The world of horse racing is centered around money, there is no secret there. Everything from breeding a racehorse to training it and racing it involves money, and sometimes the big prize purses lead us to think that it is a good idea to invest in the sport.
First thing first, you have to understand that not everyone in horse racing makes money. Additionally, since racehorse owners operate with higher costs, the break-even point is also quite high and some of them even lose money in the process.
So, it is not only fairytales, but with the right strategy, you might be able to squeeze out a profit.
What is the best way to make money from horse racing apart from betting? Is it training? Breeding? Or trading racehorses?
But let’s get back to horse race investing and find the best way to do that.
Table of Contents
1. Understanding the Market
The world of horse racing is more than simply fast horses and stylish outfits; it is a sophisticated enterprise that requires a thorough grasp. Traditionally, it has been a playground for the rich, with important personalities such as Queen Elizabeth II and members of Dubai’s royal family being frequent visitors.
But, before you start fantasizing about rubbing shoulders with royalty, keep in mind that racehorse purchases sometimes begin at auctions, and the prices may be as unexpected as the races themselves. In 2022, horses at the famed Keeneland auction sold for an average of $141,097, however, this figure might swiftly rise based on the horse’s age and aptitude.
2. Costs and Investments
Most people make the same mistake of jumping into investing in horse racing without considering the costs, which can be astronomical. As we mentioned before, horse racing has a thin break-even point, and you want to minimize your costs as much as possible.
Before you bid, realize that the buying price is only the tip of the iceberg. When you buy a horse, you can expect to pay for training, travel, veterinarian bills, and stable on a yearly basis. This might cost between $30,000 and $50,000 per horse each year.
For individuals who are not ready to buy a complete horse, platforms such as MyRacehorse provide partial ownership, similar to purchasing stock in a corporation, allowing them to have a taste of racehorse ownership without making a full financial commitment.
A horse that makes the Kentucky Derby odds by TwinSpires.com is worth on average $200,000-$300,000, even if they end up last place.
3. Strategies for Success
Now, let’s speak about turning your horse into the next great winner. For starters, quality cannot be substituted. High-quality horses are more likely to be successful, but they come at a high cost. Furthermore, it is critical to have a strong industry network; horse racing is as much about who you know as what you know. Finally, proper financial management is essential. Recognize that the costs of raising a successful horse may surpass the prize money, especially in the early stages.
4. Virtual Horse Racing
Investing in horse racing isn’t only about purchasing a horse. Remember, we are talking about a billion-dollar industry with many different segments.
Fortunately, our tech-savvy investors aren’t left out of the new trend of virtual horse racing. This is a great place to start investing in horse racing, especially if you don’t know much about the sport.
Basically, it is a representation of real-world horse racing just digitally. You get to own horses, train them, and even breed them. This can act as a training place before you make a big move in the real world or find a way to invest in a virtual horse racing start-up that is getting some traction.
Platforms such as Zed Run provide virtual horse racing in which the horses are NFTs (Non-Fungible Tokens) and the races are simulated. It’s a rising trend, and digital horses may be purchased with cryptocurrencies. While it lacks the conventional grandeur of the racetrack, it is a novel combination of technology and sport that is gaining popularity.
5. Is it a Safe Bet?
Let’s be honest: investing in racehorses is a gamble. It’s dangerous, and the prospects of profit are limited.
But it is the same story as most other investments. You don’t know what will you get and whether or not the journey will be profitable.
You just need to follow your passion and make informed decisions. That is the best way you’ll succeed in the world of horse racing.
Most horses do not yield considerable prize money, and the fees might be prohibitively expensive. It is frequently more about the enjoyment of the activity than a financial investment. However, for the fortunate few who hit gold, the rewards may be substantial, particularly if your horse becomes a successful stallion after its racing career.
Last but not least, try to connect with the right people. Hanging out with horse racing enthusiasts and investors can open your horse racing business senses, and help you learn more about the financial aspect of the sport and what to look out for.