Purse Distribution in Horse Racing (Part 2)

Current Practices and Variations Across Jurisdictions

Today, purse distribution practices continue to evolve, with different racing jurisdictions adopting various models that best suit their specific needs. In some regions, additional incentives such as "starter’s bonuses" are offered to horses that do not finish among the top positions. These bonuses are separate from the main purse and are designed to encourage participation by providing a financial reward even for horses that finish further down the field. For instance, in California, horses finishing below fifth place receive a starter’s bonus of $400 at Los Angeles-area tracks and $300 at northern tracks. Similar bonuses are also common in states like Delaware, Pennsylvania, and Texas, and have become an integral part of the purse distribution system in these regions.

In 2014, of the 33 states in the U.S. that conducted Thoroughbred racing, 20 distributed purse money to all horses in a race. However, practices varied widely; some states allocated purse money only to the top five finishers, while others followed a more inclusive approach similar to Florida's model. In Canada, different schemes are employed depending on the racetrack, with some tracks like Woodbine Racetrack paying starter’s bonuses to all horses finishing outside the top five or eight, depending on the race.

Notable Changes in Major Races

The allocation of purse money in major horse races has also undergone significant changes in recent years. For example, the Kentucky Derby, one of the most prestigious horse races in the world, included the fifth-place finisher in its purse distribution starting in 2005. Prior to this change, only the top four finishers were awarded prize money, with the first three receiving the majority of the purse. The decision to expand the distribution to the fifth-place finisher reflected broader trends in the sport towards more inclusive purse distribution.

In 2014, the New York Racing Association began distributing purse money to the top eight finishers in major stakes races, including the Belmont Stakes. This practice was soon adopted by other prestigious races, such as the Breeders’ Cup, which in 2016 increased the number of purse-earning runners from five to eight. Under this system, the sixth, seventh, and eighth-place finishers each receive 1% of the purse, ensuring that a broader range of participants are financially rewarded for their efforts.

The Global Adoption of American Models

The influence of American-style purse distribution models has extended beyond the United States, particularly in countries like Australia. Australian horse racing, known for its competitive and lucrative races, has adopted many of the innovations pioneered in the U.S. In some Australian races, purse money is distributed to the top eight or even ten finishers, with the allocation for positions six through ten often being a fixed percentage or dollar amount. For example, in the Melbourne Cup, one of the most famous horse races in the world, horses placing sixth through tenth receive approximately 2% of the total purse each.

Additionally, Australian racetracks commonly offer a "Starter Subsidy," a bonus paid to horses that do not finish in the top positions. This practice mirrors the starter’s bonuses seen in the U.S. and reflects a global trend towards more inclusive and equitable purse distribution models. However, despite these innovations, the practice of paying at least some purse money to all finishers has not yet become widespread in European racing jurisdictions, where more traditional distribution models still dominate.

Bonuses, Added Money, and the Mechanics 

In modern horse racing, the value of a purse is often displayed as a lump sum of guaranteed money. For instance, the purse for the Kentucky Derby was increased to $3,000,000 guaranteed in 2019. This guaranteed amount is typically distributed according to the purse distribution model in place, but additional bonuses and "added money" can also play a significant role in determining the final payout.

Bonuses are sometimes offered for specific conditions, such as a state-bred winner, and are only payable if the condition is met. If not, the total amount paid out may be lower than the stated purse. Alternatively, a bonus might be shown as an addition to the purse. A notable example occurred in the 2004 Kentucky Derby, where Smarty Jones earned a $5 million bonus on top of his share of the regular purse distribution, resulting in record winnings of $5.8 million at the time.

"Added money" refers to the additional funds that increase the value of a race beyond its guaranteed purse. This money can come from various sources, including nomination fees paid in advance of the event and starter fees collected at the time of the race. In the past, added money was a more significant portion of the winnings in major races, creating a greater disparity between the amounts paid to the first-place horse and the second-place finisher. For example, in 1996, the Kentucky Derby’s purse was changed from an added money basis to a guaranteed basis, reflecting a shift towards more predictable and stable payouts.

How Purse Money is Generated and Distributed

The primary source of funding for race purses is wagering. This includes bets placed on-track, in advance, remotely in betting shops, over the phone, and increasingly through online sports betting platforms. The largest share of purse money typically comes from on-track bets, while the smallest percentage comes from online betting. However, the rise of online sports betting has introduced new challenges, as the revenue generated by these platforms does not always contribute to the purse if a purse agreement is not in place.

In the UK, a portion of the prize money is funded by a levy on profits earned by bookmakers, with the remaining amount coming from owners’ entry fees. In contrast, in Ireland, where horse racing enjoys widespread popularity, the government funds Horse Racing Ireland, which contributes to prize purses. Australia, known for its lucrative racing scene, funds its purse money primarily through a tax on betting, leading to a steady increase in prize money as more people participate in betting.

The Richest Horse Races

The world’s richest horse races offer staggering prize purses, attracting top talent from around the globe. The Saudi Cup, for example, boasts an impressive $20 million purse, with the winner taking home $10 million. The Dubai World Cup, another major race, offered a $12 million prize pot in 2019, with $7.2 million awarded to the winner. These high-stakes races not only provide significant financial rewards but also contribute to the prestige and global appeal of horse racing.

In the United States, the Pegasus World Cup, which started with a $12 million purse, has also become a major event, although its purse has fluctuated over the years. Other prominent races with large purses include the Everest in Australia and the Breeders’ Cup Classic, both of which draw international competitors and large audiences.

The Ongoing Evolution of Purse Distribution 

Purse distribution in horse racing has undergone significant changes over the years, reflecting the sport’s evolving needs and the desire to create a more equitable and competitive environment. From the early days when only the top four finishers received prize money to the modern systems that reward all participants, the methods of distributing purses have become increasingly sophisticated and inclusive. As horse racing continues to grow as a global sport, the practices surrounding purse distribution are likely to continue evolving, ensuring that the sport remains financially viable and attractive to all stakeholders involved.