Lisa and the other members of Springfield Elementary's school band enter a music competition together at a state fair, performing James Brown's "Living in America". However, they lose to the Ogdenville Elementary band, which performs John Philip Sousa's "Stars and Stripes Forever" and uses red, white, and blue glowsticks to form a flag. Lisa accuses Ogdenville of cheating as the use of visual aids is against the rules of the competition. She later writes a letter to President Clinton, complaining about the situation. At the fair, Homer and Bart see a horse named Duncan that can dive into pools. The Simpsons take Duncan home after his sleazy owner is accused of animal cruelty and flees. However, they end up having financial issues because of Duncan; it costs them US$500 a week to keep him.
Homer and Bart try to think of a way that Duncan can make money to help offset the costs of keeping him. Bart discovers that Duncan is a fast runner and suggests that he should be a racehorse. Homer enters Duncan at the Springfield Downs race track, with Bart as the jockey. However, a frightened Duncan loses his first race as he refuses to leave the stall until all other horses have finished. Homer and Bart find a strategy for Duncan to win by turning him into a frightening horse named "Furious D", complete with dyed hair and one of Lisa's bracelets for a nose ring. He intimidates the other horses and wins several races. Homer is soon invited by the losing jockeys to have a beer in their lounge, which turns out to be a secret lair. The jockeys reveal themselves to be murderous elf-like creatures who want Homer to have Duncan lose the upcoming race. They threaten to eat Homer's brain if he does not comply. Though intimidated at first, Homer later vows to deal with those "murderous trolls".
At the Springfield Derby, Duncan wins the race, and the furious jockeys chase after Homer and Bart. With the help of Marge and Lisa, who spray water on the jockeys with a hose, Homer is able to put the jockeys into a garbage bag and get them sent to the dump. Afterwards, Homer and Bart prepare for Duncan's retirement from racing to start a new life as a stud. President Clinton then shows up at the Simpsons's house to see Lisa, presenting her with a plaque. Clinton says that Ogdenville was wrong to use glowsticks and that Springfield Elementary's band is the true champion.