A small nit on an otherwise informative and interesting post: I do not believe that the standard libertarian argument is “Gambling is a normal consumption good; people pay for it because they derive at least as much value from it as they pay, so it should be allowed”. Maybe this is the standard argument from libertarians who arrive at libertarian positions from a total-utilitarian basis. There is an alternative path to libertarianism which I thought was more standard (potentially falling prey to the typical mind fallacy), which is based on (some variant of) the non-aggression principle, with induction to “inhibiting [voluntary transactions that don’t aggress against third parties] using government (and thus the threat of violence) is itself aggression, so we shouldn’t do it”.
I do not actually know many libertarians—to any libertarian readers, I would be curious to know the basis of your beliefs and how they apply to this question. (My own position is that of course gambling on events that neither party can influence should be legal regardless of the venue, but given the existence of bankruptcy and gambling’s known propensity to increase bankruptcy risk, gambling companies should be held liable for some part of gamblers’ debts in the event of bankruptcy.)
I agree that these interventions have downsides, and are not sufficient to fully prevent ASI. Indeed, I spent quite a lot of the post detailing downsides to these approaches. I would appreciate advice on which parts were unclear.