It's called "illegal" because people can't stop it or that there are methods to overcome blocking provisions that security made. Personally, I have no idea where it won't be THAT invasive. If that's possible then yeah, various means become possible like making the police involved, monitoring of user actions (yeah, as I said, invasive) and stuff like that. Sadly, gambling on a casino where you're banned isn't THAT big of an offense in the grand scheme of things.
It’s definitely illegal, but since it’s not their real identity, many don’t mind as long as they can gamble. In fact, some even buy fake documents from the black market to verify their accounts at casinos. As long as the casino doesn’t require a selfie, they can get away with it easily.
However, casinos have gotten stricter with verification processes lately, and selfies have become one of the most critical requirements. This makes it harder to use stolen IDs, but some people still find workarounds by hiring someone to verify the account for them using their identity. And since money could buy anything, there are plenty of people who’d take the job if the pay is good. It’s shady business, but as long as it works for them, they’ll keep doing it.