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

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The other day, I was talking to a friend about how the horse racing purse money is going up this season. He asked me where it came from or how it was split. I thought that was a really good question, so I did a little research, and here’s what I found out.

The purse money for a horse race comes from different places, such as gambling, entry fees, and sponsorships. Typically, the amount of money bet at a track is used to determine the racing purses for a season. The winnings from a horse race are usually split between the owner 80%, the trainer 10%, and the jockey 10%.

Money from gambling on races provides the majority of the purse money. However, there are a lot of variables that go into the calculations and payouts.

Picture of horse leaving the gates from their post position.

What is a horse racing purse?

A horse racing purse is the prize money that is awarded to the horses running in a race. The amount of the purse depends on the type of race, the location, and the stature of the race. 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.

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.

Sources for the purse money.

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.

The money bet at a track is used to calculate the purse money, including onsite, online, and simulcast bets. If the course has an accompanying casino (racino), some of the gaming profits from the casino are added to the purse.

While the vast majority of horse racing prize money comes from betting, a significant amount also comes from purses that are funded by horsemen’s organizations or track operators.

The track administration develops a purse structure or “purse contract.” The contract is based on the previous season’s total wagers; it establishes the money available for each race in the upcoming racing season.

purse money,

A percentage of the purse goes to the top finishers. The amounts paid out to the top finishers vary slightly depending on the State and the track where the competition is held.

The highest percentage of a person’s wager that goes to the purse is from live on-track wagering. Generally, 7.25% of a live-on-track bet goes to the horseman’s purse.

The second highest prize money contributor is Advance Deposit Wagering (ADW). Simulcast wagering follows, then the smallest percentage paid into the purse money comes from online wagering.

In place of live wagering, gamblers can also place wagers off-track via the Advance Deposit Wagering platform. Once the money is deposited into an account for the adventurer, he can place bets.

purse money,

The player can make his wager in person, online, or by phone; 4% of the net revenue is applied to the horseman’s purse when this method is used.

When a person makes a simulcast wager, the horseman’s purse receives a considerably lower percentage, 1.5%. The lower percent is necessary because net revenues from the bet are split 50-50.

For example, if you are at Santa Anita and decide to wager on a race running at Los Alamitos, Santa Anita will divide its profit evenly. The resulting payment is considerably less than the amount received if the bet was made at Los Alamitos, the race site.

Many people these days use online sites to gamble on racetracks from the comfort of their homes. What percentage of the wagers are going to the purses is difficult to determine.

But from my research, it’s a tiny percentage because each site has different arraignments concerning reporting and gaming with the States and the individual tracks.

The horseman and the tracks have not been happy with the way technology affects the gambling wager percentages applied to the purse. However, this cuts both ways.

Although online wagering does supply the lowest rate to the purse, it also increases access to racetrack gambling for many people who otherwise would be unable to gamble.

Regardless, racetracks consider the offsite gaming site to have an unfair advantage over them. “Wagering providers that don’t conduct live racing do not support a purse structure, giving them an unfair operating advantage over racetracks,” said Corey Johnsen, President of Kentucky Downs.

  • 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.

Picture of racehorses.

How is the purse money split between the horses?

One of the most common questions horse racing fans have is how the purse money is divided up amongst the horse. 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%.

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 entered 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 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.

Some Races have Their Particular 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 payout 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

Picture of a dapple gray racehorse.

How much of the purse money is paid to the Jockey?

While the vast majority of the purse goes to the winning horse’s owners, a small portion is also paid to the jockey. Jockeys are typically paid around 10% of the purse, although their fee may be higher or lower depending on their experience and achievements.

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 named Assange. They break out of the gates high, take the lead and go wire to wire for the win.

At the track in our example, the payout is the standard rate; 60% of the purse typically goes to the winner, 20% to second place, 10% to third, 5% to 4th, 3% to 5th, and 2% to 6th.

So if the purse is $10,000, the winning horse is paid $6000. Ten percent of that 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.

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 make it into a race, either because they become lame or they are just not fast enough. My friend had an exceptional gelding; he won his first start in a maiden special weight.

Shortly after the win, he kick 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.

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

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