Since most businesses wouldn't accept bank transfers from casino bank accounts, I can see how they don't want the same through Bitcoin.
As you say, the distinction here is that they are discriminating against the entity, not against the coins.
I don't ever want anything to do with Coinbase. I'll never sign up for their exchange, and I'll never do business with them under any circumstances, since they are pretty much antithetical to bitcoin in my mind. But I would obviously be insane to say I never wany anything to do with any coin which has passed through Coinbase. Since I'm not an idiot, I recognize that it is impossible to accurately identity which outputs contain coins which were once held by Coinbase, and that any transaction can be (and often is) coins changing hands.
Saying you don't want to deal with a casino is fine. Refusing certain coins from me because those coins were once withdrawn from a casino by someone else* is entirely unacceptable.
Really good point, with all these factors there must be a way to make a case against the legitimacy of all these measures.
Education. Remind everyone that blockchain analysis and taint is fancy guesswork which frequently gets thing wildly wrong. Remind everyone that as soon as bitcoin is involved in any transaction, it is
impossible to say which bitcoin has ended up where. Remind everyone that taint isn't a real thing, and it only exists to allow blockchain analysis companies to make profit and to allow exchanges and governments to steal your coins. Remind everyone to stop using any exchange or service which is attacking and undermining bitcoin by enforcing such absolute nonsense.
*Based on guesswork and provably false assumptions.