The Money Side of Racing

Let’s talk about the money side of horse racing. Many of you already know this business fairly well, so what follows will read like Racing: A Beginner’s Guide. For those who don’t, let me outline some of the basics.

Race tracks make money when people bet on horses, naturally, and they offer purses to attract trainers and owners to run their horses there, since tracks do not own any horses of their own. The word “purse” comes from the olden days in Europe, when people ran their horses in match races and the money for the winner was put in an actual purse that hung from a hook at the finish line. Today, to encourage trainers to keep horses on the grounds, the track gives them use of stalls to stable without cost and allows them to use the track free of charge to train.

Owners pay trainers to feed, care for, and train their horses. This fee can range from $50 to $150 per day, depending on the trainer and the amount of the purses at each track. The owners also pay for vet bills, including medication on race day, and for services when caring for other ailments that horses are subject to. Owners also pay for shoeing, when needed, usually every month or so, depending on the horse. The shoeing fee is usually around $150.

Trainers lay out money for other training techniques, like swimming a horse or using a jockey to ride the horse in the morning when it trains. In the upper levels of training, the use of hyperbaric chambers to aid in the horse’s recovery is also employed. This cost is generally negotiated between the owner and the trainer.

Horses entered in claiming races, and some other lower level races, can enter these races with no cost. Tracks keep these races free of entry fees in order to attract horses to run, so that the tracks can then make money from people betting on them. Upper level Stakes races, which offer the biggest purses, require owners to pay entry fees, sometimes very steep ones: as much as $30,000 for the Kentucky Derby and a staggering $1 million for a shot at the world’s richest race, the Pegasus Cup, and its purse of $12 million.

Racetracks that are still single entities – in other words, do not have casinos aligned with them – also charge admission (which, again, varies depending on the track, but is usually around $5), and all tracks make money off of concessions, advertisements, programs and souvenirs. For example, Del Mar and Saratoga charge admission, as does Churchill Downs, Belmont, and Keeneland. The latter three tracks charge a higher admission fee, of course, on big race days, especially Triple Crown races. Some others also do the same on their big racing day. Saratoga’s big day is the Travers Stakes; this year, close to 50,000 showed up and paid $15 just for entry into the facility, and others paid a lot more for grandstand seats and box seats. On Kentucky Derby day, it costs $60 just to get into the Churchill Downs infield; seats range in price from hundreds of dollars for grandstand seats to thousands to sit in the boxes to tens of thousands for the executive suites. With over 150,000 attending the Derby – plus revenue from sales of alcohol and other concessions, and the track’s cut of the wagering – you can imagine the amount that Churchill makes on that day.

Racinos – race tracks with casinos attached – on the other hand, usually don’t charge admission. They instead make their money by getting a percentage of the money wagered in the casino, as well as their standard percentage of the amount bet on the races themselves. The track’s take from casino wagering is regulated by each individual state and varies widely. This money is used to increase the purses offered by each track and has been credited with marked increases in the amount horses run for at such tracks. Race track improvements for bettors also comes out of that money, and it consequently has led to new stalls for horsemen and better living quarters for the people who work on the backside.

When a horse wins a race, the advertised purse is distributed, usually with 60% going to the winner, 20% to the runner-up, 10% to the third-place finisher, and the rest divided up among the also-rans. The specifics vary from track to track, but finishing in the top three gets the owner some percentage of the purse. When that happens, 10% of the owner’s winnings go to the jockey, and another 10% to the trainer. The net amount of money one finally receives is not always the percentage of the purse that is offered. If the horse finishes off the board, the owner still must pay the jockey to ride. The track sets the rider’s fee, which usually starts around $50 for each ride, regardless of placing.

Owners also pay for the pony that leads their horse during the parade on the track before the race. This usually runs around $25 and again, like jockey mount fees, depends on the track. The cost of shipping horses from their home stable to the track is passed on to the owner, whether it be by trailer, at around 15 cents a mile, or by airplane, and that depends on the distance to be traveled and the number of other horses on that transport – kind of like you and me flying somewhere for a visit with the relatives.

Young horses that have never run before must be registered with the Jockey Club and receive registration papers. This, again, requires another small fee. Young horses must then have a number tattooed on the inside upper lip to ensure that the horse is the same as the one on the Jockey Club papers. This process generally costs around $75.

For the last several decades, simulcasts of races from across the country have also become a huge source of racetrack revenue. Outlets nationwide pay fees to the tracks to allow their races to be broadcast on in-house screens in real time – and, of course, wagered upon. These fees allow both the outlets and the host tracks to make money on dollars wagered. Since many outlets are located in areas that do not have tracks offering live racing –Las Vegas, for instance – simulcasting has brought horse racing to millions of fans all over the country. This source of revenue also has added to the purse money offered and improved the quality of racing in general.

Knowing most of the above allowed me to enter the world of thoroughbred ownership with my eyes wide open. Ideally, the myriad costs of owning a horse is paid for by winning races, but that can be a difficult task, since obviously all the other owners are trying for the same result. Like most owners, I had the hope that my horses would earn enough at least pay for themselves. I was right sometimes. In some cases, I was wrong. Very wrong.