No, he isn't necessarily spiritually hopeless—but he is spiritually blind, because he doesn't understand his own need of Christ and the hope he can have of eternal life when he dies.
Nor does he understand what the Bible says about the terrible reality of hell. Let me be as clear as possible: There will be no parties in hell. In fact, the Bible indicates the opposite, for hell will be a place of absolute and total loneliness. In hell, a person will be cut off from others and from God forever. Hell, Jesus taught, will be a place of "outer darkness: there shall be weeping and gnashing of teeth" (Matthew 25:30, KJV). Why would anyone want to go there?
The good news is that we don't have to go there! The reason is because Jesus Christ died on the cross to take away our sins, and now He offers us salvation as a free gift. The Bible says, "The reason the Son of God appeared was to destroy the devil's work" (1 John 3:8).
Pray for your friend, that he will face his own need of God and open his heart and life to Jesus Christ. Ask God also to give you opportunities to share Christ's love with him. Right now, he's living in a fantasy world, and when he dies he will realize it. But tragically, then it will be too late.