Yes, gambling was huge in the US before, you just didn't know about it. Illegal gambling market in the US was massive because you could go offshore. One of the issues with offshore providers is no taxes, no harm prevention, etc.

Legalization allows you to generate tax revenue and implement harm prevention effectively for the very small amount of users that are gambling addicts (if you compare to some of the things that are legal in the US, talking about addiction makes no sense at all...weed, for example, is inherently addictive, gambling is not).

Regardless though, when sports betting was largely illegal in the US, the illegal market was by far the biggest sports betting market in the world. Continuing to make it illegal was extremely illogical.