What if an incentive was offered when you make your first withdrawal, like a bonus or cashback, in exchange for doing KYC?
Would that make it more acceptable, or would it still put you off?
The point is that your casino needs a license. The government that issues the license will force you to apply for KYC. If you refuse, your casino may one day be seized. So, it's a situation where you have no choice, so you have to tell people that when they create an account, they'll need to do KYC if they want to deposit money into your casino.
This prevents people from depositing money, playing, and winning. When it's time to withdraw, they learn they have to do KYC. And when they do, the casino rejects their documents. In my opinion, it's better for you to focus on complying with the law and being honest with people: do KYC before making any deposits into your casino.