Professional vs. recreational gambler

The Supreme Court set it in Commissioner v. Groetzinger (1987): gambling is a business if you pursue it "full time, in good faith, and with regularity, to the production of income for a livelihood," and not as a hobby.

Frequent play isn't enough. Winning isn't required either. The question is whether gambling is how you make your living, run like a business, with records to show it.

Winnings go on Schedule 1 as other income. Losses only count if you itemize on Schedule A, at 90% and capped at winnings. No self-employment tax.

Winnings and losses go on Schedule C as a business. You can deduct gambling-related expenses such as travel and data subscriptions without itemizing, but they count as wagering losses: 90% of losses plus expenses, capped at winnings. You can't show a net loss.

The cost is self-employment tax on your net profit, on top of income tax.

Professional status mainly helps someone who can't itemize, because it gets losses deducted without Schedule A. It costs self-employment tax on any profit and invites scrutiny. Claiming it without a business-like operation behind it is a common audit loser. Talk to a tax professional before filing this way.