Bogus analogy. You have no business repairing airplanes because you may endanger lives. People should be free to squander their money in their folly if they so choose. Otherwise outlaw lottery, gambling and horse-racing as well.
People are not capable of fully understanding all possible choices in a fully unregulated system, and even less able to consistently act rationally in their, or anyone's best interest.
It is the responsibility of any lawmakers, engineers, experts etc. to design our systems to be safe, transparent and to set the occasional boundary where reasonable.
People misallocating capital is just as dangerous as an airplane mechanic misplacing a bolt on a Cessna. Both actions end up, in the long run, with people dying.
However this has nothing much to do with misallocating capital (after all, if they're misallocating it in gambling, why do you think they'd be smart enough to do any better if not allowed to gamble?) If you truly want to try allocating that capital better than the former owners of the money, buy shares in gambling companies.