Too much gaming is only as bad for children as too much studying, or too much sport, or too much of anything really.
But gaming, without any age-related restrictions on what they play, especially with story-driven games, can be really great for children, they can learn tons of things that they wouldn't know otherwise, learn most concepts quicker than their over-parented peers (a weapon thrown in a game, for example, has to follow a certain trajectory, illustrating the laws of physics) and develop strategic thinking, learn how to handle money well (from visiting stores in RPGs, for example) and how to save up, invest and whatnot - for example, managing your inventory in a game where you save the rarer items for boss fights is pretty similar to makong a monthly budget in real life. Open-world action games also let them learn about gambling, drug dealing and the like from where it can't hurt them, whereas films just make it look glam (a kid who loses money gambling in a video game, or gets his character killed because of a drug deal gone bad, will be averse to them, whereas someone who saw a cool character in a film live the high life while doing these things wouldn't be, because films have immune characters). They also have better hand-eye coordination and a host of other talents that will serve them well in life.
Of course, this is all assuming they actually play games that require a bit of thought and still get other things done. They could just sit all day at the computer eating Doritoes and playing the same multiplayer shooter or one of the many happy-happy-zero-IQ-required games that come out way too often now, in which case they are harming themselves. But those kids tend to do that because they're underparented, not over.