Use words like “blockchain,” and you immediately start losing people. The virtual ledger technology is admittedly confusing. Using interlocked computers, it keeps transactions safe, anonymous, and easily accessible to account owners.
Your next question might be: Ok, how? And that is an understandable inquiry. Ask yourself this, though: How much do you know about non-blockchain transactions?
The most salient difference between blockchain and what you are used to is that the virtual ledger removes barriers caused by traditional banking. This ensures that your experiences are more streamlined and transparent.
Blockchain can be used to support “micro” horse ownership. What is that, and how will it influence the overall horse racing industry?
Fractional Horse Ownership Overview
In 2020, the Kentucky Derby was held under unusual circumstances. Covid-19 had hit North America harder than a comet just thirty-something days before. Live sporting events everywhere were getting shut down. There was concern that the Derby would be impossible.
Ultimately it was held, though in an empty stadium. All of the event’s usual fanfare—the fashion shows, the mini-events held all day, the celebrity cameos, were absent.
But even Covid can’t completely hinder the most exciting two minutes in racing. The race went on and was eventually won by Authentic. This victory earned famed trainer Bob Baffert a record-tying sixth derby win.
Authentic’s owners couldn’t have been happier. All 4000 of them.
Fractional Ownership
A website called “MyRaceHorse.com” owned 12% of Authentic. A billionaire by the name of B. Wayne Hughes owned the rest. MyRaceHorse.com sold ownership stakes in Authentic for the relatively affordable price of $200 per share.
Obviously, that’s not pocket change to those of us without B. Wayne Hughes sort of money, but compared to the hundreds of thousands of dollars it takes to own and train a Derby-grade horse, the price was right. Winners received a small but meaningful share of the winnings proportionate to how much they put in. Their ownership stake in the horse not only translates into a piece of tournament winnings but also a potentially more lucrative take on stud fees and other monetization strategies used to squeeze money out of championship horses.
This innovative approach to horse ownership democratized a sport long dominated by the ultra-wealthy elite. Through this fractional ownership model, thousands of everyday racing enthusiasts became micro-owners of a Kentucky Derby winner, sharing in both the financial rewards and the emotional experience of watching “their” horse compete at the highest levels.
Each shareholder received official ownership documentation and had access to exclusive updates about Authentic’s training, health, and racing schedule. While individual investors couldn’t make decisions about the horse’s career, they gained unprecedented access to the inner workings of elite horse racing operations normally closed to all but the wealthiest owners.
When Authentic won the Kentucky Derby and later the Breeders’ Cup Classic, these micro-owners celebrated alongside billionaire Hughes, experiencing the thrill of victory that was previously reserved for racing’s most exclusive circles. This successful experiment has inspired similar ownership models across the racing industry, making the “Sport of Kings” more accessible to passionate fans from all economic backgrounds.
How Blockchain Helps
The process that made Authentic sellable to the masses is called “tokenization.” This means dividing a valuable asset into smaller pieces. Each piece becomes a token that represents partial ownership. Anyone can buy these tokens.
Blockchain technology makes this possible by creating a secure digital record of ownership. Each transaction is recorded on a shared ledger. No one can alter this record once it’s made. Smart contracts automatically handle payments and transfers. This removes the need for middlemen. Blockchain ensures that each owner’s stake is legitimate and traceable.
Changing the Game?
Before you get overly excited, understand that no one got rich from Authentic. Well—maybe the likes of Hughes did, but he was already rich, and probably didn’t notice.
The everyman who purchased digital tokens enthusiastically at $200 a pop? He probably earned back his initial investment, with maybe a little left over for movie tickets and a small popcorn.
Owning 1/4000th of 12% of a horse is not much money—no matter how great that horse turns out to be. If your goal is to make money on the Kentucky Derby, you’ll do better by making a few well-informed bets. Find more information here: twinspires.com/kentuckyderby/contenders/
The payouts even for a high-ranked horse can be 8 to 1, which is a considerably better ROI than Authentic’s owners received.
Fractional ownership is less about making money and more about growing interest in the sport. Blockchain and tokenization have long been used as a way to make things like art ownership, or even investment strategies, accessible to the masses.
Fractional horse ownership is just another stage in that development. By making championship racehorses more accessible, blockchain is bringing the “game of kings,” to anyone who wants to participate.