...Is it fiat payment methods? Is it that casinos holding users money? — these two are top of my head, you tell me more.
So, why not remove whatever those things are that makes casinos necessary to be regulated? Meaning — stick to crypto deposits, don't hold users funds (i.e, become non-custodial).
Does that get rid of casinos requiring to be regulated am I being ignorant about scheme of things?
There are various types of activities that take place on a casino site, not only real gamblers gamble there. Many people go there to try to launder money, some go there for phishing and many people go there for various types of criminal activities. A lot of maintenance is required to filter all these and provide a smooth platform for real gamblers. Again, since there is a lot of deposit withdrawal and gameplay here, if these are not maintained, then various errors will appear at different times and many times valid actions may be invalidated. Therefore, no casino site can provide you with smooth service without regulating.