My understanding is that a bet is the creation of a contract between the player and the casino. The terms of the contract are set by the casino and the player agrees to the contract when they place the bet. The contract is legaly binding, the bet is irrelevant.
The licensing conditions are the only thing that apply to the contract, in this case it would be the Fair and Open condition.
The player places a bet and consents to the contract with the casino. If the casinos deems you to have in some way violated the terms of the contract then they deal with it, confiscate winning, remove bonus, close account, whatever. There is no law saying the casino can't do this.
If the player feels it is unfair then they can complain and express why they think the contract was unfair - the casino evaluates and if they agree with the player then the issue gets resolved and T&C get updated to avoid the same issue happening again.
If the casino disagrees then the player need to submit a complaint through an ADR Alternative Dispute Resolution service - If the ADR agrees with the player then the casino will do whatever the ADR tells them to do as the casino would not be complying with the Fair and Open legislation if they were to refuse to comply with the ADR decision. If the Casino disagrees with a particular ADR repeatedly then they will find a different ADR to work with in future.
Whenever a casino is dealing with a complaint submitted by an ADR then they have to inform the UKGC - The UGKC will be informed of any outcome and only in the most severe cases actually do anything. They might instruct the casino to make the terms of its contracts more fair and open.
For the purposes of tax and law the bet was £1. The winnings from that bet are only ever realised once you hit collect but never before.
There is no tax on bets placed, only on profits. Profit is not total bets placed minus players winnings, it is players deposits/drop minus the players winnings.
There is no law concerning this bet. The law doesn't give a shit about bets. The law only cares about the contract made with the casino when you placed the bet - the contract is legally binding and that's it - contracts are often open to interpretation, unforeseen circumstance, one party might view it one way, another party another way - hence the need for ADR to step in sort it out with possible amendments to the contract to make things clearer, to make sure it is Fair and Open, overseen by the UKGC to hand out punishments to those operators whose contracts give rise to repeated issues regarding Fair and Open policy.
Anyway, I have to familiarise myself for work with the UK gambling act dating back to 1960 something over the coming weeks. If I find anything that contradicts my understanding then I will add to this discussion I am having with myself.
It's possible I am making an unnecessary distinction between the bet and the contract.