A client took a hundred grand from a small group of friends and gambled with it, with no stipulation(s) of any agreement, in writing or implied, nor is there any indication from what you mentioned that this was "business". Evidently, this client took on a hundred grand worth of somebody's willingness to risk a lot of cold hard cash, and of all things, literally roll the dice.
I'm not a tax specialist, not even close. So I wouldn't advise you in that regard. But, unless this client of yours is a professional, registered bookmaker, he's in what's called a "mutual speculation ," not a partnership in any regard.
In addition, although this may not be a casual relationship by your standards and mine, it happens frequently by people with the money and the lifestyle to do so. In fact, people with means, get into this kind of speculation all the time and consider the money they make, or not, as pocket cash. Kind of like - easy come, easy go. Accounting and recordkeeping for the activity that I just mentioned, is like going on vacation and keeping record of the bait lost Vs fish caught.
I also want to qualify my remarks with - I am not a practicing attorney, so don't take my comments here as legal advice.
In the end, this client is simply making a buck, nothing more, nothing less - UNLESS there is a stipulated agreement, stated or implied among the parties involved.
Now if all involved want to report their winnings for tax purposes, that's something that a tax specialist can deal with.
Just as a side note - In some circles, getting into that kind of business, and blowing a hundred grand, can end up with a trip to the nearest landfill. Just saying.
