I was searching all over the internet and could not find the answer.
Are you sure that you did your searched all over internet? there's a lot of articles that came out after researching keywords with what you are asking.
https://bitcoincasinos.reviews/bitcoin-gambling-legal/https://topbtccasinos.com/bitcoin-casinos-legal/Are crypto casinos legal ?
Yes and no.
Yes if their country allows online crypto casino's to operate.
No if their country prohibits this type of business operation and service.
Do they need a license ?
Software licenses is a must but if you're asking about local permits, yes they do depending again on the country they reside. Some country's doesn't need for this license as if they don't care about online crypto casinos.
Are US and China citizens allowed to play in that casinos ?
Not sure about the law of these two countries but AFAIK they aren't allowed.