[Ed Miller]

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I don't know about Phil Ivey, but Barry Greenstein, Matthew Hilger and Phil Hellmuth have all stated in interviews that I have seen/read that they file a Schedule C for their gambling income.

I think you missed the important sentence in the first paragraph in the decision:

In redetermining respondent's tax deficiency, the Tax Court held that he was in the "trade or business" of gambling, so that no part of his gambling losses was an item of tax preference subjecting him to a minimum tax for 1978. The Court of Appeals affirmed.

The Supreme Court upheld the decision, therefore gambling can be a trade or business.

Self employment taxes would be calculated on the net. In this case, the IRS was not trying to collect SE tax. The goal here was to hit the taxpayer with AMT because of the gambling deductions.

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They're saying it can be a business as long as you don't lose money. That's a big caveat.

Most businesses lose money in their first year. They can deduct their losses. A "professional" gambler can't.

The IRS seems to be saying that it's ok to call yourself a pro-gambler, file a schedule C, pay the 15% SE tax, but don't expect to write off losses when you have a losing year.

IMO that's not a business.

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You're right, it's not. But it's entirely preferable to declaring an $800,000 AGI and then trying to deduct $700,000 in losses on a net $100,000 gambling income.

The tax code really sucks for gamblers who follow the rules. That's why many don't. But the Schedule C route is still superior to the hobby route for many, despite the SE tax you have to pay.