Even if a gambler somehow committed a mistake during their sessions or it is something wrong with the information they provided during the KYC process, they should be given the chance to get their initial deposit back after they have proven their identity, at least; followed with a permanent ban from the specific casino, to avoid future problems. 
Giving the user a second chance or allowing him to withdraw his initial deposit depends on the seriousness of the mistake he committed and whether he did it in bad faith or not. If the user, knowingly, breaches the casino's rules to get some advantage over it then, imo, he doesn't deserve a second chance and his balance should be seized. Otherwise, if the abuser knows he will be able to withdraw his money then he will simply create a new account and try to cheat again.