playing competitive Chess is a privilege, not a right like freedom. I'm totally fine with 0-tolerance, because the only penalty is you can't play in competitions. If you want to play chess with your mates, no one is going to stop you.
It's the dude's livelihood, though. There are laws about taking someone's tools if they owe a debt for similar reasons. I think it is a very similar thing.
I think there's little dispute that he's a very good chess player. He could perhaps earn a modest living as a chess tutor. That should be good enough, he's not entitled to riches.