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It is a problem for the crypto world in general and not just crypto gambling. Why does anyone need to see what I look like and where I live when they don't consider revealing what' their team like and where they're located? They want to be safe from the governments but think it's okay to take player's data? That's hypocritical.
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Good point! I think if governments force some casinos to require KYC, the casinos can refuse to do that justifying their actions by words similar to what you said. Indeed they would look hypocritical asking players for their personal info, like you said. Also, I think it may have something to do with with violation of human rights and freedoms. Maybe this idea should be adopted by casinos' lawyers.