When preparing the individual income tax return for an individual who is self-employed as a professional gambler, report their winnings, losses, and expenses on Schedule C.
If you're uncertain as to whether their gambling activity should be considered a hobby or if it qualifies them to be considered a professional gambler, your due diligence will include asking them additional questions, as the determination greatly affects how the return is prepared.
For example, a professional gambler will maintain detailed records of all gambling activities, including dates, locations, amounts wagered, winnings, and losses. A professional gambler should have receipts, tickets, and other documentation relevant to their gambling business.
Our knowledgebase article titled Hobby Income vs Business Income can assist you in determining whether or not the taxpayer's gambling activity qualifies them to be a professional gambler.
Deducting losses and expenses
For tax years prior to 2026, here's how to prepare Schedule C for a professional gambler:
- Gross receipts equals winnings minus losses, but not less than zero.
- Ordinary and necessary expenses, such as meals, travel, and lodging, can be deducted in full. "Ordinary" implies not lavish or extravagant, and "necessary" implies the expenses were incurred as a result of the gambling activity.
The passage of the One Big Beautiful Bill Act of 2025 changed how gambling losses and deductions are reported. Unless changed by subsequent legislation, for tax years 2026 and beyond here's how to prepare Schedule C for a professional gambler:
- Gross receipts equals winnings.
- The total of losses and deductions is equal to the lesser of 90% of gambling winnings or the total of losses and ordinary and necessary expenses.
Additional Information:
2025 One Big Beautiful Bill Act - New Limit for Claiming Gambling Losses