Let's not forget that 98% of all crypto casinos have sided with the players but the abuse and manipulation of some gambling users which used casinos to tint stolen crypto are what make the SEC and other government agency to introduce the KYC/AML in the crypto casino setting. Besides, we need to understand the casino is not happy about spending some extra funds on KYC verification and user data protection.
Having said that, if the platform can be easily hacked as you said a lot of issues would have happened before now.
That is true, it's not something that casinos would want, why would they need your KYC for themselves? It is not something that would help them at all. However, we should also realize that after it has already happened, and after KYC was introduced, some of the casinos started to use it to prevent people from doing things against the rules, so nothing government related but purely for casinos sake.
So, it wasn't like purely for government after a while, it was also for the casinos that dealt with it as well. It's definitely a benefit for the whole casino world, either you ask it right away, or ask it when something happens, but they do ask for it.