This is a good approach.
Lately, I just switch the chat off because all I see is a bunch of spam or posts in exotic languages.
I don't think so, people can make long or short chat as long as they don't spam the chat room with nonsense stuffs with the same reply patterns from spamming bots.
Should be a moderator there and use the chat for short talks or promotions.
Every users should be banned, really? Why did you think so?
Chatroom has its own functions, and is fundamental thing of gaming/ gambling sites. What we actually need is new rules for chatroom.
Every abuser should be banned.