Denmark’s Peter Nikolaj Hardgrove Hansen vs DK Gambling insolvency case is undermining player trust and could have serious consequences for the market, says Henrik Norsk Hoffman. 

Regulators are under the magnifying glass and a landmark Danish ruling shows segregated player funds may not be safe after all. 

The case saw the Danish gambling operator DK Gambling ApS taken to court after it went bankrupt but Hansen still had funds in his account at the time.

While Hansen was backed by the Danish Gambling Authority, he wasn’t given access to the funds which triggered a strong backlash against the current rules. 

Discussing the case was Nordic’s legal partner Hoffman and EM Group’s Managing Director Kees-Jan Avis, who spoke to SBC Media’s Charlie Horner on the latest episode of the iGaming Daily Podcast.

Hoffman condemned the breakdown of trust for players and warned that this could cause long-term effects for the market.

Hoffman said: “For DK gambling, what went wrong was they followed the instructions from the Danish gambling authority to be a little bit naughty. There is a misunderstanding of how Danish Insolvency Law functions when separating funds and taking them outside of the insolvency state.

“The problem with that process is that the second after the consolidation has been executed, the numbers don’t match anymore and consequently, it was found to be part of the insolvency state.

“It’s now the second insolvency case we have, and it’s the second time that the players don’t get their money back. So yes, it shakes player confidence in the system considerably, I would think.

“If that is gone, the whole market will collapse.”

Avis then weighed in, stressing the importance of the need for proper fund separation. While Hansen’s claim was rejected, it opened up a lot of discourse in the country. 

The gaps exposed by the Danish court ruling have shown the way to avoid such instances in the future – and Avis believes funds should be independently managed. 

Avis said: “One can adhere to their gambling regulation, but as the Danish case evidenced, it might be different from an insolvency practice and I think at the end of the day, the insolvency is guiding the estate and how it’s being handled.

“Two things are key in order to really separate player funds from the operational capital of operators and those two elements are that it should be outside of the financial and legal environments of the operator. It should really be independent and in addition to that, it should be independently managed.”