Regardless the nature of Bitcoin payments as a regulated operator we are obliged to ID verification, KYC and AML (anti-money laundering) procedures by the regulator at certain withdrawal levels.
We have stated this clearly in our Terms & Conditions page available here
https://sportsbet.io/about/general-terms-and-conditions3.3.3. Sportsbet reserve the right to carry out additional KYC verification procedures for any withdrawals exceeding the equivalent of 10 Bitcoins or 2300 which ever is lower, and further reserves the right to carry out such verification procedures in case of smaller withdrawals, as demanded by our gaming license. Account Holders who wish to recover funds held in a closed, locked or excluded account, are advised to contact Customer Support.
Whatever shit is there in your clause, i am adamant that one should never ask for KYC or ID verification from the players who play via bitcoin.
The theme of bitcoin is P2P and anonymity.
--------------------------------------------------------------------------
I suggest you to reimburse the players money with some reward as you have cost him tension and a waste of time.I even suggest you to remove this ID verification against your clause, else true bitcoiners will never play at your site.