Online gambling should be legalized on a federal level overriding any and all state laws. Only allowing citizens to gamble inside of brick n mortar locations in certain states is a non-sensible approach to gambling.
Why legalize?
1. You can't outlaw something that SOME people are morally opposed to. Why not allow other subjectively immoral acts. ie: marital affairs, children out of wedlock, alcohol, cigarettes, abortion, atheism, etc.
2. IP proxies allow people to easily gamble online on offshore gambling websites. The US loses jobs and tax revenue.
3. Legalizing will allow for better regulation and consumer protection.
4. The constitution talks nothing about preventing gambling. The federal government should have no such power.