They will then forward this to a partner likely owned in the West but who out-sources most of the actual work to somewhere cheap: like India or perhaps China.
Then you have a bunch of people who come into work, and work their way through a massive list of web-pages trying to spend no more than few seconds on each (metrics etc) and put them into boxes: - Adult - Web Mail - Social Media - News - Entertainment - Gambling - et al
These lists are then sold to many companies like Microsoft, firewall vendors like Sonicwall, Parent Software like Netnanny, and also sold on to people who write anti-spam software.
Essentially it is an entire industry.
These companies have never little trust in their employees. A flip side of this is a lack of respect. Blocking none work related sites is an acceptable if not desirable result.
There is normally a way to "complain" if something is incorrectly tagged but it is after the fact. The local administrators (or parents) can normally add it to a whitelist while it gets resolved.
If there was a person typing IP addresses into a list I can imagine them making a typo, but obviously that's absurd and these lists are auto-created. So how does a website get labelled as a gambling site?