Sad but there, even if we pay taxes, government are not going to protect us from online scam sites or even land base casino themselves. I remember one case wherein someone filed a case against a brick and mortar casinos.
And the case drag for years until the judges decided against the player and favor the casinos themselves.
So it's very tricky for us, demanding taxes from gamblers and then at the end of it, there will be no government protection at all.
If you are playing in crypto casinos, mostly, you don't need to report your winnings to your government. Because they don't care also with your losses. So if they are not so strict, then, don't submit any of your gambling winnings.
And that's a fact, you can't rely from the government in helping you out of your situation. In most cases, the player will just move on and not file a lawsuit because aside from being expensive, it will take a mental toll to the player. So if the amount is not really significant, just let it go and learn a thing or two from that experience.
The answer to the question is very simple: the government is after what they can benefit from the citizens and not entirely what the citizens can get from them. They always say that they are fighting to protect the citizens rights, but what they are after is how to control and put all service providers under their watch.
Anyone who has a case with a casino and the casino is licensed, I believe the person is not just supposed to relay on the government, but they can get their own lawyer and file lawsuits against the casino, as there have been cases of gamblers winning from such a case.
This is why pursuing a case is quite expensive because you need to hire your own lawyer. The government won't provide you one and allocate budget for you. This is your battle so think before filing a lawsuit. Is it worth to take or just look for a better casino to play with?