This is one of the reasons why many people who prioritized privacy use cryptocurrency (other prefer Monero and other privacy coins). They wanted to hide their wealth from the government. May it be to avoid taxation or something else.
As far as I know, citizens are supposed to be transparent about their income to the government, that is where taxation plays since we need to declare everything in order for the government to get the right amount of money from us. Being a citizen of one country, we have the responsibility and obligation to pay taxes to the government.
We can only lose our funds in a gambling platform when
1. We lose in our gambling activity.
2. The platform is hacked, or our account including our account security is hacked
KYC on casino is needed both for security and complying to AML that is implemented by the government. Aside from the given factors, I do not know how KYC will make us lose our funds in a casino. It is impossible for other people to use our submitted data to steal our found in a platform since picture and information will be different unless the perpetrator is someone inside the gambling management.
True but I think KYC doesn't function as that. KYC is for the gambling platform to verify its user, not the user verifying other users. Casino have an option to make your account name hidden or make it private and has nothing to do with KYC.
As far as I know, if the gambling platform follows the data privacy act, submitting KYC will not reveal your identity unless the platform is hacked. They will be fined if they carelessly leak their users' data and may disrupt their operation due to negligence. Aside from that, anyone wanting your information needs proper documentation from the authority.
Anonymity is very important and that is why data privacy law is adopted by many countries, but we, being a citizen of a country we have the responsibility to not cheat the country of our obligation of paying tax for whatever gain we have no matter how corrupt our government is. Let us not use these privacy things to evade taxes.