I think casinos free up restrictions on countries that are indeed excluded by most gambling sites because they want to get more customers, they try to attract more people with various conveniences without any exceptions and this is kind of strategy to be able to gain more profits.
However, if at some point the gambler gets really big win and interestingly, no one knows whether the gambling site will still accept the withdrawal with full convenience or there will be series of complicated problems, basically as gambler, the majority still don't think about what will happen if there are certain conditions that might be problematic about KYC or the use of VPN if they withdraw large amounts of money.
Yes, their reason is like that because with attracting many people from many countries can grow their business and they will have many loyal members who will playing gambling at their site. That means, they can make a lot of money from their business while they can promote it using other ways. They don't prohibit for those people who come from a country that prohibit gambling but those people must responsible to themselves if something bad happen to them. Casino only gives a place to playing gambling while people must realize about the risk of gambling.
But most casinos are not allow their members using VPN because casino want to know where they are come from. Maybe that will related to the KYC process but we are not sure about that.