Should sports betting be legalized? Although legalizing sports betting wouldn't eliminate illegal betting, legalizing it could be beneficial for the economy, make it harder to fix games, and focus fans more on the outcome of games.

Since the question essentially lays out most of the most common arguments in support of legalizing sports betting, this answer will focus on a few that make the opposing case.
First, many argue that legalizing sports betting will make it more likely that the competitions and the athletes themselves would become corrupted. Match-fixing, "point-shaving," and other practices have often been associated with gambling. Legalizing sports gambling, some argue, therefore makes it more likely that athletes will have incentives to (or be threatened to) take actions to alter the results of games.
Another argument against sports gambling is that revenues would not go to small bookies or to the public (through taxation). Rather, it is argued that they would predominately be directed into large corporations that would, through advertising, exert an undue influence on games.
Finally, there is the argument that gambling is a demonstrably addictive activity, and people who struggle with gambling addiction would find it easier to "feed" this addiction if it was legalized in sports.
One argument against the legalization of sports betting that is no longer valid is that it is against federal law. Federal legislation that banned sports gambling across the nation was overturned by the Supreme Court in May of 2018. The debate referenced in this question, then, is currently ongoing in many states.
https://www.cnn.com/2018/05/14/politics/sports-betting-ncaa-supreme-court/index.html

https://www.theringer.com/sports/2018/5/15/17355544/downsides-sports-gambling-legalization-ncaa-marijuana