Legalization of gambling is a very sensitive topic as on one hand, it is not considered to be a legitimate source of entertainment, whereas on the other hand, it is considered to be a very good source of growth in economy if it is legalized. In this article, we have done a thorough literature review to understand the economic and social impacts of the legalization of gambling. In this study we have also seen examples where the state government, having legalized the gambling, lotteries, etc., have the monopolistic control over the system, which in fact is detrimental to the economy. This is because instead of the demand supply ruling the economics, the government is. This article studies the impacts of legalization of gambling on consumers, government, the revenues, economics of the community and its social outcomes.