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State lotteries are in effect a tax on the uneducated; largely used to fund education.
But part of the reason they exist is that, in their absence, people spontaneously come up with even worse forms of gambling, like the old numbers game that funds the expansion of organized crime.
Most lottery players, especially scratch-ticket players, would be better off sticking that money under their mattresses or in credit-union accounts. However, again, when there are no gambling games around, people spontaneously invent them; abolishing state lotteries would not cause that money to go under mattresses or into credit unions.
Out of curiosity: What is considered illegal gambling?
Gambling that is prohibited by local laws.
Each state has its own restrictions and laws so really it depends on your location.