A Japanese man is challenging tax authorities in Tokyo’s district court to recognise his gambling losses as a business expense.

The civil servant won ¥7.84 billion (€55.5m) and lost ¥7.27 billion (€51.4m) gambling on horse-racing over a six year period. On tax forms he declared his net profit as ‘miscellaneous income’ and claimed that money spent on lost bets is a legitimate cost of business.

The local tax authority disagreed however, and refused to regard the losses as deductible expenses, judging that he failed to declare over ¥400 million. They will only recognise money spent on winning tickets as legitimate expenses.

The man claimed that if the tax bureau’s judgement stood and losses were taxed, then he would pay more in tax than he actually earned from gambling.

In a similar case, a court in Osaka last year decided that money spent on failed bets could be considered a legitimate expense when a person gambles for a living.

Gambling in Japan is heavily restricted, mostly to sporting events, of which horse-racing is the most popular. The Japan Racing Association reported ticket sales of ¥2.4 trillion (€16.9b) in 2013.