Bankruptcy at Online Casinos

Online casino bankruptcy – is your money safe when you leave it in an online casino regulated by the MGA or UKGC? (Photo by Melinda Gimpel on Unsplash)

The online casino industry is extremely lucrative, but also incredibly competitive. New casinos launched almost every week, hoping to capitalise on booming iGaming markets around the world. However, not all casinos can make it in the long run. Some are poorly managed, others may struggle to attract players, while some may have poorly optimised websites.

Even if they have good intentions, reputable online casinos could struggle too.  Eventually, when the money runs out, an online casino has little chance but to file for bankruptcy.

As players, this leads to questions such as what happens to our money at a bankrupt casino? Do we lose that money? What can we do to get it back?

Well, online gambling regulation has come a long way in the past ten or so years. Gone are the days of high profile online gambling closures that have led to the loss of players money. If you remember the online poker boom and the subsequent Black Friday that saw the closure of platforms such as Full Tilt Poker and the millions of player funds lost as a result, this is something that should not happen anymore. As long as you’re playing at a regulated online casino, your money should be protected.

To help our readers as comprehensively as possible, and to give important guidance should an online casino that you use suddenly go bankrupt, we have created this short guide. It will tell you how safe your funds are when playing online casinos, and what you need to do in the event a casino does get into financial trouble and apply for bankruptcy.

As a result, over the past decade, the iGaming scene has seen a huge overhaul in the way online casinos are regulated. Much like cryptocurrencies of today, in the past, governments were unsure how to regulate the online space of gambling on the World Wide Web. However, where there is a will, there is a way, and licensing authorities like the Malta Gaming Authority (MGA), the UK Gambling Commission (UKGC), and/or Gibraltar Gambling License (GGL) are now super-efficient when it comes to regulating online casinos.

Here is an excellent explanation of some of the licensing authorities.

Licensing authorities’ main purpose is’ player protection ‘first and foremost. Then, of course, there is the criminal aspect to deal with, which is money laundering. That means these licensing authorities need to be financial experts because they have the pay-outs to deal with, casino member balances, and the licensing authority also needs to stamp out money laundering.

Licensing helps ensure your casino balance is safe!

One of the reasons licensing is in place is to make sure your casino balance is safe. That means in case the casino runs into administration, wants to liquidate, or suddenly finds itself bankrupt, you will get your money back.

One of the reasons licensing is in place is to make sure your casino balance is safe. That means in case the casino runs into administration, wants to liquidate, or suddenly finds itself bankrupt, you will get your money back. When the casino applies for licensing, which it must pay a heft fee to obtain, it must show all financials including how it plans to keep player balances, how players will be paid their winnings, and agree to open their books to forensic accountants who will check the casino’s finances.

Although the licensing authorities cannot cover every casino every month of the year, the casino must submit financials at the end of every tax year. These are subject to audits, while the accountants that submit the casino’s financials are legally obliged to report any wrongdoing or suspicious activity. If they do not, then the accountant can become part of the crime if one arises from any such investigations. This is great news for you, the player, because it also means there is an early warning system in place that can spot if a casino is running into financial difficulty.

Separate bank accounts: Under the MGA, UKGC, and GGL licensing rules, the casino must keep player balances in escrow-like bank accounts. These accounts are completely separated from the casino’s day-to-day operational costs. This is a similar setup to the way banks operate. Now if the casino were to dip into the player funds for any reason, it is fraud and the culprits will face prison time.

Bankrupt Online Casinos Holding a Malta Gaming Authority (MGA) License

Online casinos with licenses from the MGA are some of the most common for players from Canada, India, Ireland, New Zealand, and South Africa. It is a license issued by a European Union (EU) member country. That means it falls under strict EU laws covering business / financial, consumer rights, gambling, and privacy online.

The purpose of the MGA license is for cross-border services. This online casino license is issued to the casino’s operating company by the MGA. For example, Genesis Global Limited is the operator for Casino Cruise and holds the license to operate the casino under the MGA framework and according to EU laws. The same applies to LeoVegas Gaming PLC, which is the operator that holds the license for LeoVegas Casino. You will always see the operator information and the license the operator holds on every one of our online casino reviews.

Question: How do I get my money now if an operator / casino under the MGA licensing framework goes bankrupt?

  • Under the MGA licensing, your money is kept in a separate bank account to the casino
  • The casino should keep its platform open so you can make a withdrawal – the separate bank account will fund your withdrawal
  • You can contact the casino’s support services via live chat or email if still open
  • There are player assistant services on the MGA website you can use

MGA Assistance: As soon as an online casino’s operator declares bankruptcy, the MGA will immediately talk to the company auditors, secretary, and management to encourage the casino to payout its members as quickly as possible.

Does this mean my money is safe inside an MGA Online Licensed Online Casino?

Yes, for the most part, but there is also a certain amount of trust involved – the same for all businesses around the world. There are rules put in place by the MGA to help protect your money, and online casino companies should abide by those rules. However, your casino balance is not 100% safe from rogue operators that disregard the rules, which is very rare because punishments are steep. These financial rules are there to protect players playing at MGA casino globally, for example, our readers from Canada, India, Ireland, New Zealand, and South Africa,

Your money is not protected as with a bank account i.e. if someone commits fraud by using the player balances for casino operational purposes (a fraudulent crime), then although this is a crime, the government will not pay your money back. What this means is the only way you can lose your casino balance is if the owners and/or others involved are willing to break the law, risk criminal proceedings, and jail time for fraud.

Under Malta and EU laws, if the operator or any person is found breaking the financial laws related to online gambling, this is an international offence. This is because of frameworks put in place specifically for online gambling and those laws overlap with eCommerce, financial, and consumer rights laws.

2 regulations protect you to a certain extent:

  1. The Gaming Act, the national gaming law of Malta, came into force in a revised form on August 1, 2018.
  2. Gaming Player Protection Regulations issued by Malta Gaming Authority.

The particular points of interest in this document are in PART VI – Rights and Obligations of Players:

  • PART 19: Where a group of players are owed player funds by an operator, articles 2, and 4 to 23 of the Collective Proceedings Act shall apply mutatis mutandis and such players may institute collective proceedings to recover such player funds.
  • PART 20: An operator, and any third party holding player funds for or on behalf of such operator, shall be responsible for safeguarding the player funds in accordance with the Player Protection Regulations, 2018 and any other applicable law.
  • PART VII – Enforcement and Sanctions: Any person guilty of a breach stipulated in the Third Schedule shall, on conviction, be liable to a fine of not less than ten thousand euros (€10,000) and not more than five hundred thousand euro (€500,000) or to imprisonment for a term of not more than five years, or to both such fine and imprisonment:

Your Money is safe with MGA Casinos: In short, there is enough protection written into the MGA licensing framework to ensure that player casino balances are fully protected and treated as separate funds to the casino’s own operating funds. This means player balances are not part of the casino’s cash flow or balance sheet, and so when a casino’s auditors perform acid tests (liquidity tests), if the needs to liquidate or is in debt, your funds have nothing to do with the financial process involved in closing the casinos. All the casino needs to do is pay you back from the separate ‘player balances’ bank account.

Bankrupt Online Casinos Holding a UK Gambling Commission (UKGC) License

Exactly the same principles apply to the UKGC license as with the MGA license. There are laws in place that guarantee players playing at UK online casinos will get their money back if the online casino needs to liquidate or claim for bankruptcy.

Here are the UKGC rules in a bullet list from its player fund protection policy:

  • Casino operators hold the UKGC license for the online casinos
  • It is the responsibility of the casino to keep player funds separate from casino funds
  • Spending player account balances for casino operational purposes or for a loan is illegal
  • Operators must report changes in the player fund account every month
  • Operators must tell players how they plan to pay players back in case of insolvency
  • The casino must warn the UKGC of potential insolvency risks by rating the level of protection of customer funds

More about UKCG rules here: What happens to your money if a gambling business goes bust? For UK casino players, the same principles apply as with the MGA licensing framework. Your funds are not 100% protected, but the UKGC has a framework in place that lessens the chances of a casino going bust and taking your balance with it. There is still a risk of persons working for the operator committing fraud, but the chances are slight. If this does happen, the government or UKGC will not pay your losses back as they would with bank fraud. However, you may be able to claim back from your bank or eWallet if the casino committed fraud.

Online casino bankruptcy
Be sure to always check which license your online casino hold?

Checking the license of an online casino should be the first thing you do before even signing up. A license means the casino has to adhere to rules and regulations issued by a regulatory body. It allows the online casino to legally offer its services to players under the jurisdiction of that licensing body. Therefore, if the casino holds no license or is showing a fake license, stay far away. You’re certainly not protected if an unlicensed casino suddenly goes bankrupt.

However, if the online casino has a valid license from the likes of the UK Gambling Commission, Malta Gaming Authority, the Government of Curacao, or the Gibraltar Regulatory Authority, there is a good chance that you will get your money back in the event it goes bankrupt. To qualify for a license, the casino will have to show that it keeps player funds in segregated bank accounts. Without this, the casino would not get a license in the first place.

Checking the license: If you’re not sure what license your casino has, try checking in the page footer. Most casinos will show the logo of the licensing authority that regulates them. If you cannot find the information there, try reading the terms and conditions. If you’re still struggling to locate any licensing information, try to remove your money and find somewhere else to play. Plus, always check the validity of any license. You can do this by visiting the regulatory bodies website. An example is here at the Malta Gaming Authority.

FAQ – Frequently Asked Questions about Online Casino Bankruptcy

Why is licensing important?

If you can establish that your online casino holds a valid license from a reputable regulatory body, your funds should be protected. Even if an online casino faces financial problems, it cannot use players funds to pay operating costs. As per regulations, players deposits and casino balances are kept in segregated bank accounts and not mixed with operational funds. Once an online casino applies for bankruptcy, administrators will cease all company assets and funds. The administrators then contact players to arrange reimbursement. Players will receive money before that any of the creditors of the online casino.

How do I get my money back if an online casino is bankrupt?

The casino platform will usually stay online, giving you a chance to withdraw. This is especially true if the online casino is part of the Malta Gaming Authority (MGA), the UK Gambling Commission (UKGC), or Gibraltar Gambling License (GGL) licensing. With these licensing authorities, there will be measures in place that kept all the casino’s player balances in a separate bank account. If the casino has not automatically refunded you, then you can contact its live support, email the casino’s support if it’s still operational, or get in touch with the licensing authority.

Which countries benefit from MGA licensing’s financial rules applied to online casinos?

English-speaking countries we cover here on that fall under the protection of casinos licensed by the MGA are Canada, India, Ireland, New Zealand, and South African online casinos.

Do the UKGC & MGA laws guarantee a bankrupt casino will pay my casino balance back?

Yes and no. It rather depends on how you look at it. The rules say that the casino must keep all player balances in a separate account. However, this is arranged by the casino. Now, the casino or operator, may not borrow money from this account (it’s not there for loans). It cannot count this money towards balance sheets or cash flow or any casino operations. That means if the casino closes, your money is ready and waiting to be paid back to you. Yet, if someone in the casino steals this money to commit a crime, the government will not pay you back. That said, you may be able to claim the money back via your financial provider.

Can the licensing authority help me get my money back if a casino is insolvent?

Maybe. You can contact the complaints or player support for the UKGC or MGA. Both authorities will have a pretty good idea of what’s happening with the casino already, as under their respective frameworks rules the operator should already be in contact with the licensing authority.

Who should I contact if my online casino is bankrupt?

  • Contact the operator by phone, email, and/or in writing
  • Contact the MGA if you play from Ireland, Canada, India, South Africa, or New Zealand
  • Contact the UKGC if you play from the United Kingdom

What about bonus balances if the casino closes?

If you have a bonus balance from a welcome deposit match or no deposit bonus, this money is not yet played through. The casino has the right to revoke your bonus money at any time. As such, you cannot claim bonus money as part of your casino balance.

Will I need to provide any documents?

Probably. The regulatory body will need proof of your name, address, date of birth, phone number, username, and email used to create the casino account. They might also ask for screenshots of your casino account and its balance. Once your identity is verified and you have a case to make a claim, the authority will take the next steps in the process to recoup your player funds.

How long will it take to get my money back?

This depends on so many factors. Once a casino files for bankruptcy, administrators will cease assets and funds and perform the necessary audits. If it is determined the casino cannot continue operations, a liquidation process will start. As part of this, players will receive their funds from segregated bank accounts they are kept in.

How safe is my money at a licensed online casino?

If you play at the best online casinos that hold strong licensing from reputable regulatory bodies, it is likely your money is safe no matter what happens. The casino is under obligation to keep your money in separate accounts and it cannot use it for any purpose other than playing casino games or withdrawing back to you. Laws and regulations ensure that your money is safe even if the casino faces financial difficulties.