So, I haven't thought about your premise at all. So this is off the cuff.

I think that gambling about real-world events (election outcomes etc) can be a kind of futures market and are a valid kind of market. I'd want to be able to hedge against elections and so on.

Manufactured events (horse racing?) and raw probability (die rolls) are probably not valid markets, IMO.

Personally, I think that the problems we see because of financial organizations misbehaving are due to regulatory issues rather than structural issues.