Most people seem to be saying you should give him the money, or split it with him 50/50.

Maybe the problem should be clarified? I'm thinking poker... where I buy in for $200, for instance, and have another $800 with which to buy more chips if I bust out. So, how am I supposed to know which $1 is my friend's?

Do you mean a $1 slot machine I guess? And you are specifically saving a specific $1 bill just to play for him? And what if 10 other friends do the same thing? You keep track of the money to see who's $1 is going into the machine? I'd tell my friends just to keep their money... that's more trouble than it's worth. If they want to pool their money with mine, then I'd be willing to do that. But, $1 in vegas doesn't go too far.

Also, even if I did keep up with the dollars, I'd have the overhead of keeping up with their specific dollar, in addition to the overhead of going to Vegas, going to the slot machine, and playing it for them.

Anyway, I'd pool the money, and count my expenses as part of that pool. Unless their money was a significant portion of the overall risk, of course.