KYC is surely for our own benefit it gives us security. I have seen now people dont hesitate to give their information to casino but I think gamblers should only follow this rule in registered casino and also ask them whats and why all these requirements are for after your complete satisfaction I guess a gambler wont mind sharing KYC.
It never increases any security but it will make privacy issues if the site got hacked,You can never know where our documents could be shared even it goes to dark web for selling.
SO people who gamble a lot won't share their details to gambling sites.
There are a lot of risk if we already give our data to a sites. For exchanges, usually i not pick which ask me to do KYC. Because a lot of site still can be used. And like gambling, site that actually i really want to play it anonymously. Because in my country we can't do gambling online or offline.