Thank you! 

Thanks again. What business code would you use for Schedule C? 

999999 Other Unclassified

Ok Thank you. What about the Expense /  Entry Fee ( Money Spent) ? 

In making the distinction between a hobby or business activity, take into account all facts and circumstances with respect to the activity. A hobby activity is done mainly for recreation or pleasure. No one factor alone is decisive. You must generally consider these factors in determining whether an activity is a business engaged in making a profit:

• Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
• Whether the time and effort you put into the activity indicate you intend to make it profitable.
• Whether you depend on income from the activity for your livelihood.
• Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
• Whether you change your methods of operation in an attempt to improve profitability.
• Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
• Whether you were successful in making a profit in similar activities in the past.
• Whether the activity makes a profit in some years and how much profit it makes.
• Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

If your client can satisfy the above requirement to consider it a business then open a schedule C and take expenses not to exceed the income.

If your client receives income for an activity that is a hobby, the expenses they pay for the activity are miscellaneous itemized deductions and can no longer be deducted. The taxpayer must still report the income they receive on Schedule 1, Form 1040, line 21.

Actually client satisfies all the above and wants to take a loss. I have explained the potential consequences of doing so. I'm just trying to figure out how to classify the "entry fees"  that will be more than the income if we proceed. 

Thank you so much for all of the above information. 

Suggest you file a Form 8275 to protect yourself

https://www.irs.gov/pub/irs-pdf/i8275.pdf

l would not recommend calling this activity a business.  As a sports better (and looser) on FanDuel, the win/loss spreads are so wide (about 9% house advantage), it makes it almost impossible to be profitable in the long run.  Accordingly, if there's no reasonable expectation for profit (9% against you), it's not a business but a hobby.  That's not to say FanDuel is doing anything wrong, it's just another form of casino gaming and it's very fun.  Tread cautiously my young Jedi.   

Thank you. Talked to client and took your advice!