"[1] The parties agreed that Baxter devoted a substantial amount of time to his gambling activity,[1] which was poker.

[2] The preliminary issue presented to the trial court was whether Baxter, as a professional gambler, was engaged in a "trade or business" for federal income tax purposes.

The Nevada judge who heard the case ruled in favor of Baxter, declaring "I find the government's argument to be ludicrous.

the Court finds that capital was not a meterial [sic]-income-producing factor in Baxter's gaming income.

In fact, the Court finds that Baxter's income was derived entirely from his personal services and that the capital he used to finance his poker playing was merely a "tool of the trade."

it was Baxter's extraordinary poker skills which generated his substantial gaming income, not the intrinsic value of the money he bet.

[3] The government threatened to take the case to the United States Supreme Court, but eventually backed down.

The case of Baxter v. United States is currently being cited by opponents of the Unlawful Internet Gambling Enforcement Act (UIGEA).