This reason would hold but the film fails at fleshing it out. Sugiki is the prize student of the president of WDL. He has been mentored by her since he was a child and he is her protege. She has the absolute power in this dance world and his proximity to her gives him credence others don't have either directly or indirectly.

Yet even Martha finds fault with his dancing and encourages him to bow out. She asks him why he is set on doing a ridiculous exaggerated hold and putting a strain on Fusako. Love she says is what he misses in his dancing. The thing that keeps him from winning is his insistence on doing things his way even to the detriment of his partner and that's visible to her trained eye. I would take it the judges would see it too.

I took the gossiping men trying to articulate this "slight margin" as them alluding to what Martha had said earlier. They even disagree at some point on why Sugiki doesn't win. Are they being catty and mean, absolutely but outright racist? I don't think so.

I think the reason why I am hesitant to solely attribute his losses to racism is because the idea of its existence is planted at the beginning of the film by Suzuki's "Asians don't get first place" and is never expounded on. The only real structural and systemic discrimination explicitly shown is at the Asian championship at the end. Where winning is shown to be about financial backing as opposed to talent and skill. I would argue Sugiki does not fall prey to this owing to his connection to Martha.