> Regulation does not exist to prevent people from taking risks. It exist to prevent people from buying something with a risk profile that they do not understand.

I agree, but I think the difficult question here is determining when somebody understands a risk profile.

If a person, at some rational level, understands that a casino is a zero-sum game, that their real return will rapidly approach the expected return of zero the more often you bet etc., but at the same time has a pathological gambling problem, should they still be allowed to play?

> The risk is first order and easily understandable by retail investor. At least as much as going to a casino.

Casinos are heavily regulated in some jurisdictions for precisely these reasons.