Kees-Jan Avis, Managing Director of EM Group Netherlands, issues a wake up call to operators on their compliance measures specifically when it comes to fund separation. Avis cites a Danish court case which only underlines the importance of proper fund segregation measures.

The Financial Fallout: A Modern Wake-Up Call

The iGaming industry faces unprecedented regulatory scrutiny as jurisdictions worldwide tighten financial compliance requirements. Recent high-profile operator failures across multiple markets have exposed critical gaps in customer protection, forcing regulators and operators alike to reassess existing safeguards. The financial world is changing rapidly, with digital platforms, cryptocurrencies, and NFTs reshaping how people store and manage their money. Operators must now navigate increasingly complex compliance landscapes where the systems designed to protect users often struggle to keep up. 

This regulatory evolution directly impacts how iGaming operators handle player deposits and manage financial risk. The consequences of inadequate player fund protection extend far beyond individual operators – they threaten the industry’s credibility and regulatory standing in key markets.

One key safeguard is fund separation—the practice of keeping customer funds completely separate from a company’s own money. This protection is essential, especially in cases where a company goes bankrupt or mismanages finances. A powerful example of what can go wrong is seen in the case of Peter Nikolaj Hardgrove Hansen v DK Gambling ApS, where a player’s funds were not returned during bankruptcy because customer money had not been kept separate from the company’s assets.

The Hansen Case: When Legal Structures Fail Customers

The Hansen case demonstrates the real-world consequences of inadequate fund separation. Peter Nikolaj Hardgrove Hansen sought the return of funds deposited with DK Gambling ApS, an iGaming operator that had entered bankruptcy. The bankruptcy trustee denied his request and claimed that all assets—including client deposits—had been absorbed into the bankruptcy estate, despite the adherence to stipulations under its gambling license. This decision left Hansen and other players facing potential total loss of their deposits, with no priority claim over other creditors seeking recovery from the failed company’s assets.

The denial highlights a harsh reality: operators that fail to implement proper and actual fund separation treat clients like unsecured creditors. DK Gambling ApS failed to adequately separate customer funds. Player deposits flowed through operational accounts and co-mingled with funds that the operator used to pay operating expenses. 

For consumers, the outcome of the Hansen case underscores the serious risks associated with inadequate protection of deposited funds. Without clear legal separation between customer deposits and an operator’s own assets, players effectively lose any special status or protection in the event of insolvency. As seen in this case, consumers who believed their funds were safeguarded found themselves treated as ordinary unsecured creditors, standing in line with all other claimants in the bankruptcy process.

This not only results in a high likelihood of losing their money entirely but also erodes confidence in the safety and reliability of operators in the online gambling and broader fintech markets. The case highlights the urgent need for stronger regulatory safeguards and more transparent fund separation practices to ensure that consumers are not left financially exposed when operators fail.

For operators, the Hansen case serves as a critical warning about the legal and reputational consequences of failing to implement proper fund separation. When customer deposits are not clearly separated from operational funds, operators expose themselves to significant legal challenges, regulatory scrutiny, and loss of consumer trust. In the event of insolvency, the inability to demonstrate that client funds were adequately protected can lead to damaging litigation, penalties, and long-term brand harm. Moreover, such failures may trigger broader regulatory reforms, increasing compliance burdens for the entire sector.

To mitigate these risks, operators must adopt robust internal controls, maintain dedicated client accounts, and ensure transparent reporting practices that align with both licensing requirements and consumer protection standards.

For other stakeholders—such as regulators, payment providers, and financial institutions—the Hansen case highlights the systemic importance of enforcing and supporting effective fund separation mechanisms within the iGaming and fintech industries. Regulators are reminded of the need to not only set clear requirements but also to monitor compliance proactively to prevent consumer harm. Payment providers and banks, often acting as intermediaries in fund flows, must also understand their role in safeguarding client monies and ensuring that separation frameworks are respected. 

This outcome devastates affected individuals financially while undermining trust across the broader online gambling and financial technology sectors.

A failure in one part of the ecosystem can have ripple effects, undermining market integrity, inviting stricter regulation, and damaging public trust. The case underscores the shared responsibility among all stakeholders to foster transparent, secure, and resilient financial practices.

The Legal Vacuum and Regulatory Oversight

This regulatory gap creates serious risk, particularly in sectors like iGaming and crypto, where platform failures, insolvencies, or breaches of compliance are increasingly common. Traditional financial institutions operate under strict client money safeguarding rules, but such standards are often missing in newer digital sectors, leaving consumers exposed to financial loss and eroding trust in the industry.

For instance, in the Celsius Network bankruptcy, the court ruled that customer digital assets were property of the estate, classifying account holders as unsecured creditors due to the lack of fund separation.

Addressing this gap requires innovative approaches to compliance infrastructure. Forward-thinking operators have begun implementing structured frameworks that enable proper fund separation in markets like the Netherlands. Modern compliance frameworks enable platforms to protect customer deposits through legally separated third-party funds foundations, ensuring that operators cannot access player funds for operational use and that funds remain safe even if a company fails.

Beyond technical infrastructure, comprehensive approaches also include independent reconciliation, transaction monitoring, and real-time fund visibility, giving both regulators and consumers’ confidence in the operator’s financial integrity.

Operators that adopt robust compliance frameworks not only meet regulatory obligations but also demonstrate their commitment to responsible business practices. Operators that embed fund separation as a standard—rather than a reactive measure—help create a safer, more transparent environment for both users and the industry as a whole.

Conclusion

The Hansen v DK Gambling ApS case transcends legal dispute—it’s delivers a powerful reminder of real-world consequences when businesses fail to implement proper financial safeguards. In a fast-evolving digital economy, where platforms handle large volumes of user funds outside traditional banking systems, operators must earn trust through action, not assume it by default.

Industry experience demonstrates that operators can achieve comprehensive customer fund protection when they build compliance and operational integrity into their business foundation. Operators that adopt robust fund separation practices, independent oversight, and transparent account structures, move beyond minimal legal requirements and build sustainable, trustworthy platforms.

Ultimately, responsible fund management is not just a regulatory checkbox—it’s a fundamental commitment to consumer protection and long-term industry credibility. As digital finance and iGaming continue expanding, operators must embed these safeguards from the start to ensure innovation doesn’t compromise security.

Kees-Jan Avis is Managing Director of EM Group Netherlands and a recognised expert in the Netherlands and European gaming industries. He has been instrumental in helping operators navigate complex regulatory frameworks across multiple European jurisdictions, with particular expertise in Dutch gaming regulations and compliance requirements. Kees-Jan specialises in licensing, fund separation protocols, and regulatory risk management for international gaming operators.

Kees-Jan will be attending SBC Summit Lisbon from September 16th to 18th and welcomes discussions on fund separation and iGaming compliance matters.