are they sure they want to miss out on all the revenue POGO and online gambling will bring?
Yes, people who are short-sighted don't see how much money they are losing. They could make a regulatory model like the one in many countries in Europe, but without creating borders, which is the best, and charge a lot of taxes for it. But as they don't know what they regulate, they don't even think about it and the solution they think of is the simple one, to prohibit.
Instead to focus on regulations and ways to reduce illegal activities, they want to ban gambling. Those are two different things.
If gambling is banned in a country, it will result to more illegal gambling activities.
That's it.
According to what I know, offshore gambling may not bring revenue for the government. Local casinos are the government focus because that is where they see taxes from. Although some countries have strict regulations that makes any gambling site that wants to provide gambling services for their citizens to have physical presence in the country.
If they regulate it well, they can earn a lot of money in taxes with online gambling, and some people would still escape, but few. They have chosen the worst option.