Japan’s four public races: how the state runs the only legal betting

A crime with four exceptions

Chapter 23 of Japan’s Penal Code, in force since 1907, punishes gambling and the running of a gambling place. It has never been repealed, and it is the reason there is no Japanese Las Vegas: until the integrated-resort law of 2018, no casino could legally exist. What the country built instead, starting in the 1920s and finishing in the early 1950s, was a set of exceptions. Each is a separate Act that lets a named public body sell betting tickets on one kind of race, and each was written to raise money, not to entertain.

The oldest exception is horse racing. Racing itself arrived with the foreign settlements in the 1860s, but selling tickets on it was illegal until the Horse Racing Law of 1923 permitted a limited form of pari-mutuel betting at licensed courses. The law was rewritten after the war, in 1948, and in 1954 the Japan Racing Association was created to run the national circuit, with a separate system of local-government racing alongside it. That two-tier shape, national and local, is repeated in the other three sports.

The three younger sports were invented for the purpose. Keirin was written into law in 1948 as a way for cities to fund post-war reconstruction and the bicycle industry, and the first meeting ran at Kokura in November of that year. Auto race, motorcycle speedway on a paved oval, followed under a 1950 Act, with its first meeting at Funabashi. Motorboat racing came last, under a 1951 Act, with racing from 1952 and a foundation attached to it that still channels the proceeds into shipbuilding and social causes. None of the three existed as a sport before its Act; the betting product came first and the sport was designed to carry it.

One system: pari-mutuel

All four sports settle bets the same way, and it is not the way a casino does. There is no house odds line and no fixed price. Every ticket sold on a race goes into a pool; when the race is run, the operator deducts the share the law allows, and the remainder is divided among the winning tickets in proportion to their stakes. The odds you see on the board before the race are simply the current state of the pool, and they move until the windows close. Bet on a favourite and you are betting with the crowd, and the crowd’s money is what you will be paid from.

The consequence is that the operator has no interest in who wins. A bookmaker or a casino carries risk on the outcome; a pari-mutuel operator carries none, because its share is taken off the top before anything is paid. Its only variable is turnover. That is why the public races advertise, build online platforms and run night meetings: the take is a fixed fraction of whatever is bet, so the business is entirely a question of how much is bet.

The horse-racing figure is the statutory one the JRA publishes; the other three are the commonly cited rates for the standard bet types, and some exotic bets return less. All four are set by law, not by the track.

Read those percentages as a house edge and they are startling. A game that returns 75% keeps 25 yen of every hundred wagered, on average, before a single race is run. Roulette on a single-zero wheel keeps 2.7. The originals on this site, priced from their own tables, keep between about 1% and 3.5%. The public races are among the most expensive bets available anywhere, and they are also, by a wide margin, the most popular legal bets in Japan. The two facts are connected: the take is high because the law says it must fund something, and it is tolerated because for most of a century there was nothing else.

Where the money goes

The point of the 25% was never the operator. Under the Horse Racing Act the JRA pays a fixed share of sales to the national treasury, and what remains after the cost of running the sport is paid over as well; local racing funds prefectures and cities directly. Keirin and auto race were built to fund municipal reconstruction and the machine industries; motorboat racing funds a foundation whose grants reach shipbuilding, welfare and overseas aid. The bettor is, in effect, paying a voluntary tax with a race attached, and the state is honest about it: the laws say what the money is for.

The scale makes the arrangement matter. In 2024 the JRA reported total sales of about ¥3.36 trillion, its fifth straight year above three trillion, and secondary estimates put the four sports together at roughly ¥8.5 trillion, with keirin and motorboat racing growing fastest. Most of that is now bet online rather than at the track, which is the same shift that moved pachinko’s three-shop system from the parlour floor into a legal grey zone: the product that was designed around a physical venue no longer needs one.

What a fixed payout buys, and what it does not

There is something admirable in a payout rate written into a statute. A bettor at a Japanese racecourse knows, before the first race, exactly what fraction of the pool will come back, and no track can quietly change it. That is a stronger promise than most casinos make, and it is the promise this Journal tries to make in a different way: every return figure printed here is read from the engine that pays it, and the paytables are published as open data so the reading can be repeated.

What the statute does not do is make the bet fair in the sense the Journal uses the word. Pari-mutuel odds are not a probability; they are a poll of the crowd, and a favourite can be over-bet or under-bet by people who know less than you or more. There is no committed randomness to verify, because the outcome is a race, and there is no way to check after the fact that the pool was divided as the law required except to trust the operator’s arithmetic. The public races are transparent about their price and opaque about everything else. A provably fair game is the reverse: its price is a house edge you can compute, and its outcome is a number you can recompute. Neither model is a free bet. They are different answers to the question of what a bettor is allowed to know.

The lottery is the third answer, and the takarakuji article gives its number: by law less than half of sales comes back as prizes. Put the three side by side, lottery under 50%, public races around 75%, the originals here between 96.5% and 99%, and the history of legal gambling in Japan reads as a history of what the state charged for permission.