The 2026 Kentucky Derby is this Saturday, May 2. Some people view betting on horses to be a lower-class form of gambling, but races like the Kentucky Derby are in a league of their own, financially speaking. The race draws wealthier investors and dishes out $5 million in prizes (1).
However, you no longer need to be ultra-wealthy to win a decent amount of money from the Kentucky Derby.
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Just as you can buy fractional shares of stocks through investing platforms, you can now buy fractional shares of horses.
This alternative investment strategy isn’t for everyone. But it has potential for a great return on investment.
How fractional ownership works in horse racing
Fractional ownership, or a “claiming partnership,” involves buying a small stake in a stable of horses. For example, you could pay $10,000 to own a 5% stake in a stable of five horses. Rather than putting all of your money on one horse, you spread your money across five “assets.” (2)
“This is a tangible asset where owners are encouraged to visit their horses at the barn,” investor and columnist Rob Isbitts wrote for barchart. “It’s a level of access to the front-row action that a standard brokerage statement simply cannot provide.” (3)
Several platforms give you access to fractional ownership of horses, including Morning Line (4), MyRacehorse (5) and Zilla Racing Stables (6).
MyRacehorse breaks down how fractional investing in a Kentucky Derby horse would work. The platform uses the example of you betting on a horse entered in a Maiden Special Weight race in the Kentucky Derby (7).
In this example, MyRacehorse says the average “purse money,” or total prize amount awarded for the top several winners (8), for a Maiden Special Weight is $100,000, and 60% of the purse money goes to the first-place horse. (Note: the purse money for the Maiden Special Weight on May 2 is $120,000, but the amount changes, and we’re using the number provided by MyRacehorse (9).)
In the scenario that your horse wins, you would pocket 70% of the money, with 10% going to the jockey, 10% to the trainer and 10% to the manager.
So, 60% of $100,000 is $60,000 in gross earnings. Then, 70% of $60,000 is $42,000 in net earnings.
Assuming there were 10,000 shares available, each share would be 0.01% of the horse. If you bought 10 shares, you would multiply 0.01% by $42,000 to get $4.20 per share. With 10 shares, your payout would be $42.
But let’s say you bought 100 shares. You’d then pocket $420 if the horse won. The more shares you buy, the more it pays off — but only if the horse performs well.
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The tax rules regarding fractional ownership
The One Big Beautiful Bill Act (OBBBA) of 2025 made racehorses a better investment, even if your horses lose. You can deduct 100% of a horse’s cost from your taxes the first year it’s in service (10).
You can also now permanently claim 100% bonus depreciation for horses. There are various rules about what is considered a depreciating horse, but for racehorses, it’s typically one that is more than two years old (11).
“Furthermore, if your 100% depreciation creates a paper loss that exceeds your current year’s income, you can now carry that excess forward indefinitely as a net operating loss (NOL) to offset up to 80% of your future winner’s circle checks,” explained Isbitts (12).
When you invest in racehorses, you can either opt for active or passive ownership. As an active owner, you are involved in the stable’s business, and your tax deductions can offset all types of income.
If you’re a passive investor, your losses can offset other forms of passive income, such as money earned from a rental property (13).
These tax write-offs make fractional horse ownership less risky than they would be otherwise. Still, the tax rules are complex, so consult a tax professional before investing in a racehorse.
Risks to consider
As with any type of investment, there are risks associated with fractional horse ownership. Most horses lose races. And although the tax write-offs mean you are risking less money when betting, you still usually risk some money.
Still, this depends on the platform you use. For example, MyRacehorse claims that you cannot lose more than your initial investment through its ownership model (14).
There is also the risk of fraud. Those who are defrauded in horse racing are usually high-net-worth people.
“Once the fraud is detected, these individuals are hesitant to file suit or seek relief from the fraudster because they don’t want negative publicity or for their private life to become public,” Kayla Pragid, partner and chair of Equine Team, Holland & Knight, told Citywealth. “Fraudsters know this and prey on such individuals.” (15)
Going through the proper channels, such as one of the platforms previously mentioned, can reduce the risk of fraud.
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Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Kentucky Derby (1); Barchart (2),(3),(10),(12),(13); Morning Line (4); MyRacehorse (5),(7),(14); Zilla Racing Stables (6); BetMGM (8); Equibase (9); Dean Dorton (11); Citywealth (15)
This article originally appeared on Moneywise.com under the title: You don’t need to be rich to own a Kentucky Derby horse — fractional shares start small and pay real money
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
