I think once we start confronting the government with decentralized casinos, which require no KYC, they may decide to loosen up their regulations due to plain redundancy. It would not be fair for such laws to exist, if they are unenforceable in the first place.
If there were a bond or unity among the citizens of a country to pressure the government regards the extinction of KYC enforcement to online casinos, the government would accept the order of the people. However, only a small portion of the population is concerned about sharing their personal data online. Most people are fine about doing it blindly, without thinking twice... There is only a minority unhappy left, and this minority isn't sufficient to confront the government in anyways.
And the few individuals who will try bypassing the government's regulations, playing at decentralized casinos will be persecuted and punished by such governments, as will the decentralized casinos too for operating without permission from a local authority. For that reason, casinos prefer demanding KYC, instead of going against governments' regulations.