I recently converted from longtime horse racing hobbyist to considering myself firmly in the business. By some standards, that means spending 500 hours a year working on things related to the development, maintenance and growth of being a racehorse owner. In full, or as part of a partnership. The latter is one of the strongest growth trends in the industry. And I’m smack dab in the middle of it

I’m also a former “investment fiduciary.” What does that mean? In my prior career, which I retired from in 2020 after 27 years, my job was to put the goals, concerns, aspirations and risk attitude of my clients first. No exceptions! In my particular field, that meant managing their money in a manner which was 100% putting them first. No commission distractions, or “good enough” type of business ethics and service was acceptable. It is the same thing that all registered investment advisor principals, client advisors, CPAs and attorneys commit to.

I’m several years removed from that field, though as you can tell if you Google or ask AI about “Rob Isbitts investing approach” or something like that, you’ll get more than you bargained for. In my first 5 years of semi-retirement, I’ve continued as an investment researcher and writer, including my work at our separate, investment-oriented Substack site, ETFYourself.com.

I don’t provide personalized, fiduciary advice anymore. But 1,000+ published articles and lots of investment intellectual property later, I still try to convey what I’ve experienced, so that people can learn from that. Then handle it as they see fit. As I say, “use the Y in DIY investor - take what I do and say about investing, and figure out what matters to you.”

Yet when it comes to investing in a different asset class - racehorses - now I am the DIY investor. A role-reversal I find both exciting and fascinating. And given my background in professional asset management, I’m not fazed by the endless parade of discouraging sentiments toward the racing industry, and of racehorse ownership.

Why? Because I’ve been doing my due diligence. As any owner of any asset should.

The biggest barrier to entry for professional investors in the horse business has historically been the “Transparency Gap.” For over a century, the backstretch of a racetrack has been a place of opaque billing, unaligned incentives, and “trust me” handshakes. To professionalize this, management must move away from the “hobbyist” mindset and adopt what we call a Fiduciary Style.

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In the financial world, a fiduciary is legally bound to act in the client’s best interest. In the racing world, where that legal designation doesn’t always exist in the same way, a “Fiduciary Style” means voluntarily adopting those principles. It starts with the ongoing expenses of keeping a horse fit to race on a regular basis. That can even go as far as capping expenses.

Or, in the case of the first partnership I joined up with, In Front Racing Stables, no ongoing bills at all. My friend, In Front founder Howie Heiberger, is one of a small number of racehorse partnerships that trade off a portion of the racing purses won, in exchange for the trainer covering their own monthly expenses. As with anything in business and really in life, there are tradeoffs. Or as I say in my other biz, there is return and risk. They are 2 dials, to be turned up and down as one wishes.

Of course, that involves a lot of searching, testing, and (there’s that phrase again) due diligence. Racing is a game, and it was a hobby for me for some time. A fun little weekend thing. Then I decided to put more of an effort toward it. And what I’ve found is this:

• There are many ways to “do” racehorse ownership. There are ways to do it in a way that risks a lot of money that doesn’t have to be risked. And other ways that are akin to “trust me” when they need not be that way.

• Those with the big-big-big money get what they pay for: white glove service and business acumen. The rest have many excellent resources and outlets to work with. But telling them apart can be difficult. Racehorse ownership’s “middle class” draws in a lot of top-10% wealth types. But separating what will be a good experience, win or lose at the track, from the rest is not very structured.

• Nor is the process finding it efficient. It took me years before I made even a tiny move, committing hundreds of dollars, then thousands. It doesn’t have to be that difficult. And if this site and the people in my racing network have anything to do with it, it won’t be forever.

• Transparency, trust and business process are what I’ve found to be the differentiators so far. And for the sake of the racing industry’s long-term survival, I’d like to see them communicate the multi-pronged value of this experience and venture. Namely:

  • You are in the sports business, and it feels like it. Not just a fan.

  • The learning curve is infinite. You can never know enough. Every day, every race, is a new piece of the puzzle. Just ask the lifers about that. I was once told that happiness is all about having things to look forward to. This business brings you that, regardless of how many times you stand in the winner’s circle. Put another way, TRYING to win in this game, a very tough task, is one of the central parts of doing it. The challenge.

  • If the financials are what drives you, you might see some very nice ROI (Return on Investment), especially after-tax, thanks to the massive tax incentives now being granted to racehorse owners. But if making a profit while acknowledging the risk is all you care about, maybe look into venture capital or private equity. Where all you get is a number telling you what you won or lost.

  • I say no thanks to that “experience.” This one, owning racehorses in one of many forms available, this experience and lifestyle, plus the people you meet and your access to the sport as an owner? I choose that!

  • And, while I decided to make it more of my “time allocation” in my 60s, devoting at least double the litmus test of 500 hours a year to it for a while now, that’s not for everyone. Dabblers can trade off time, effort and risk by outsourcing the parts of being an owner they prefer not to think about for a moment. And let the horsemen and their team fill you in as things progress.

The racing industry helps itself when it thinks and acts more like fiduciaries do

So that’s a former fiduciary (me) thinking like a fiduciary (old habits die hard) even though I no longer act in that capacity. But people in the racing business can certainly “act in a fiduciary manner” toward their investors - transparency, clarity on costs and markups, and simply telling it is like it is, in English, not industry-speak?

Examples include the traditional training model—where a trainer sends a monthly invoice for whatever was spent on vets, feed, and vitamins—is a recipe for friction. It places the owner in a defensive position, constantly questioning the “mystery bills” that arrive after the fact.

A professionalized model could replace this with a Capped Day Rate. When a trainer agrees to a flat, all-inclusive rate that covers labor, feed, and routine care, the incentives are suddenly perfectly aligned. The trainer doesn’t make their profit by marking up a blacksmith bill; they make their profit by being efficient and, most importantly, by winning races and earning their 10% share of the purse.

This transparency is amplified by the use of Technology and Open Communication. In 2026, there is no excuse for an owner not to have real-time access to scouting reports and financial ledgers. By treating the stable like a boutique private equity fund—with regular reporting and professional oversight—we remove the “mystery” that has kept so many smart investors on the sidelines. It turns the ownership experience from a stressful “black box” into an intellectual pursuit that mirrors the way successful people manage the rest of their wealth.

And that’s something I know about. More than a little. Hopefully, through having people join me in this Substack community, participate in the chat, tell their interested friends and family, and provide ideas for future content and features, we can make a small dent. Or, maybe a big one.

This article I wrote for Barchart.com is one of hundreds I’ll write there this year. And it is one of the more meaningful to me.

Because rather than my usual beat, investment strategy, ETFs, stocks and bonds, I wrote about what I primarily cover here at HorseClaiming.com: why and how a lot of people who don’t own racehorses might want to consider it.

Check out the article, and the broader platform at Barchart.com. I was an avid user of it as a professional investor for years, so starting to write for them last year was an easy call.

In the world of Private Equity or Venture Capital, the most dangerous word is “illiquidity.” Investors are often forced into five-to-ten-year lockup periods, waiting for a “liquidity event” or an IPO that may never materialize. For the DIY investor, this is a significant hurdle.

Thoroughbred racing, however, possesses a unique mechanism that functions with the efficiency of a public stock exchange, yet remains largely misunderstood by those outside the backstretch: The Claiming Race.

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Claiming Races: The Sport’s Thriving “Middle Class”

One of the most popular socio-economic topic for those of us in the baby boomer generation is the gradual decline of the middle class. The “K-shaped economy,” they call it. Where there are wealthy, poor, and not nearly as many in between. This is not the case in the U.S. thoroughbred racing industry. Where the middle class still has a strong presence. In fact, it is a big part of what sustains the sport.

Approximately 70% of all races in North America are “Claiming Races.” To the casual fan, these are just lower-level competitions. To the professional manager, this is a transparent, high-velocity marketplace. In these events, every horse entered is essentially “for sale” for a pre-determined, fixed price (the “tag” - which is literally a red tag put on the horse after a race, if it is claimed).

If a horse is running for a $25,000 tag, that is its declared market value for that afternoon. Any eligible owner can “drop a claim”—submitting a check before the gates open—and purchase the horse regardless of where it finishes in the race.

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Claiming Strategies: the basics

If a trainer enters a horse for a price lower than its true value to try to grab a win, they risk losing the asset to a savvy competitor. If they enter it for too high a price, the horse will be uncompetitive against faster peers. For the sophisticated investor, this provides two distinct advantages.

1. Objective Valuation. You don’t need a subjective appraisal from a bloodstock agent; you know exactly what the market thinks a horse is worth because that price is printed in the daily program.

2. Instant Exit Strategy. Unlike a real estate holding that requires a listing, inspections, and a 60-day closing, a racehorse is a liquid asset that can be “exited” at a set price every few weeks. This allows a fund to “trade up” its inventory—selling a horse that has hit its ceiling and immediately reinvesting that capital into a “prospect” with more upside.

Horse Trading…Literally

By treating the claiming box as a trading floor, the modern owner replaces “Hobbyist Hope” with a capital recycling strategy that keeps money moving and working.

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Watching 42-year-old Aaron Rodgers walk off the field after a playoff-ending interception felt like watching a blue-chip stock hit a permanent “Sell” rating. In the NFL, the cliff is absolute. There is no lower league where an aging legend can go to compete against peers.

But yesterday at Will Rogers Downs in Oklahoma, a 10-year-old gelding named Absaroka did something Rodgers couldn’t in the Pittsburgh Steelers playoff loss, perhaps the final game of the Hall of Fame career of Mr. Rodgers: He won.

Tail of the Tape: horse racing ages vs. human ages

When you see a 10-year-old in the entries, you are looking at the biological equivalent of a 35 year-old human. Racehorses reach their prime athletic age between 3-5 years old. That’s why the Triple Crown races are for 3-year olds.

A horse still racing at age 10? This is where the physical “top-end” speed begins to trade for “experience and grit.”

Absaroka has 58 career starts. He has been running since the world looked very different. His first race was in 2019, prior to the Covid-19 pandemic. 76 months ago.

He’s earned more than $350,000 in his career. So about $4,600 in earnings per month. Since I’d estimate it costs $2,600-$3,000 a month to train a horse at WRD, that’s a nice monthly profit over 6+ years. The reason he is still winning—and why he represents a “Fighting Chance” for an owner—is the Claiming System.

There’s no “class drop” for Aaron Rodgers

The NFL forces Rodgers to play “Graded Stakes” every Sunday. If he can’t beat a 24-year-old cornerback, he loses.

The claiming box allowed Absaroka’s connections to perform a Class Drop. Instead of forcing him to fail against $50,000 athletes, his owner and trainer entered him for $13,000. He didn’t lose his talent; he just found a market where his talent was still the “Alpha.” This is the beauty of claiming: it protects the asset’s longevity by ensuring the horse never has to be “over-matched.”

The Downs and the downside

As inspiring a story as Absaroka’s 15th victory in 59 starts is, Will Rogers Downs (WRD) remains a front line in the legal battle for racing integrity.

• The Regulation: Oklahoma has been a primary challenger to HISA (Horseracing Integrity and Safety Authority). While HISA is the federal law of the land, WRD has historically operated under the Oklahoma Racing Commission protocols during various legal injunctions.

• The Safety Signal: Even in a “patchwork” regulatory environment, a 10-year-old horse winning at a high level is the ultimate “Clean Bill of Health.” You cannot “trick” a horse into being a high-performer at age 10. That kind of longevity only comes from an owner who treats the horse as a multi-year asset, not a disposable bet.

The Investment Conclusion

Aaron Rodgers’ career is likely over because his “Market” has no room for a 42-year-old — though Philip Rivers tried to test that theory briefly last month. Absaroka’s career is thriving because the claiming game is a Liquid Market.

As an owner, you aren’t looking for the “Greatest of All Time.” Among quarterback’s that’s Tom Brady to many. And among horse racing fans, Secretariat is likely the first to come to mind. You are looking for the “Absaroka”—the asset that has been cared for, right-sized for its competition, and continues to pay dividends long after the “stars” have flamed out.

When I spoke to a CPA with a racing industry background about an idea I had, I was pleasantly surprised. Bottom-line: I’m turning my hobby into a business, a business I’ve been figuring out how to enter since I retired from managing other people’s money in 2020, after 30+ years in that hot seat.

According to a 2025 survey by Fidelity Investments, baby boomers on average have about $500,000 between their IRA and 401(k) accounts. So being a half a millionaire in your 60s and 70s is “average.” The career I retired from in 2020 was spent as a fund manager and advisor to high net worth families. And while our clients had a net worth in the $2-7mm range, I never would have thought back then that $500k would eventually be average.

So today, no longer in the business of delivering personalized investment advice (or any investment advice for that matter), I wonder…how will all of that wealth be used? If it is in retirement accounts, it can come out at age 60, but it has to come out starting at age 73.

You see, I used to be the one responsible for “other people’s money. But now, I’m the client, so to speak. I’m in my early 60s and for the first time, thinking about IRA withdrawal strategies. And while I write about investing over at my other Subsatck site, ETFYourself.com, as well as Seeking Alpha and Barchart, the target investment is ETFs, stocks, and bonds.

Here’s the thing about IRAs. They are taxed as ordinary income. So if someone’s effective tax rate is 20% and they withdraw $25,000 from a retirement account, what normally happens? $20,000 of that can be spent, but $5,000 is going to be the government’s cut. For people in high-tax states, it might be a 40% cut or more. So that $25,000 withdrawal is really only $15,000 of spending money.

So, why not spend it on owning racehorses?

I was going to make the move from investing hundreds in racehorse ownership to thousands anyway. But when I spoke to CPA Victor Collazo, whose parents were trainers and whose clients include many horse owners, I confirmed my suspicion about how retirement accounts and non-retired racehorses can be a powerful and enjoyable combination.

According to Victor, Since you are operating as a business, you have a powerful tool at your disposal: the ability to use the horse purchase to “wash out” the tax liability from your IRA withdrawal.

Under the 2025 tax rules (specifically the One Big Beautiful Bill Act or OBBBA), the tax benefits for horse racing businesses are currently at a historic high.

1. The “Wash” Strategy (IRA vs. Deduction)

The $25,000 withdrawal from your IRA counts as $25,000 of ordinary income. However, because you are buying racehorses (such as claimers) for a business, you can use 100% Bonus Depreciation. In 2025, you can deduct the full purchase price of a racehorse in the first year it is “placed in service” (the moment you claim it and it’s ready to race).

The Result: The $20,000 deduction on your Schedule C effectively cancels out the $20,000 income from your IRA on your Form 1040. You essentially move money from a retirement account into a business asset tax-free.

2. Key Business Requirements

To ensure the IRS respects this as a business and not a hobby, you should meet these specific “safe harbors” for the horse industry:

• The 2-out-of-7 Rule: While most businesses must show a profit in 3 out of 5 years, horse racing has a more lenient standard. The IRS presumes you have a profit motive if you show a net profit in at least 2 out of 7 consecutive years.

• The “Placed in Service” Rule: You must actually buy the horse and have it ready to race before December 31st of the tax year to take the deduction for that year.

• Operational Standards: You must maintain a separate business bank account and keep a “books and records” log (trainer invoices, nomination fees, purse receipts). Using a professional trainer is considered evidence of a businesslike intent.

3. Claiming Costs (The Hidden Expenses)

Beyond the $20,000 purchase price, your business can deduct:

• Training Fees & Board: Usually $60–$120/day depending on the circuit.

• Vet & Blacksmith: All medical and shoeing costs.

• Vanning: Transporting the horse between tracks.

• Jockey/Driver Fees: The “mount fee” (usually $100+) plus any percentage of the purse.

4. Important 2025 Update: Permanent 100% Bonus

Under the latest 2025 legislation, the “phase-down” of bonus depreciation (which was supposed to drop to 40% this year) was repealed. 100% expensing is now permanent for qualified property like racehorses. This means you don’t have to spread the $20,000 deduction over several years; you can take it all now.

Pro Tip: When you claim a horse, the track “Paymaster” will give you a 1099 at the end of the year for your gross purse earnings. Do not just report your net profit. You must report the gross purse as income and then deduct the trainer’s 10% and jockey’s 10% as business expenses to avoid an automated IRS flag.

Of course this is NOT tax advice. I got used to saying that back in my advisory days. Before even considering using IRA or 401(k) withdrawals to own and race horses, you not only need a good tax advisor.

You also need to be absolutely sure you won’t need that money any time soon. Remember that this is a business involving assets which are equines, not public company stocks or government bonds. As they say, usually referencing dogs, don’t let the tax tail wag the investment horse

Retirement accounts are flush. But using withdrawals to own racehorses is not gambling, if your intentions are straight. If you have any questions, comments or feedback on this, send us a message. I suspect this will be one of the more popular topics here, once more people start to think about the potential.

The 15-Minute Paddock Audit

When you are “claiming” a horse, you aren’t buying a pedigree or a dream—you are buying a physical reality. Unlike a public auction, there is no “return policy” and often no pre-race X-rays. Your entire “Due Diligence” happens in a 15-minute window in the paddock.

Savvy owners look for “The Red Flags”:

1. The “Filling”: We look at the ankles and knees. If a horse has “filling” (soft tissue swelling), it’s a sign that the joint is under stress. A horse that is “bandaged” on all four legs is often a horse that the current trainer is trying to “hold together” for one last check.

2. The “Drop” Logic: Why is the horse for sale? If a horse was competitive in $50,000 races three months ago and is now “dropped” into a $20,000 race, the industry is telling you there is a problem. The current owner is willing to take a $30,000 loss just to move the asset. Your job is to figure out if that “problem” is a career-ending injury or simply a horse that hates the current track surface.

3. The Breath: A horse that is “washing out” (sweating profusely) or breathing heavily before the race is burning its “Physics of the Finish” fuel before the gates even open.

The Claiming Box: A Legal Handshake

The transaction itself is deceptively simple. You (or your trainer) fill out a slip of paper with the horse’s name and your owner’s license number. You drop it into a locked box in the racing office before the horses leave the paddock.

At the moment the gates open, the title transfers. If the horse wins the race and the $15,000 purse, the old owner keeps the money. If the horse breaks a leg and has zero residual value, the new owner (you) keeps the horse. You are assuming 100% of the risk for a 100% “as-is” asset.

The Arbitrage Play

Why do we do it? Because of Arbitrage. The “Claiming Game” is essentially a market of “mispriced assets.”

• Surface Arbitrage: You find a horse that has been losing on Dirt but has a pedigree that screams “Turf.” You claim it for $25k, move it to the grass, and suddenly you have a $75k Allowance horse.

• Distance Arbitrage: You find a horse that is “quitting” at 6 furlongs (sprinting) because it has a slow “cadence” but a long stride. You claim it and move it to 1 1/16th miles (routing), where it can use its efficiency to outstay the field.

• The “Fresh” Move: Sometimes, a horse just needs a “change of scenery.” A new barn, a new feed program, or a different vet can unlock a level of performance the previous trainer couldn’t find.

The Ledger Reality

At HorseClaiming.com, we treat the claiming box as a “Buy It Now” button for a business. We don’t get emotional about the horse’s “story.” We look at the Condition Book, the Vet Folder, and the Price. If the math doesn’t work, we don’t drop the slip. But when the arbitrage is there? It is the most exhilarating transaction in the world of finance.

To a “Straight-Talk” owner, the OBBBA isn’t just about racing; it’s about sophisticated capital management. When structured correctly, a racing stable is no longer a drain on your wealth—it is a strategic shield.

The Barrier: Passive vs. Active Participation

The most critical distinction in the 2026 tax code is between “Passive” and “Active” ownership. If you simply buy a 5% share in a horse through a large-scale syndicate and wait for an email update, the IRS considers you a Passive Investor. In this bucket, your losses can only be deducted against other passive gains. For most high-earning professionals, this makes the horse a “hobby” in the eyes of the law.

To unlock the Tax Alpha, you must be an Active Participant. This generally requires you to meet one of several “material participation” tests—most notably, spending a significant amount of hours (often 500+) on the business or being the primary manager of the operation.

The Media-Business Pivot: The HorseClaiming.com Strategy

This is where the Media Business model becomes your most powerful financial tool. By running a platform like HorseClaiming.com, you aren’t just an owner; you are a publisher, a data analyst, and a media producer.

Your stable becomes the Research & Development (R&D) arm of your media company. Every trip to the backstretch, every interview with a trainer, and every biometric data point you publish serves as “Active Participation.” You are documenting your work in real-time. This documentation turns your “stable expenses” into “business expenses.” Your travel to the Kentucky Derby isn’t a vacation; it’s a “Field Reporting Trip.” Your vet bills are “Product Research.” This structure ensures that your stable’s costs are fully deductible against your active business income.

100% Bonus Depreciation: The Year-One Shield

The centerpiece of the OBBBA 2026 is the 100% Bonus Depreciation. In most industries, you have to spread the cost of an asset over several years. Under the current racing provisions, a Thoroughbred can be fully depreciated in the year of purchase.

If you buy a horse for $150,000, you can take a $150,000 deduction on day one. For an individual in the top tax bracket, that effectively reduces the “out of pocket” cost of the horse by nearly 40% through tax savings. You are essentially “buying the horse with 60-cent dollars.” When you combine this with the “Capital Recycling” strategy—selling the asset and rolling the proceeds into a new prospect—you create a tax-deferred engine that builds your racing brand while protecting your capital.

The Ledger Over the Luck

At HorseClaiming.com, we love the thrill of the win, but we respect the logic of the ledger. We believe the modern owner should spend as much time with their CPA as they do with their trainer. In the 2026 era, the “Sport of Kings” is only sustainable if you play it like a King—with a sharp eye on the tax code and a professional media strategy to back it up.