Because there's pre-existing demand for lottery tickets that provides some plausible deniability for the money-laundering use case. If prediction markets were primarily used to buy insurance against hard-to-avoid expensive events, that's what money launderers would trade in too, in order to blend in.
Instead, most volume is in sports bets. People just like to gamble.
Instead, most volume is in sports bets. People just like to gamble.