The answer is a combination of corruption and regulatory capture. It started with sports betting. They were able (through extensive lobbing) to convince the government and the regulatory bodies that sports betting should have looser rules than regular gambling. This enabled them to advertise and expand far more aggressively. This caused a massive gold rush of sports betting companies looking to take in some easy money.

There were lawsuits of course but they just set legal precedent that weakened gambling regulations and narrowed what the government could call gambling. Simultaneously a big boom of retail investment apps and sites showed that there was money to be made in the financial speculation markets. Financial speculation is just another form of gambling so those companies empowered by all that new money put a large portion of it to convincing the government that financial speculation is not gambling and cannot legally be considered such.

This resulted in massive gambling loopholes; now you can call any site or app a financial investment app and you don’t need to worry about any gambling rules. What we get now is the result of effectively completely deregulation gambling. They want you to bet and gamble on everything.