In the 1986 case Commissioner of Internal Revenue v. Groetzinger, the United States Supreme Court ruled on whether a gambler's activities could be considered a trade or business for tax purposes. The court held that if one's gambling activity is pursued full time, in good faith, and with regularity to the production of income for livelihood, then it constitutes as a trade or business subject to taxation under section 162(a) of the Internal Revenue Code. Robert P. Groetzinger had spent 60-80 hours per week at dog races and made over $70k but also lost more than he won overall during his taxable year in question (1978). He sought to deduct his losses from his winnings as costs incurred "in carrying on any trade or business." The IRS disallowed this deduction which led him to sue them leading up until this case where it was decided that indeed Mr.Groetzinger’s gambling did constitute as “carrying on a trade or business” due its frequency and intentionality.

In the dissenting opinion for Commissioner of Internal Revenue v. Groetzinger, Justice White argued that gambling should not be considered a trade or business under Section 162(a) of the Internal Revenue Code. He contended that Congress did not intend to allow deductions for expenses incurred in illegal activities when it enacted this provision. Furthermore, he believed that allowing such deductions would undermine public policy by encouraging unlawful behavior and could potentially lead to absurd results if other criminals sought similar tax benefits. He also disagreed with the majority's reliance on subjective factors like regularity and continuity to determine whether an activity is a trade or business, arguing instead for an objective test based on societal norms and legal status.