Investing in racehorses has traditionally been limited to the wealthy elite, but a new scheme is changing this dynamic in Dubai. A company named Tokinvest is launching a racehorse tokenisation program that significantly lowers the cost of ownership, allowing investors to buy a fraction of a racehorse through a digital token that represents their share.

This innovative concept, known as tokenisation, has been gaining traction in various sectors, including real estate, where investors can buy shares in properties instead of entire units. Now, this model is being applied to racehorses, making it possible for more people to participate in what was once an exclusive market.

Tokinvest, which is regulated in the UAE, has partnered with New Zealand’s DSG Group to offer this investment opportunity. According to Matt Blom, co-founder and chief strategy officer at Tokinvest, individuals can start investing in racehorse tokens for as low as Dh1,000. He explained that the goal is to provide access to the economic performance of the horse without requiring outright ownership. The tokens will represent fractional exposure to the costs and potential rewards associated with training and managing a racehorse over a year.

Investors who purchase these tokens will own a stake in a professionally curated selection of racehorses for a racing season. If any of the horses perform well or are sold, investors could receive a payout. Tokinvest plans to detail the full structure of this scheme in its upcoming whitepaper.

Ryan Johnson-Hunt, co-founder and CEO of DSG Group, emphasized that racehorse ownership is just the beginning. He noted that together, they are “unlocking new asset classes and expanding access to investment opportunities that were previously out of reach for most investors.”

Under this scheme, investors will not actually own a piece of the horse but will gain access to the potential economic upside throughout the racing season. Blom clarified that this model resembles a performance-linked fund rather than traditional ownership. He also mentioned plans to enhance the experience by offering race-day updates and exclusive content in future versions.

Purchasing a racehorse outright can cost anywhere from tens of thousands to several million dollars, depending on various factors like pedigree and training history. This high entry barrier has led to the creation of syndicates, where multiple individuals share ownership, thereby dividing expenses and potential returns. Racing Life Dubai, for example, pools investors to select racehorses with winning potential. However, the starting investment for such syndicates is significantly higher, with shares beginning at £5,000 (around Dh24,000) for a five percent stake.

With the advent of tokenisation, the entry costs are considerably lower compared to traditional ownership and syndicates. Depending on the fund, hundreds of people could own tokens in the same group of horses, as is the case with Tokinvest. The token price typically covers standard expenses like training and care, with most net proceeds going to the investors. Furthermore, the transparency provided by blockchain allows participants to track transactions, enhancing trust in the system.

Steve Piek, CEO and founder of Australia-based BTX Racing, described their offering of micro-shares in racehorses, making ownership accessible to a broader audience. He stated that BTX was the first company globally to provide a fully regulated racehorse ownership model based on blockchain technology, with a minimum investment of $75 (Dh275).

The Middle East has a rich horse racing heritage, exemplified by the Dubai World Cup, which boasts a total prize pool of $30.5 million (over Dh100 million) this year. While tokenised ownership is still developing, providers are exploring ways to offer perks similar to those of traditional ownership, such as race-day access.

Platforms like The Winners Circle, powered by Zilliqa, are utilizing blockchain to enhance fan engagement through digital tokens that grant voting rights and exclusive content access. Additionally, Maxima is a racehorse exchange platform that offers an NFT marketplace, allowing individuals to own horses and potentially earn from them.

The introduction of tokenisation in racehorse ownership is set to democratize access to this once-exclusive investment opportunity, creating new avenues for participation in the equestrian world.