Supreme Court: Money Lost In Horse Betting Considered Expense

A new rule by the Supreme Court states that for tax calculation, money that is lost during horse betting should be taken as expenses that are deducted from the winnings. The Third Petty Bench of the court had Kiyoko Okabe on board. He disregarded the claims of the prosecution that an old man (Osaka Prefecture) managed to evade taxes worth ¥570 million when he was unable to show earnings from horse betting.

Money that is lost during horse betting should be taken as expenses

The ruling was passed on Tuesday and upholds lower courts’ decisions which led to the man being sentenced to prison for 2 months in addition to getting a suspension for 2 years.


Several million yen bet on horse racing

As per the ruling of the top court, several million yen were bet by the man every day on online horse races for many years all over Japan with the use of specialized software. From 2007 to 2009, approximately ¥2.87 billion worth bets were made by him and his total earnings were around ¥3.01 billion.

A comprehensive betting approach was adopted by him to earn a decent amount of money as winnings over a period of time with little regard to the amount earned from individual bets, reported the Supreme Court.


Supreme Court calls horse betting winnings ‘miscellaneous income’

The Supreme Court ruling stated that a ‘miscellaneous income’ tag should be given to the winnings. It did not resonate with calling it temporary earnings, as claimed by the prosecution. Tax-deductible expenditures of a larger amount are accepted by tax authorities with respect to miscellaneous income as compared to temporary income.

According to the Supreme Court, the almost arbitrary bets should ideally be seen as part of the overall economic activity when it explained the reason behind its decision.