it drove it underground, where the crime gang componenet got very rich and powerful.

I would argue, you still havent seen the end of THAT effect. the money talks for a long time.

The Italian mafia operated in my large New England town when I was growing up in the 1960s and 1970s. There was a beefy Italian guy at the YMCA I frequented with a nose that had been horribly disfigured by some intentional violence. One of the Italian boys in my high school offered sports bets as a service to the other children. I'm guessing that that boy was mobbed up, but I never saw any sign of it that time I challenged him to a fight (to get him to stop talking trash to me).

Certainly everyone will agree with me that the mafia is a pale shadow of what it was on the East Coast of the US in the 1960s and 1970s? And do any of the non-mafia criminal gangs in the US even offer sports betting as a service? Sports betting is still illegal in many US states, including California: does anyone know of any gang offering sports betting to Californians?

I've spent many hours on Youtube learning about the mafia, which gave me the distinct impression that the worst effects of the mafia are when it "taxes" necessary society functions (like garbage collection and skyscraper construction) and that the mafia's offering services that are unequivocally illegal are less harmful. Certainly it was outright illegal for any party to offer betting of very-high-interest loans when I was growing up.

So, without someone's proving a decent amount of evidence to the contrary, I'm going to believe tentatively that "driving sports betting underground" does not in fact has a high societal cost. The mafia's making some regular money on this or that is not necessarily an unacceptable societal cost; the optimal amount of crime is not zero.