WHY THE PEGASUS WORLD CUP ATTRACTS OWNERS

What prompts racehorse owners to put up $1 million to enter their charges in the Pegasus World Cup Invitational?  The apparent answer is a huge payout if their horse wins and a big check for second or third place.  But that is an incomplete explanation for the motivation since some of the entries have little chance.

Horse racing draws owners from a wide assortment of backgrounds.  An oft-seen trait among them is an apparent affinity for risk-taking across life’s endeavors, as personified by legendary historical characters like Edward Bradley, James Keene, and John Madden.

Racehorse owners whose fortunes were made in not-for-the-faint-of-heart business and financial ventures are still plentiful.  To illustrate, Seth Klarman of Klaravich Stable–who grew up blocks from Pimlico racetrack–is the chief executive officer of Baupost Group, which is one of the largest global hedge funds.  His tolerance for problematic outcomes is demonstrated by Baupost’s ownership in late 2017 of nearly $1 billion in highly hazardous debt issued by Puerto Rico.

Another example:  Vincent Viola, part owner of 2017 Kentucky Derby winner Always Dreaming, accumulated a substantial part of his billion dollar-plus net worth by betting on oil prices at the New York Mercantile Exchange.  Even West Point graduate Viola’s initial occupation, U. S. Army soldier, is perilous.

Such narratives are common around the globe.  Irish businessman J. P. McManus, who owns the largest stable of National Hunt horses, made a substantial part of his considerable wealth via currency trading.  The Guardian wrote “McManus doesn’t bet in thousands; he bets in hundreds of thousands.”

Similarly, prominent Wall Street notables like to play poker for big pots in their spare time.  Business Insider once published an article titled “The 22 Biggest Poker Players on Wall Street.”

In January 2018, instead of a hedge-fund titan turning to horse racing or poker, the reverse occurred.  That is, a high-stakes gambler crossed over to the world of high-stakes investing.  Bloomberg reported: “The World’s Best Female Poker Player Joins the World’s Biggest Hedge Fund.”  The reference is to 33-year-old Vanessa Selbst, who took a full-time position with Bridgewater Associates.  Her bio reads:

“Vanessa Selbst is a professional poker player and the highest earning female poker player of all time, with over $11.6 million in total winnings.  She is a member of Team Pokerstars Pro, where she plays under the username ‘V. Selbst.’  A native of Brooklyn, New York, Vanessa has been playing poker for over 10 years, starting out in online and live NLHE and PLO cash games.  In 2007, Vanessa hopped onto the live tournament scene and never looked back (apart from that two-year hiatus she took to go to [Yale] law school)!”

Selbst says that successful gamblers and exceptional investors have “so many similarities,” such as patience, strategic flexibility, and aggressiveness when “you [think you] have the best hand.”  She compared her work at Bridgewater with poker playing:  Like gambling, investing is “also really freaking difficult.”

Horse racing and other skill-combined-with-chance plays have always been compelling to driven individuals who have made their marks by starting businesses or trading and investing on financial exchanges.  Risk in the pursuit of great rewards is a powerful allure.  That verity will be on display Saturday in the Pegasus World Cup Invitational.

Copyright © 2018 Horse Racing Business

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