Can gambling be considered a business (Schedule C) if I have a systematic approach and work on it consistently?

14 This is actually a pretty complex question! The IRS doesn't automatically disqualify gambling from being a business, but they scrutinize these claims very carefully. There's a "hobby loss rule" they use to determine if an activity is a legitimate business or just a hobby. For gambling to qualify as a business, you generally need to show you're engaging in the activity with continuity, regularity, and with the primary purpose of making a profit (not just for recreation). Some factors the IRS considers include: whether you conduct the activity in a businesslike manner, your expertise, time and effort spent, history of income/losses, and your financial status. The fact that you keep detailed records, dedicate significant time, and rely on it as your primary income source are all positive factors. However, courts have historically been skeptical of gambling as a business. One key test is whether your approach has an "expectation of profit" beyond mere chance.

7 I was in almost exactly the same position as you last year with my poker career. I was struggling with how to properly file my taxes given my situation. After browsing Reddit threads for hours and getting conflicting advice, I finally used https://taxr.ai to analyze my specific situation and get clarity. I uploaded all my documentation (record keeping, profit/loss statements, time logs) and the AI analyzed whether my poker playing would likely qualify as a business based on the 9 factors from the IRS. It showed me exactly how my case compared to previous IRS rulings and court cases on professional gamblers. It was much more helpful than generic tax advice because it focused specifically on my situation.

18 Just wanted to follow up! I tried taxr.ai after seeing this comment and it was incredibly helpful. I uploaded my gambling records and documentation, and it gave me a detailed analysis of my situation. The AI walked me through each of the factors the IRS considers and showed me where my case was strong and where it was weak. Based on the analysis, I learned that my record-keeping was good but I needed to document my "businesslike approach" better. I've now created a formal business plan for my gambling activities and am tracking my time more systematically. The platform showed me examples of how professional gamblers have successfully argued their case with the IRS, which was super valuable context. Definitely worth checking out if you're in this situation!

12 I went through a long fight with the IRS over my gambling business classification and what finally helped was getting through to an actual IRS agent who specialized in Schedule C businesses. I spent WEEKS trying to get someone knowledgeable on the phone. If you're serious about classifying your gambling as a business, I'd highly recommend using https://claimyr.com to actually speak with an IRS agent about your specific situation before filing. They got me connected to an IRS agent in under 20 minutes when I'd been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The advice I got from the agent was much more specific than what my CPA told me, and they explained exactly what documentation I'd need if I were audited. They confirmed that yes, gambling can be a business, but you need to prove you're approaching it professionally.

22 Just wanted to update on my experience - I was the skeptic above, but I decided to try Claimyr out of desperation after spending another 2 hours on hold with the IRS yesterday. Holy crap, it actually worked! Got connected to an agent in about 15 minutes. The agent I spoke with was super helpful regarding my poker income. She explained that they look for a "businesslike approach" and said my situation (25+ hours weekly, tracking systems, profit three years running) would likely qualify as a business. She recommended I document my intent to make profit, maintain separate gambling bank accounts, and create a formal business plan to strengthen my case if audited. She actually directed me to an IRS memorandum I hadn't found in my research that specifically addresses poker players filing as professionals. This was EXACTLY the guidance I needed before filing my taxes. No more conflicting advice from random internet strangers!

9 One thing to consider is state taxes too. I'm a semi-pro blackjack player and while I was able to successfully file as a business on my federal return, my state (Pennsylvania) has different rules and doesn't recognize gambling as a legitimate business no matter how professionally you approach it.

16 Have you considered forming an LLC for your gambling activities? That's what I did for my poker career. It adds another layer of legitimacy to your claim that it's a business, plus gives you some liability protection.

The IRS uses a 9-factor test to determine if an activity is a business or hobby, and your situation actually looks pretty strong for business classification. Key factors in your favor: you're profitable, spend significant time (30-40 hours/week), keep detailed records, and rely on it as your primary income source. However, be aware that if you file Schedule C, you'll owe self-employment tax (~15.3%) on your net gambling income, which hobby gamblers don't pay. The trade-off is you can deduct ALL ordinary business expenses (travel, equipment, subscriptions, etc.) rather than just losses up to winnings. I'd strongly recommend consulting with a tax professional who has experience with professional gamblers before making this decision. The IRS does scrutinize these claims heavily, and you want to make sure you have solid documentation of your businesslike approach and profit motive if you're ever audited.

Based on the discussion here, it seems like there's a lot of nuance to this decision. I'm a tax preparer and I've seen several clients in similar situations. One thing that hasn't been mentioned yet is the audit risk factor - the IRS does flag Schedule C gambling businesses more frequently for examination. That said, if you have the documentation and can demonstrate all 9 factors of the business test, it's absolutely legitimate. The key is being able to prove your profit motive and systematic approach. I'd suggest keeping a detailed log not just of your wins/losses, but also your decision-making process, strategy adjustments, and time spent on research/analysis. Also worth noting: if you do get audited and they reclassify it as a hobby, you'd owe back taxes plus penalties and interest on the self-employment tax you didn't pay. So make sure you're confident in your position before filing as a business. A consultation with a CPA who specializes in this area would be money well spent.

This is a fascinating discussion! I've been following professional poker for years as a hobby, and the tax implications have always intrigued me. One thing I'm curious about - for those who have successfully filed as businesses, how do you handle the psychological/emotional aspect that the IRS sometimes considers? I've read that they look at whether you derive personal pleasure from the activity as a factor in the business vs. hobby determination. It seems like with gambling, there's always going to be some element of enjoyment involved, even if you're approaching it systematically. How do you document that your primary motive is profit rather than recreation? Do you need to somehow prove you don't enjoy what you're doing, or is it more about demonstrating that profit is the dominant motive despite any incidental enjoyment? Also, has anyone dealt with the question of how "games of chance" vs "games of skill" affects the business classification? I imagine poker has a stronger case than something like slot machines, but I'm wondering if the IRS makes those distinctions when evaluating these cases.