I think I need more specifics then. Are we talking about gambling cities or gambling states? NJ, for instance, bans gambling in general. But in Atlantic County (Atlantic City, mostly), they can issue casino licenses. That has made it a tourist attraction, for that reason, which brings a lot of people there.
Problem is, gambling-based economies are REALLY vulnerable. In good years, they do bring in a lot of money. In bad years, they suck a TON out of the state. NJ has been dumping cash into AC for the past decade to try and get people back there. But the problem is that gambling is the attraction. Everything else relies on it, not the other way around. You use the casinos to get people there, so they'll spend money in stores and restaurants. It makes saving the city a huge money sink. There just isn't much else you can do to glamorize it.
That's actually led to some other big issues (including some civil rights debates) because casinos are such a high risk business that laws tend to introduce loopholes to favor them. For instance, NJ banned smoking in places of business that were not tobacco shops or places that generated x% of their revenue from smoking or tobacco, due to second hand smoke. The law excluded casinos, for fear that it would limit the number of gamblers on the floor. Problem is, the law was passed to protect other customers, and more importantly employees, from second-hand smoke (essentially says your boss has no right to make you inhale smoke). So it actually is a big problem that they have these violations. And there's a lot more where those come from, because there's such a high interest in keeping the casino floor a minimally controlled environment.
Las Vegas is going strong because they attract people world/nation wide, so population of gamers isn't an issue. No one else will be competing with them for a long, long time.
The amount of revenue generated by making gaming legal statewide would probably be less than forming a gaming city. But gaming cities WILL crash and burn at some point. And because their revenue was depended on by the state, you'll spend decades rebuilding them. That's where any connection between casinos and crime rates lie, I'd wager. After the local economy dips, you'll end up with a huge number of unemployed workers (either laid off from casinos or other local establishments), and it's even worse if casinos collapse completely. They aren't often bought out--the casino owners have more to gain by concentrating their guests, rather than spreading them thin between buildings.
So casinos are kinda a gamble for the gov't, ironically. They can be great in periods of plenty, but a huge burden in periods of want. I'm more inclined to say its better to focus those funds in less variable industries. Because a gambling city IS going to require state aid at some point.
Honestly, the biggest issue with gambling addictions is that they are more cerebral than a substance addiction. You can't distance yourself from the act--you start turning everything into a bet, a game. You can keep from becoming an alcoholic by drinking in moderation and not allowing yourself to rely on it--that's easy to control. But it's much harder to fight an addiction that you are subconsciously introducing into every aspect of your life.
TL;DR: Gambling can generate a lot of revenue, but it can also suck a lot out of the state. And since they provide a lot of excess when you don't need it, but a lot of burden when you do, it can be rough. That said, this only really applies to casinos/gambling towns. If we are just talking casual gaming, then *shrug*.
Anyways, you all are horrible, @#%^ed up people