Horse-Racing (Hadith No. 412)
Narrated ‘Abdullah bin ‘Umar:
Allah’s Apostle ordered for a horse race; the trained horses were to run from a place called Al-Hafya’ to Thaniyat Al-Wada’ and the horses which were not trained were to run from Al-Thaniya to the Masjid (mosque of) Bani Zuraiq. The sub narrator added: Ibn Umar was one of those who took part in the race.
Yes, Prophet (SAW) ordered that horse race. But it was a healthy competition, which benefited the horses as they were used in battles and needed to stay fit. There was no gambling involved in it, as it is today. Wikipedia says:
A major part of horse racing’s economic importance lies in the gambling associated with it*, an activity that in 2008 generated a world-wide market worth around US$115 billion (Global betting stable, but some countries suffer recession).
*Campbell, National Gambling Impact Study Commission Final Report, p. 111
Gambling is not allowed in Islam, whatever shape it may take. But breeding horses, training them for jihad is encouraged.
(I want a horse! :D)