Investing in the Fast Lane: Private Equity in Horse Racing

Horse racing has always been associated with prestige, money, and luxury, which is why, for so long, owning an actual racehorse was out of the question for most equestrian fans. Thoroughbred horses from decent bloodlines can cost hundreds of thousands of dollars, which makes a high barrier to entry for us fans. 

But recently, horse racing investments have picked up, and they are popular again for a number of reasons. The biggest one is that private equity firms with deep pockets are pouring cash into horses, tracks, and tech, believing that the return potential is big. On top of that, we also have companies that revolutionized racehorse ownership by making it affordable using fractional shares.

In today’s article, we will talk more about racehorse ownership, how to invest, companies that revolutionized investing, and how the money flows in the industry.

Fractional Ownership Platforms

There is no doubt that one of the biggest innovations in the industry is the introduction of fractional ownership of racehorses. But what’s that exactly? 

Well, instead of buying an entire racehorse for yourself that can cost you $400,000, you can become an owner by buying small parts of the horse. These are not actual parts (like a leg or ear) but shares of a horse that determine the ownership percentage. Think of it as crowdfunding racehorses.

You, I, and every other equestrian fan can now own part of a racehorse for as little as $100. Now, this doesn’t mean that you’ll be involved in the decision-making process or that you’ll get tons of money from prize purses, but it is very cool to watch a race while bragging to your friends that you own that horse.

Startup companies like MyRacehorse, backed by Experimental Squared, raised $7 million from investors like 1/ST Racing, allowing them to fractionalize racehorse ownership, offering micro-shares. There are already 50,000 investors buying into the thrill of ownership without the millionaire price tag.

They’ve managed to structure deals as SEC-regulated securities, turning horses from live beings into assets like stocks. Don’t get me wrong, this is still a risky bet since most racehorses end up losing money, but it is something that will make your horse racing experience a lot more fun.

Bloodstock Investments

There is also another trend where private equity is sniffing out profits in the bloodstock market, where top racehorses fetch millions. We have companies like Phoenix Thoroughbreds (although associated with money-laundering allegations in 2020), which spend millions on yearlings at auctions like Keeneland, where the average price of a horse is around $140,000.

So, what’s the deal here, and how are they making money? Well, these investors buy young prospects, hoping to flip them as proven racers. Of course, horses need to be trained and sculpted before they race, and their goal is to sell them for a profit after they’ve made a name for themselves.

However, this is a very risky business where there are so many things out of their control. Although the horse might come from a good bloodline, it doesn’t guarantee that the horse will be fast, and injuries can tank their value.

But private equity’s muscle lets them scoop up pedigrees’ others can’t touch just because they have a lot of capital.

Track Acquisitions

It is not only about horses, though. Have you noticed how private equity companies are buying tracks and facilities where they can train their horses and organize horse racing events? 

These companies see racetracks as real estate gold for a number of reasons. First of all, you have the revenue from ticket sales, entry fees, property renting (concerts), and, of course, betting.

Betting is a big part of horse racing, and it is an entire billion-dollar industry where everyone once a piece of the pie. You have companies like TwinSpires that dominate the market, giving people expert advice and betting options, and there is trackside betting, which is most profitable for companies that are acquiring racetracks.

In 2024, a private equity group eyed Gulfstream Park, drawn by its casino and event potential. 

Tracks like Saratoga or Churchill Downs host festivals beyond racing, pulling in crowds and cash. Investors renovate facilities or add tech like live streaming to boost attendance, which dipped 6% in 2023. Tour a track’s site for event schedules, and you’ll spot private equity’s fingerprints, turning dirt ovals into entertainment hubs.

Syndicates for the Elite

For the ultra-wealthy, private equity-style syndicates offer a posh entry into racing. Groups like West Point Thoroughbreds, backed by deep-pocketed investors, sell shares in top horses for $5,000-$50,000, promising access to elite trainers and marquis races. 

Unlike crowdfunding, these are intimate, with perks like paddock passes and trainer dinners. Syndicates like Victory Racing Partners celebrated wins at big horse racing events, splitting purses among a select few. 

It’s less about profit—median horse earnings were $14,000 in 2023—and more about prestige. To join a syndicate, you can do that via their contact forms, and you’re in an exclusive club, sipping champagne as your horse charges for glory.

So, there is no doubt that private equity is shaping the modern world of horse racing, and since this is a billion-dollar industry with big potential to grow even more, we expect more companies to jump on this investment wagon.