Its illegal because bookies dont pay taxes, betters place bets without laying down money and that leads to shylocking. Ever wonder what shylocks do when a guy owes 50 large and cant pay ? Contrary to what many think, its not just written off.
sports betting should be legal and controlled, no doubt. The reason why bookies make money is because they are taking a big risk most poeple arent willing to take: they are risking their freedom. If no one went to jail, everyone would be a bookie on the side.