W2G

How do you know it is horribly wrong?  Are you sure he didn't dump $417,201 in to get those winnings?  

That is what he "won." The W2G doesn't report what he spent.

Unfortunately, from what you describe, the W-2G is "horribly correct".

Gambling addiction is not a new issue.  Online sports betting is just a new place to see it.  Same story as people who put $450,000 into slot machines and get back "winnings" of $400,000.  That might involve 50 trips to a casino, with $2,000 rolled over 4 or 5 times.  At least they comp you free meals, at that level. Online gambling, you pay for your own food.  

A key difference between sports betting and playing slot machines is that you have a better chance of claiming "professional gambler" status, and putting the winnings and losses on a Schedule C.  There is a degree of skill involved, not just luck.  It would be helpful if the bottom line turned out to be a profit (without cheating).  But professional gamblers need to keep good records, just like any other business.  Unlikely your client has done that.