PLAYER FUND PROTECTION
Peter Nikolaj Hardgrove Hansen v DK Gambling ApS under konkurs (CVR-nr. 38201565) v/kurator - A Danish case study. In April 2022, an operator active in the Danish online gaming market experienced financial difficulties and as a result entered bankruptcy proceedings. When the operator went bankrupt, its assets, including the player funds account, were handed over to a bankruptcy curator for distribution among creditors. At the moment of bankruptcy, players who had funds deposited with the operator were informed and assured by the operator that their funds were safe and would be returned to them. Having received this information, a player who had a substantial balance in the operator’s platform requested that his funds be returned. However, the bankruptcy curator refused this request on the basis that, in their view, the player was a creditor of the operator and that the funds in the offsetting account were now included in the bankruptcy estate. The player then approached the bankruptcy court for assistance.
This case demonstrates not only how important independent player fund protection is, but how the current Danish approach does not adequately protect players. Furthermore, not only does it fail in its consumer protection function, it also adds an additional regulatory burden to Danish operators. At this point, it is instructive to compare the potential outcome under UK and Netherlands regulations to see whether players would been better protected. UK Had the facts of the Hansen case occurred in the UK there would have been three possible outcomes depending on the level of player protection the operator had opted for. 1. If the operator had opted for segregation of customer funds in a separate account, the outcome would be the same as in the Hansen case as this set up is essentially the same as the current regulatory status quo in Denmark. 2. If the medium level of protection had been opted for players are likely to have received back all their funds as there is specific provision set aside for that purpose. However, this is not guaranteed. In this scenario the funds may take a while to be returned as they will not necessarily be readily available for distribution.
The question before the bankruptcy court was whether the funds in the offsetting account belonged to the players or to operator at the time of the bankruptcy and consequently whether the players could claim the funds directly without having to wait in line with the other creditors. The court found that although the purpose of the offsetting account was indeed to separate the players funds from the operational funds of the operator, it did not adequately do this. The reason being that the funds first flowed through the operational accounts of the operator and were therefore allowed to co-mingle with the funds used by the operator to pay its various operating expenses. This in effect meant that the players’ funds could not be definitively distinguished from those of the operator. This was further compounded by the fact that the operator only wiped the player’s funds from the operational account once per week meaning that only at that point was there anything approaching certainty regarding the separation of funds. In light of this, the court found that the funds in the operator’s offsetting account were part of the bankruptcy estate, and the players were only entitled to their funds in so far as they were creditors of the operator 5 . 5 Peter Nikolaj Hardgrove Hansen v DK Gambling ApS under konkurs (CVR-nr. 38201565) v/curator – available at https://domstol.fe1. tangora.com/Domsoversigt.16692/BS-25530-2023-SHR.2502.aspx 3. If the high level of protection had been opted for players are very likely to have received back all of their funds and received them back quickly as funds are effectively held in escrow and are therefore available for distribution as soon as needed. Netherlands Had the facts of the Hansen Case occurred in the Netherlands the players would very likely have received all their funds back. This is because the Dutch approach clearly separates player funds from those of the operators. Player funds are at no point co-mingled with the funds of the operator creating a clear separation which in not the case in Denmark. In addition, if the Dutch approach had been adopted, the account holding the player funds would not have even been held in the name of the operator meaning that it would not have been included in the bankruptcy estate at all.
PAGE 44
IMGL MAGAZINE | DECEMBER 2024
Made with FlippingBook flipbook maker