What is the ruling on participating with horses in horse races, knowing that the state is the one that gives out the prizes, and a portion of them might be taken from prohibited gambling funds? And is raising horses used in races considered aiding in wrongdoing?

Contests and betting on horses are permissible, based on the hadith: "There is no betting except on arrows, or on hooves (camels), or on horses." There is no objection to raising horses used in races. The unlawful incidental matters that may accompany races do not affect the permissibility of raising horses, because horses are not usually bred for such purposes. However, if one knows that a person intends to use a horse for gambling or any unlawful act, then it is not permissible to raise it for him, as this constitutes aiding in sin. This ruling applies to everything intended for unlawful purposes, such as selling weapons to belligerents.