My comments were for the casual (non-professional) gambler. If you can get qualified as a professional, Schedule C is the right place to report income and expenses. Is you friend going to have another job? Be prepared for an audit!

IMO, the only game that might qualify for a pro gambler is poker. IRS knows all casino games have a negative expectation and if there is no expectation of a profit, it can't be called a business... its a hobby or recreation.

I agree with Jim, someone who knows the tax laws is needed if you're going to go this way. I have so far not found any accountant or lawyer who claims to know how to properly report gambling income [g].

By the way, again for the casual gambler reporting wins on a 1040 and losses on Schedule A, there is no 2% floor to overcome. ALL gambling losses can be deducted dollar for dollar (but not to exceed wins).