The Kentucky Derby might soon become more than just getting drunk and screaming at animals, because betting at the track just got a hell of a lot easier, and riskier too.

Picking the winner at the Kentucky Derby this Saturday could earn you some winnings, but for the guys owning those horses stand to make millions from their investment.

International Equine Acquisitions Holdings allows you to own a stake in not just one horse, but a full portfolio of potential winners. It works like a hedge fund.

You invest with IEAH, they use your money to breed, feed, and promote their stable of horses, and if any of those ponies turns out to be a big winner, you could be counting a lot of money. So far 100 investors have contributed over $1 million to the fund.

To make things a little more legit, IEAH also owns and operates an equine hospital that will open this year to care for racehorses. This hospital part of the fund would bring in and maintain some semblance of steady revenue.

Skeptics of this whole idea say it’s bogus because you can’t predict revenue. There’s no way to know how much you could expect to win depending on how the horses place. It’s may not be worth the added risk and slim chance of payoff.

According to an article in the Louisville Courier-Journal, IEAH principal founder Michael Iavarone said:

“As long as we’re within the law … I don’t care what people think whether it’s a good idea or it’s not.”

This does not sound like a guy who should be managing racehorse money. Really, his only defense to the obvious potential flaws in his business plan is ‘as long as it’s legal we’re going for it’.

I mean, yeah, it would be great if these horses won and you got a ton of money, but how’s that any different than just placing a single bet?

Terrible idea or brilliant strategy? Think the favored ‘Big Brown’ can win it? What’s your favorite Mint Julep recipe? Let us know in the comments.

Louisville Courier-Journal: Racehorse hedge fund considered, May 1, 2008
CNBC Sports Biz: Hedging Horse (video), May 1, 2008