Gambling Addiction Countermeasures Basic Plan published

Japan's National Tax College, part of the National Tax Agency, published a research paper on the taxation of horse racing payouts in June 2025, examining how betting income is classified and how the cost of buying tickets is treated. The paper, by researcher Masakatsu Ueda, appears in the college's journal volume 114 and states that its contents are the author's personal views, not the official position of the college, the National Tax Agency or the National Tax Tribunal¹.

The paper sets out the payout rates JRA applies to different bet types. The payout pool is 70 to 80 percent of sales, distributed among winning tickets under the pari-mutuel method. The rates are 80.0 percent for win and place, 77.5 percent for bracket quinella, quinella and wide, 75.0 percent for exacta and trio, 72.5 percent for trifecta, and 70.0 percent for WIN5¹.

The paper argues that because of these rates, a loss of 20 to 30 percent arises at the moment a ticket is bought, and that betting as a whole is an activity that destroys principal. Applying the law of large numbers, it says continued betting converges on that 20 to 30 percent loss, so such income normally cannot be said to be for profit, and normally falls under occasional income (一時所得) rather than miscellaneous income (雑所得)¹.

The paper says that where a bettor has know-how that can select tickets with an expected return above 100 percent, profit-seeking and continuity can both be satisfied and the income becomes miscellaneous income.

On costs, the paper says that where no such know-how exists, only the amount spent on winning tickets can be deducted as directly incurred spending. It suggests that a relaxed treatment, for example allowing losing tickets to be counted for internet accounts with verified identity, could be considered, and that such a measure might also support identity checks and purchase record keeping relevant to gambling addiction¹.

What it means for players

The paper is a research article, not a change in the rules. It describes how the tax authority and courts have treated horse racing payouts, and it does not alter what bettors owe. For anyone betting on Japanese racing, the practical point it repeats is that payouts are normally taxed as occasional income, where only the cost of winning tickets is deducted, unless the bettor can show a documented method that produces returns above 100 percent.

What happens next

The paper proposes that special measures be considered, including counting losing tickets as directly incurred spending for purchases made through internet accounts with proper identity verification, and setting the scope of that treatment at one year. It says no such measure has been decided. The paper is dated June 2025 and carries a disclaimer that it represents the author's personal views¹.