Q: You are given a passage. You need to construct a question about the information present in the passage. Construct a question in such a way that (i) it is unambiguous, (ii) its answer is the whole paragraph. Avoid creating questions that can be answered correctly without actually understanding the paragraph.
I agree with the answers provided above, but with one caveat. Illegal business activities are not allowed to deduct business expenses. So reporting the illegal gambling winnings on a Schedule C would mean that no expenses can be claimed. This would subject the gross winnings (from illegal gambling) to Self-Employment Taxes. This will increase your taxes, and not provide you with the benefit of deductible expenses.

So, I would list this income as gambling winnings, with losses reported on Schedule A as an itemized deduction.

Hope this helps.

William
A:
Should a professional gambler who file Income Tax as a gambler, report losses & wins from online gambling?