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substantial, was more consistent with a hobby than a trade or
business. He argues that he spent a significant amount of time
studying “cycles” of video poker machines, reading publications
relating to video poker, and practicing on his own video poker
machine in order to “achieve greater success while gambling.”
These efforts would be consistent with a desire to win money.
However, the desire to win money is consistent with gambling
purely for its entertainment or recreational aspects, and we find
that petitioner gambled primarily for this reason rather than
primarily for profit.
Finally, we note that petitioner is semiretired and in 1996
received a substantial amount of income: Excluding his business
loss of $3,415, he received over $40,000 in interest, individual
retirement account distributions, and Social Security benefits.
This income and petitioner’s semiretired status indicate that he
was not relying upon gambling for his livelihood.
In his trial briefs, petitioner discusses the material
participation requirements of section 469 and the regulations
thereunder. First, petitioner points to the references in these
provisions to 500 hours of participation in an activity, arguing
that he was in the trade or business of gambling because he
devoted nearly twice that amount of time. See, e.g., sec. 1.469-
5T(a)(1), Temporary Income Tax Regs., 53 Fed. Reg. 5725 (Feb. 25,
1988). These provisions govern whether a trade or business is
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