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Horse racing is a lucrative sport.
In the UK, horse racing has an annual turnover of more than £1 billion which, although it sounds a lot, is a lot less than it was a decade ago. In other countries, the horse racing track industry is worth significantly more. For example, in the US, the horse racing market is estimated to be around $3 billion; in Australia, the thoroughbred industry adds more than $1 billion to the economy. In recent years, the industry has declined to a degree, but people still love to watch horse races and it is unlikely punters will stop betting their hard-earned cash on the races anytime soon.
Owning racehorses is a costly business, but a successful racehorse can earn a decent amount of prize money over its relatively short racing career. The purses are not the main reason why people buy racehorses, but they do help cover some of the costs. Where does the purse money come from? Let’s find out.
What is the Purse?
In horse racing, the purse is the prize money. This is the money paid to the winning horse(s). More prestigious horse races that attract better quality horses have bigger purses, but all horse races have a purse, as it acts as an incentive for owners looking for races for their horses and jockeys looking for a horse to ride.
The purse is paid out to the winner of the race. Most of the money goes to the owner of the horse, but the jockey receives a percentage of the purse, as well as a riding fee, place fee, and salary if they are retained by one owner. The better the performance of the horse, the more a jockey can earn from a race.
The value of a purse is based on the previous racing season’s total wagers. The more money bet on a race, the higher the purse will be in the following season.
The value of a race’s purse may increase if entry fees, starter fees, and nomination fees are added, but this varies depending on the racetrack.
How the Money Flows Through Horse Racing
Most of the money to fund racetrack purses comes from wagers. This includes on-track wagers, wagers placed in advance of the race, wagers placed remotely in betting shops and over the phone, and wagers placed via online sports betting websites.
The biggest percentage of money from wagers comes from on-track bets, and the smallest percentage from online betting. In some cases, money bet online via sports betting sites is not added to the race purses at all if a purse agreement is not in place.
Online sports betting has increased in recent years and horse racing bookmakers are a popular way to place a bet in many countries around the world. However, this has caused issues, as a far smaller percentage of the money generated by online sports betting ends up in the purse. Some racetracks believe this is unfair, but the offsite sports betting providers say it offers more people a chance to bet on the races, which helps to keep horse racing as a sport alive.
In most countries, purse money is generated from betting, but in the UK, some of the money added to a race purse comes from a levy on profits earned by bookmakers. Owners’ entry fees make up the rest. In Ireland, where horse racing is very popular, the government funds Horse Racing Ireland, which in turn adds contributions to prize purses.
In Australia, purse money is mostly funded by a tax on betting, so the more people that bet, the higher the prize money. This has led to an upward trajectory of prize money in Australian horse racing.
The Biggest Purses in Horse Racing
The richest horse race in the world is the Saudi Cup, where the overall prize purse is a massive $20 million. The lucky winner of the race walks away with a cool $10 million.
The Dubai World Cup is also up there on the list of the world’s richest horse races. The prize pot in 2019 was a generous $12 million, with $7.2 million going to the winner.
The invitational Pegasus World Cup is another race worth considering for owners looking for a massive payday. This is a similarly luxurious event, but it takes place in the US rather than the Gulf. The prize purse started at $12 million but has since dropped, and in 2020 was $3 million.
Other famous races with a large purse include the Everest in Australia and the Breeder’s Cup Classic.
Allison is the Publisher of Eclipse Magazine. She loves going to the Races and is learning to bet (despite being officially the worst bettor in the History of the Universe), there’s a lot more to learn…