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Frank Stronach has struggled for more than a decade to restore the popularity of the sport of kings, which some believe is in a death spiral amid the proliferation of other types of gambling and the rise of Internet betting.Michael Burns/The Globe and Mail

Frank Stronach's attempt to use the stock market to bring ownership of racehorses to the masses has run into a hurdle.

The controversial founder of auto parts giant Magna International Inc., who is also one of the leading horse breeders in North America, has temporarily shelved a plan to sell to public investors shares in six companies that would each own 20 racehorses.

"The whole idea behind this was to make racing more popular and affordable so that you don't have to be an overly rich person" to own a piece of a thoroughbred, Mr. Stronach said Thursday.

But that plan has been shelved, he said, because of "cumbersome" securities rules. A U.S. Securities and Exchange Commission filing by Awesome Again Racing Corp., one of the six companies, said the offer was withdrawn because of unfavourable market conditions.

Mr. Stronach has struggled for more than a decade to restore the popularity of the sport of kings, which some believe is in a death spiral amid the proliferation of other types of gambling and the rise of Internet betting.

His attempt to revive the industry began in 1998, when Magna bought Santa Anita Park.

But the purchase of the track near Los Angeles, one of horse racing's signature venues, contributed to a revolt by shareholders of the auto parts company. Acquisitions of other tracks followed and they were eventually spun off into Magna Entertainment Corp., which went into Chapter 11 bankruptcy protection in 2009 during the recession.

He purchased several of the company's tracks, however, including Gulfstream Park in Florida, where his vision of how to restore the grandeur of racing is now unfolding at a track attached to an upscale retail complex and a housing development.

But it was through Awesome Again, Red Bullet Racing Corp. and other proposed publicly traded companies named after some of his most successful horses that Mr. Stronach hoped to convince the average bettor to put down $10 (U.S.) a share to purchase a bigger stake in the business.

"The stock exchange rules were very, very cumbersome," he said, so the six public companies will now become limited partnerships with private investors taking stakes.

The six companies were going to sell shares without an underwriting syndicate. The shares were to be sold over the Internet and marketed at two of the tracks Mr. Stronach still owns, Pimlico in Baltimore and Golden Gate Fields in San Francisco.

The payoff for investors was to come in 2013 when each of the six companies would auction off the 20 horses and distribute to shareholders the proceeds of those sales and any money the horses had won during races.

The shares were restricted, however, to residents of just nine U.S. states, and two of those states imposed what amounted to means tests on potential investors.

Investors from Pennsylvania and Kentucky were required to prove that they had minimum annual gross income of $70,000 and a minimum net worth of that same amount, not including such assets as their vehicles and homes. Explaining such rules to bettors and convincing them to read a prospectus when they were at a track to watch horse races and place a few bets would have been difficult, said one source familiar with the process.

"There were a whole bunch of rules like that," Mr. Stronach said. "Just incredible."

He said hopes that running the six companies as limited partnerships will convince securities regulators that idea makes sense for publicly traded companies as well.

Mr. Stronach is chairman of each of the companies.

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