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Government wants to assure that your money is in the safe hand. These procedures basically eliminate the frauds.
Imagine everyone is launching their own gambling business without having a valid background check. Frauds will take the chances and will walkaway with your money even without letting you playing with your money.
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Isn't that what has been happening from the beginning of times? No government can regulate gambling to the extent of eliminating frauds entirely. I think there is no such country, even taking the North Korea into consideration, were gambling is properly regulated. The scam artists are plentiful even under dictatorship regimes. That's why we need provably fair system in the first place. You don't have to rely on anyone's honesty, you don't have to trust anybody, you should be able to check the fairness any time you want.