On your second point, I don't disagree, but those issues aren't tied to prediction markets. Traditional online sportsbooks have allowed gambling on presidential and state elections for at least a decade now. Kalshi and Polymarket have taken this to the extreme, but they didn't start the fire.
We should be restricting what people can bet on regardless of the technology used. My concern with tying these two points together is that law makers will assume that solving problem one also solves problem two, when it doesn't. I'm worried that law makers will just outright ban prediction markets and go, "job done" leaving the door open to bring them back by creating some new gambling method that technically isn't a prediction market.
I don't want Polymarket allowing bets on whether we're going to war, but I also don't want DraftKings offering that bet. On the flip side, I frankly don't care if someone wants to bet on the Super Bowl, or the winner of Survivor, of how much rain New York will get tomorrow whether it's on Polymarket, or Kalshi, or DraftKings, or anywhere else. Prediction markets are how people are placing bets. I don't actually care how the bets are places, I care what is being bet on and I think most people would agree with that.