Definition of chip dumping
Let's state up front that chip dumping is illegal everywhere, in all online gaming rooms and in all casinos. Players who chip dump get banned from casinos and have their money seized in online rooms. The player who is chip dumping willingly gives his money or chips to another player as if it was not planned. If a player premeditates that he is going to lose his stack to his friend, that is chip dumping.
The reasons for the illegality of chip dumping
Chip dumping mainly takes place in online poker rooms. And all rooms explicitly write that this is illegal behaviour. Why is this? Some poker rooms will give bonuses to new players. The bonus will be frozen and cannot be withdrawn until the player has paid X amount of money in commission. This amount is given to attract new players and get them to play. So let's say Player A has €100 (bonus received) frozen in his account. He takes a heads-up table with his friend, Player B, who has an account in good standing with €100 of his own money unfrozen. Player A raises preflop to €99, player B pushes all in, player A folds and player B pockets €99. This is chip dumping. Player B will then be able to withdraw Player A's money as it is now in Player B's hands and will no longer be frozen. Player B can then share this money with Player A after he has cash out.