Firstly, confiscation of funds is illegal (unless it is bonus money from the casino). Secondly, I think this issue is resolved through the support service. And it seems to me that the casino itself initiates the solution of this issue through a request of KYC procedure. One IP address for an entire location is a known problem and casinos do not want to reduce the number of their clients because of this. I think this issue is easily resolved (especially if you are not a bonus hunter or something like that).
Saying confiscating of funds is illegal may not be completely true because some casinos would have stated it clearly in their terms that in situations where they find out that a certain person has got too accounts probably traced to their IP or the identity in Case where KYC is done, such account will be faced with the consequence of confiscation even with funds in them, so such casinos who's got such policy will not see or bear such as illegal but if this isn't the case, then considerations could be made on a different terms.
Legally speaking, Casino is not allowed to confiscate the deposit of the user. They are only allowed to confiscate the profit but the deposit should be refunded. The ToS of the casino will not govern over the law of the country which they are under jurisdiction.
Unless the source of funds is proven from illegal such as money laundering. That’s the only time casino is allowed to confiscate even the deposit.