On top of this, one of the problems is that a lot of sites now use KYC as their excuse but were planning to steal the money anyways, so then you've given them your full identity and documents when they were already planning to scam, just making it more dangerous
Yes, in such a scenario, KYC is an element of risk assessment - whether your money can be stolen without problems or not. They evaluate first of all your jurisdiction - whether you can file a lawsuit against them. And only then being on sanctions lists and the like.
KYC has its good and bad sides, but in all, it has to be observed and completed if your casinos demand it, especially if the land at which they operate demands it for continued cooperation with them and also for regulations. But the issue is that the data could be stolen or the casinos could use it as an excuse to cheat the customer in question. Well, that aside, about what you said, it might be true that KYC will help the casinos verify the personality of the customer and the residence claims, but it is not about your lawsuit claim per se. Anybody from any country can sue any lawful casino even regardless of the status, once you have the money and all it takes, you contact a lawyer from their country and the case begins. So, I don't think it is a valid point that casinos ask for KYC to prevent a lawsuit. But if a country is banned by the casinos, of course, the KYC will be able to reveal it even if the citizen of the country has opened an account. I read countless of some cases like that every time where they would have funded the account but they couldn't do KYC since their country is banned.