Dubai Racing Club (DRC) recently unveiled its plans to tokenize racehorses, in partnership with Tokinvest, a broker-dealer regulated by the Virtual Assets Regulatory Authority (VARA). This development may have implications for both the equestrian and virtual asset spheres, and might reshape how racehorse shares are held, as well as how fans engage with the sport.
The DRC announcement comes on the heels of news of Abu Dhabi’s Coin Technology Projects (the first-ever sports wagering operator to be licensed by the United Arab of Emirates (UAE) General Commercial Gaming Authority) launching PLAY971, which may also tap into the UAE’s horse racing calendar.
Last month, DRC’s CEO, Ali Al Ali, explained the tokenization scheme in further detail. In essence, the proposed tokenization scheme is an alternative, and potentially lower-cost, form of the syndication model that has traditionally opened racehorse ownership to the wider public. In summary:
- A horse owner decides they want to reduce their financial risk. Instead of bearing all the costs of training, veterinary bills, and upkeep, they sell a portion of their horse's future prize money to outside investors for the duration of a single racing season.
- Investors buy in through digital tokens on the Tokinvest platform, priced based on the horse’s value.
- The owner keeps full legal ownership of the horse and remains responsible for all costs but gives up a proportionate slice of any winnings to the token holders. In return, owners receive the proceeds from the token sale upfront.
- For the token holder, the proposition seems straightforward: exposure to the potential benefits of horse racing without any of the costs. If the horse wins, token holders receive their proportional share of the prize money. If it does not, their loss is limited to what they paid for the token. Additional benefits such as stable visits and race-day hospitality may also be offered to token holders, depending on their participation tier.
The tokenization programme is currently subject to regulatory approval and, if approved, may become available to the public as soon as September or October 2026 — in time for the start of the 2026-2027 racing season.
From a legal perspective, this structure raises certain issues that will hopefully be clarified during the approval process. As structured, token holders would not be horse owners in the traditional sense, as they would hold no legal title to the animal and bear no liability for its costs. Instead, they hold a contractual right to a share of future earnings, linked to the performance of a living asset. How this right might be characterized under UAE law and how regulators and holders may enforce those rights if a dispute arises require clarification.
In addition, equivalent structures have faced further regulatory hurdles where utilized in other markets. In the United Kingdom, for example, passive token holders sharing returns from a horse managed entirely by someone else may attract Financial Conduct Authority scrutiny as a collective investment scheme. In the United States, a profit-linked token of this kind may fall within the Howey test for investment contracts, raising potential securities registration questions. Dubai’s structural approach differs in that regulators designed VARA to accommodate real-world asset tokenization rather than retrofit the existing regulatory regime for these new structures.
As the wagering side of horse racing continues to grow in the UAE, the government may also introduce new requirements to regulate both new products and the more traditional “on-course” bookmakers model known in other markets, such as Australia and the United Kingdom.