On May 23, the Osaka District Court ruled that if a person repeatedly buys a large amount of racing tickets, his or her losing tickets should be regarded as "necessary expenses." This is the first ruling of its kind. The taxation authorities should rethink its taxation policy for income generated through winning racing tickets.
In the trial, a 39-year-old man was charged with violating the Income Tax Law by evading about ¥570 million in income tax over a period of three years. He had made earnings by repeatedly buying racing tickets in large amounts. He was found guilty of evading the tax. But if the court had not decided that his losing tickets constituted necessary expenses, he would have been forced to pay much more income tax than his actual income.
The man automatically purchased betting tickets for most of the races sponsored by the Japan Racing Association held at all the racing tracks in Japan by using computer software for race predictions, into which he had incorporated his own calculation formula. He opened a bank account specially for paying for ticket purchases and receiving refunds for winning tickets.