The economics of horse racing looks a lot like the economics of other sports. There are the usual costs of ownership. There is prize money. There is the focus on competitive balance. There is revenue sharing. This LA Times article presents some numbers that show how difficult it is to turn a profit in horse racing. A snippet:
In allowance races, there are set conditions -- weight, experience -- meant to level the playing field. In claiming races, every horse can be "claimed" or bought for a predetermined price, the idea being that owners will enter horses of like value and ability.
Last year in California, the average purse at these lower echelons was $20,400, the TOC reports. The winner received 60%, second place took 20%, on down to 2% for fifth.
So a horse crossing the line first in an average race earned $12,240. And the owner, after paying a 10% winner's share to the jockey and another 10% to the trainer, walked away with about $9,800.
Figuring that most horses run seven to 10 times a year, it takes a lot of winning to cover expenses.