casinos just need to adopt a more flexible and transparent approach, making it clear what document requirements and other KYC procedures may be necessary for each stage or level of play or withdrawal.
Doesn't the problem come from the fact that most casinos aren't transparent or have a clause like "reserve the rights to demand new documents when necessary" without giving more details because they want to avoid some legal loopholes or something similar?
These problems would be avoided by requiring a full kyc upon registration, but this would take away the main attraction that cryptocurrency casinos have. However, I would not be surprised if in the next few years that is the way to go.
Now, as you say, they take advantage of some loopholes or turn a blind eye in certain aspects, such as putting a list of restricted countries but not blocking players from those countries and not asking for KYC or putting problems while they lose, but the moment they win a good amount and intend to withdraw they ask for KYC and deny the withdrawal for playing from a banned country. I am not saying that all casinos act the same way but we have seen stories like this many times in the forum.
I can't imagine how fast some gamblers will zoom off when every online casinos accept KYC verifications from the beginning, because many gamblers don't want to have anything to do with KYC, many got trapped believing that casinos won't ask for KYC verifications but when it is time to withdraw they will have to pass KYC and that's where they will start complaining.
It will make things easier for many gamblers that don't want to pass any verifications, and I guess this is why some online casinos will never want to let customers pass KYC for starter before depositing on the casinos, some of them believe that they will end up losing customers this way.
You are right though, every online casinos have their aims too, locking on customers, trapping them so that they won't leave easily, or making it hard for them to withdraw from the casino after trapping them with restricted location, something they should have block them from accessing the casino before.