Some people are after ones personally informations because they want to sell it or use them for fraud activities, the truth is casino won't stop demanding for KYC anytime soon because that has been part of their system. They are also demanding KYC for their own benefits in other to protect their own business reputation. Actually it won't be bad if they keep a good quality security in other to protect their customers details at all cost.
So don't let your identity be handed over to a less reputable platform, it will usually be a scam where the platform sells your identity on the black market.
Not from part of the system because the casino is now centralized so KYC will definitely be needed for their legality against existing regulations because the casino already has a license, KYC will automatically be required later considering there are already rules.
I'm sure most casinos will protect the identity of their customers, they won't divulge it so it's safe, although there is a slight concern... Now casinos are still KYC friendly with small withdrawals so use those casinos.