The top range of horses run in so called graded or group races. To enter a race, owners need to pay a stake, which amount flows into the betting pool for the winning horse.
Group 1 races are categorised as the most prestigious races as only the best of the best are entitled to race against each other.
Group races are categorised as follows:
a) European Group races:
Group 1 (G1) - (Classics and other races of major international importance)
Group 2 (G2) - (less important international races)
Group 3 (G3) - (primarily domestic races)
b) North American races: The best horses run in Graded Stakes Races instead of Condition races. Classifications are similar to the one rest of the world.
c) Australian and New Zealand races: The best horses run in Group races, which are chosen by the Australian Racing Board and the New Zealand Thoroughbred Racing Incorporated. There are four classifications:
Note that Group One races(G1) may be run under handicap conditions in Australia but Weight for Age (WFA) conditions in Europe. Races may also be restricted to age groups or stipulated gender.