Personally, I favor the calling him out approach. Based on what you wrote of his past behavior, it does not seem to me that there will be a mutually satisfactory resolution to this conflict. It's unlikely he's going to stop being a tool, and you should rightfully not have to take it. Therefore, counselling and "I feel" statements are pointless wastes of time, with no disrespect to the others in this thread who do not share my opinion.
Bear in mind, with all this armchair psychologizing, ain't none of us have a full picture of what the OP's problem is. We don't know how long these 2 have been "friends" of if they really are friends vs. aquaintances who've gamed together a lot.
What I do know is lacking extra information, Systole's advice has a 10% chance of actually rescuing the problem and maintaining the relationship in a new corrected state. The other 90% yields the blow-up and loss of the jerky player or group.
Umbran's approach, regardless of any other information about the ACTUAL relationship of the OP and the jerk, yields a 40-60% chance of repairing the problem and keeping everybody together.
The gist is, the direct confrontation is most likely going to lead to a negative reaction and somebody will leave the group.
Umbran's approach is very unlikely to cause bad feelings between anybody (yes it's possible somebody could still react irrationally and angrily, but it'll be all on that person).
There's no need for direct confrontation, when a more diplomatic solution can be tried first.
Consider it this way, imagine your handling of this situation will be subject to a review by a higher authority. Sure, they might agree the other party is a problem person and behaved badly. But they will also frown and score you much lower when there are points in your interaction where you chose to instigate and escalate a more negative response in the other party.
I realize, there ain't no SocialPolice to enforce how you deal with people. But the world might be a bit better if folks did some introspection, and even better advance analysis of how things could play out and choose the nicer path.
Nobody should have to play with or put up with jerks.
But the best response in dealing with them is to be diplomatic, not compounding it with poor communication and bad behavior.