It's not just that governments are dependant on the money, it's also that the gambling can then fund vast lobbying arms to the detriment of good policy.

This has certainly happened in Australia (especially NSW): two of the biggest political donors are the Australian Hotels Association (AHA) and ClubsNSW, which represent the principal beneficiaries from video gambling machines: https://www.smh.com.au/national/nsw/machine-men-how-the-aha-...