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Horse Racing Purse Money: Where’s It From and How’s It Split?

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Last updated: December 7, 2023

By: Miles HenryFact Checked

Did you know that in 2022, over $12 billion was wagered in thoroughbred horse racing, with total purses distributed reaching an unprecedented $1.25 billion? As a seasoned racehorse owner and enthusiast, I’ve delved deep into the financial dynamics of this sport. A recent insightful discussion with fellow racehorse owners sparked a fascinating question: “Where does all this purse money come from?”

The purse money in horse racing, a major incentive for owners and jockeys, stems from the substantial bets placed by spectators, racer entry fees, and sponsor contributions. Typically, the distribution sees 60% awarded to the winning horse and 20% to the runner-up, with the remaining percentage decreasing incrementally for lower-placed finishers. However, this split can vary, influenced by specific track rules and race conditions.

The thrill of horse racing transcends the physical race, extending into the strategic financial planning behind it. Join me as we delve into the world of horse racing economics, unraveling the complexities of purse money – a crucial component that not only celebrates the victors but also ignites the fervor and rivalry that define this exhilarating sport.

Picture of horse leaving the gates from their post position.
Horse racing at the Fairgrounds

Understanding Horse Racing Purse Money

Delving into the world of horse racing, one term you’ll frequently encounter is ‘purse money’. But what exactly does it mean, and why is it so significant? In this section, we’ll decode the concept of horse racing purse money, exploring its importance and its role in the high-stakes arena of horse racing. Let’s unravel this key aspect that drives the sport and fuels the competition.

What is a Horse Racing Purse?

In the simplest terms, horse racing purse money is the prize money the winning horses earn in a race. Picture it like a big pot of gold at the end of a rainbow – that’s the purse. Every race has a different purse, and the money in this pot is shared among the top finishing horses.

Importance of Purse Money in Horse Racing

Now, you might be wondering why purse money is so important in horse racing. Well, it’s the main reason people participate in races! Owners, trainers, and jockeys all receive a part of the purse money when their horse performs well.

It’s their reward for the hard work, time, and effort they’ve invested in preparing the horse for the race. Moreover, the size of the purse can often reflect the race’s prestige. Larger purses usually mean more competitive races because they attract top-quality horses and experienced jockeys.

For example, the purse for the world-famous Saudi Cup in 2022 is $30.2 million, while a local horse race at a small track might have a purse of only $2,000. So, in a way, purse money not only fuels the competition but also adds to the excitement and grandeur of the sport!

The purse is typically divided with 60% going to the winner, 20% going to second place, 10% going to third place, fourth place receiving 5%, and fifth place receiving 2.5%. Any horse that finishes sixth or worse receives splits of the remainder.

Picture of a turf race at Churchill Downs.
$500,000 Turf Race at Churchill Downs.

Sources of Horse Racing Purse Money

Now, let’s explore where all this purse money comes from. It’s like a magical pot that keeps filling up, but what’s the source of this magic?

Betting Revenues

Imagine you’re at a horse race, and you decide to bet on your favorite horse. Did you know that a portion of your bet contributes to the purse money? That’s right; betting revenues are one of the main sources of prize money. So, every time a bet is placed, it helps increase the pot of gold waiting for the winning horse.

Television and Online Simulcast Revenues

Television rights and online simulcasting rights can be significant sources of revenue for horse racing events. These rights refer to the fees paid by broadcasting networks or online platforms for the privilege of transmitting the race live to viewers around the world.

A portion of this revenue is typically added to the purse, increasing the prize money available to the winning horses, jockeys, and trainers. Remember, the larger and more popular the event, the more valuable the television and simulcasting rights will likely be. Hence, they can contribute a significant amount to the purse.

Entry Fees

Before a horse can dash down the track, it has to enter the race, and there’s usually a fee for that. These entry fees, paid by the horse owners, also add to the purse money. So, every horse galloping on the track has contributed to the prize it’s hoping to win.

Sponsorships

Big companies often sponsor horse races. They provide funds in exchange for advertising and promotion during the race event. A significant part of these sponsorships goes into the purse money, making the races more attractive and competitive.

Other Sources

Sometimes, racetracks or racing associations might add extra funds to boost the purse money, especially for big races. This added prize can attract more participants and create buzz around the event.

So, whether it’s from betting, entry fees, sponsorships, or added funds, all these sources work together to build up the prize money, making each race an exciting spectacle with a rewarding finish!

Horse racing is one of the most popular spectator sports in the world. Each year, billions of dollars are wagered on horse races, and the sport generates billions more in revenue from sponsorships, advertising, and media rights.

purse money,

How Your Wager Gets into the Purse

Understanding the Allocation of Wagered Money Towards the Purse

Introduction: When you place a bet at a racetrack, the funds you wager are crucial in determining the purse money. This process applies to various types of bets, whether made onsite, online, or through simulcast platforms. Additionally, in cases where the racetrack is accompanied by a casino, a portion of the gaming profits is also allocated to the purse.

  1. Live On-Track Wagering: The highest percentage of a person’s wager contributing to the purse is derived from live on-track wagering. Typically, approximately 7.25% of a live on-track bet is allocated to the horseman’s purse. This ensures that a significant portion of the wagered money directly supports the rewards for the participating horsemen.
  2. Advance Deposit Wagering (ADW): Following live on-track wagering, Advance Deposit Wagering (ADW) plays a substantial role in boosting the purse money. ADW allows bettors to place wagers off-track through a dedicated platform. Like live on-track betting, a notable percentage of ADW wagers contributes to the overall purse, providing further incentives for horsemen.
  3. Simulcast Wagering: Simulcast wagering, where races from other tracks are broadcasted, and bettors can wager on them, also contributes significantly to the purse money. While the percentage allocated may be lower than that of live on-track and ADW wagering, it still plays a vital role in supporting the purse.
  4. Online Wagering: The smallest percentage of funds allocated to the purse comes from online wagering. Online platforms provide convenience for bettors, allowing them to place their bets from anywhere. Although the percentage allocated is relatively lower, the cumulative effect of online wagers still contributes to the overall purse amount.

Understanding how your wager is distributed towards the purse is essential for appreciating the impact of your bets. Whether you place your bets live on track, through ADW platforms, simulcast wagering, or online platforms, your contribution supports the horsemen and enhances the excitement of the racing industry.

purse money,
  • On Track wager——————- 7.25% of the amount wagered to the purse
  • Advanced Deposit Wagering—–4% of the amount wagered to the purse
  • Simulcast wager——————-1.5% of the amount wagered to the purse
  • Online betting—The lowest percentage and variable, in some cases zero.

If you are interested in learning more about the basics of betting on horse racing, then check out this article.

How Purse Money is Split Between the Horses.

One of the most common questions horse racing fans have is how the purse money is divided up amongst the horses. The amount of money a horse can earn in a race depends on several factors, including the type of race, the purse size, and where the horse finishes.

In general, the horse that crosses the finish line first will earn the largest share of the purse, with the second-place horse earning a smaller portion, and so on. The exact split will depend on the particular race and track guidelines, but typically, the first-place horse will earn 60-70% of the total purse, while the second-place horse will take home 15-20%.

Picture from a racing form from Churchill Downs. This shows how a purse is split.
Racing form shows how the purse is split in a Stakes race.

The remaining purse money is typically divided among the remaining horses based on their finishing position. The most common split today began in 1975 in Florida when they introduced a revolutionary pay payout system.

This system changed the old way of paying the race finishers and ensured payment to all finishers. They allocated 1% of the purse to horses that finished the race lower than fourth. The amounts paid out vary based on the number of horses in the competition.

More horses are finishing a race below fourth in a 12-horse race versus a six-horse competition. For example, if a race had twelve starters, 60% of the purse went to the winner, 18% to second, 10% to third, 4% to fourth, and 1% each to fifth through twelfth; with only six starters, the winner received the same 60%, but 20% went to second, 13% to third, 5% to fourth and 1% each to fifth and sixth.

The basic premise of this payout method is that it is used at most tracks in various degrees. For instance, in 2018, New York changed its payout to 55% to the winner, but 20% to second, 12% to third, 6% to fourth, 4% to fifth, and the remaining 3% to be divided equally among the other finishers.

Florida’s payout method has helped improve the racehorse industry to gain better horses entering and ensuring that all will get some money.

Picture of racehorses.

Some Races have Their Own Payout Structure.

The Kentucky Derby, for example, only paid the top four finishers from 1915 to 2004; before 1915, they only paid the top three finishers. Today, the Derby pays the top five finishers. The Belmont Stakes pays out purse money to the first eight finishers.

The Breeders Cup changed its payout system in 2016, increasing the number of purse-earning runners from five to eight, the sixth-, seventh-, and eighth-place finishers, each receiving 1% of the purse. Click this link to learn more about Stakes races.

Today, most of the 33 US states conduct thoroughbred racing payouts to all horse entries. Currently, ten states only pay the top five finishers.

Three states use various payouts with added money, starter money, etc., resulting in some tracks paying all entries and others that don’t. This information was courtesy of https://wikipedia.org/wiki/Purse_distribution

How Do the Owner, Trainer, and Jockey Split the Purse?

Just like a big cake at a party, the purse money is also divided among the key players in the race. Typically, the lion’s share goes to the owner of the winning horse, usually around 80% of the total purse. The trainer, who prepares the horse for the race, gets about 10%.

The jockey, the brave rider steering the horse to victory, also gets about 10%. So, think of it as a big ‘Thank You’ cake shared among those who played the most critical roles in winning the race.

Variables That Can Affect Distribution

However, like many things in life, this distribution is not set in stone. It can change based on different factors. For example, track rules and the specific terms of certain races can alter the percentages. Sometimes, a portion might be set aside for the horse breeders or others involved in the horse’s career. So, while the ‘cake’ is always shared, who gets a piece and how big it can be can vary.

Examples of Distribution from Recent Races

Let’s look at a couple of recent races to understand this better. In the 2023 Kentucky Derby, the purse was a little over $3 million. The owner of the winning horse walked away with a whopping $1.86 million (60%), while the trainer and jockey each received $186,000 (10%).

In another race, the Summer Sprint, the purse was smaller at $500,000. However, the distribution was different. The owner received 70% ($350,000), and the trainer and jockey each got 15% ($52,000).

So, if the purse is $10,000.00, how much would the Jockey be paid? That depends. Let’s start with a quick example: Our Jockey, Bobby, is riding the seven-horse in the fifth race. They break out of the gates high, take the lead, and go wire to wire for the win.

In this example, the payout is the standard rate: 60% of the purse goes to the winner, 20% to second place, 10% to third, 5% to 4th, 3% to 5th, and 2% to 6th. So our winning horse is paid $6000. Ten percent goes to the trainer and 10% to the Jockey. Bobby is paid $600.00 for this race.

Jockeys also receive a base fee for riding a horse regardless of winnings. This payment is called a “mount fee.” Mount fees vary depending on the racetrack and the position of the horse’s finish. Most mount fees range from $75.00 to $135.00.

As you can see, the division of purse money can vary, but it always rewards the hard work of the individuals who make the exciting world of horse racing possible!

Picture of a dapple gray racehorse.

How Do Horse Owners Make Money?

Horse owners can make money in varying ways; breeding, racing, boarding, or buying and selling horses are examples. Racehorse owners make money if their horse runs well enough to receive a portion of the purse.

However, it is most likely they will never make a profit. Many horse owners consider themselves lucky if they make enough money to offset a portion of their expenses. Many racehorses never even enter a race, either because they become lame or are not fast enough. My friend had an exceptional gelding; he won his first start in a maiden special weight.

Shortly after the win, he kicked the stall and broke a bone in his lower leg. This injury has likely ended his racing career. However, for many racehorse owners, if they are lucky enough to have a horse that can make it to race day, its chances of winning remain slim.

But most horse owners don’t buy a horse expecting to make money (they hope they do). Owners purchase racehorses because they love horses and the horse racing business or use this hobby/business for a tax shelter.

Impact of Purse Money on Horse Racing

Just like a shiny trophy at the end of a tough competition, purse money serves as a huge incentive for participants in horse racing. Owners, trainers, and jockeys put in a lot of effort, time, and resources to prepare a horse for the race. The promise of a share in the purse money encourages them to bring their best to the race. It’s like a tasty carrot at the end of a stick, motivating them to run faster and aim higher.

But purse money doesn’t just motivate the participants; it also has a big impact on the quality of the races and competition. How so? Well, races with larger purses usually attract higher quality horses, experienced jockeys, and skilled trainers. After all, who wouldn’t want a shot at a bigger prize? This means the competition gets tougher, the races more exciting, and the overall quality of the event goes up.

So, purse money isn’t just about rewarding the winners; it’s also about fueling the passion, enhancing the competition, and making horse racing the thrilling spectacle it is!

Below is a YouTube video that explains the economic impact of horse racing in Pennsylvania.

The Rising Tide of Purse Money in the Current Season

Have you noticed the buzz in the air? There’s an exciting trend in the world of horse racing – the purse money is on the rise this season! It’s like a high tide, lifting all boats. From smaller local races to big-ticket events, the prize pots are getting bigger and more tantalizing. It’s creating a ripple of excitement among participants and fans alike!

So, what’s causing this pleasant upsurge? There are several factors at play. First, there’s an increase in betting revenues. More people are taking an interest in horse racing, placing bets, and thus, pumping more money into the purses.

Second, sponsorships are on the rise. Brands are seeing the value in associating with this thrilling sport, leading to more sponsorship money flowing into the races. Lastly, the revenues from television and online simulcast rights also contribute to the increase. As horse racing gains popularity, more viewers are tuning in, making broadcasting rights more valuable.

All these factors combined create a surge in purse money, making this season of horse racing more thrilling and rewarding than ever!

Conclusion

We’ve galloped through the intriguing world of horse racing purse money, exploring where it comes from and how it’s split. We’ve seen how betting revenues, entry fees, sponsorships, and even television and online simulcast rights contribute to the prize pot. We’ve also learned how this purse money is divided among the winning horse’s owner, trainer, and jockey and how it varies depending on various factors.

What’s exciting is the rising tide of purse money in the current season, thanks to the growing popularity of the sport and increasing sponsorships. This increase isn’t just making the races more rewarding for the participants and more thrilling for us, the spectators.

So, next time you watch a horse race, remember the fascinating journey of the purse money. And who knows? Maybe it will make seeing the winning horse crossing the finish line even more thrilling! Happy racing, everyone!

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Miles Henry
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