If they arbitrarily and intentionally pull their KYC cards just to gain benefit for their casinos, even they currently are legit ones, their reputation will be damaged with time and it's hard for them to reclaim their reputation.
You need years to build up your legitimacy and reputation but only need one or a few cases to wipe it all. After that, even many years later it is hard to erase shady history in reputation and start to gain a clean legit reputation. Almost impossible. Therefore I don't think good teams behind good casinos will do that.
If they have holes in system that are compromised and they have deep pocket, they will accept it, pay the user and move on with improvement in their infrastructures.
Correct points, but they are a lot smarter than you think. For example, some sites block gambler funds claiming that they found something suspicious and request KYC hoping that the gambler will gamble away his/her winnings before releasing the funds.
This is perfectly legal as stated in their TOS and their reputation stays unaffected.
I see that point and yes if that's include with the TOS then gambler might risk their winning money while still in process of verifications
if fate do not favor them,
the chance that they may lose those money back to the house and the reputation will not be affected as
gambler decided to play and risk the money betting back again.