That is because the government wants to know their people who playing gambling at online casinos. They want to impose tax on them so they ask the casino to apply KYC to their members and tell the government.
Doing KYC has its risks so we must be really careful selecting the platform. We need to clarify that the site is safe and can take responsibility for its members if something bad happens. They can give protection to their members identity so there is nothing to worry about.
We should be responsible for this because that is our identity. We need to know the site reputation and how good its protection is for members.
With KYC and digital data, governments want to know as most as possible about their citizens, online activities and money flows. Gambling is just like other activities if it is legla in a nation and the general interest of government is tracking their citizen activities, money flow in order to force citizens to pay as most tax as possible.
Tax is like main budget for government to operate their cumbersome system so they would like to maximize tax they can get from citizens. KYC is one of powerful tools for governments to achieve this.