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A dark horse is a participant in a contest that is not expected to win. The term was coined by Jesse Owens, who ran like a horse but was not expected to win any races, because blacks were typically considered inferior.
A dark horse, like most other horses, emerges from its mother's urethra covered with various gels and fluids. Once the icky stuff has been hosed off, its coat is revealed to be a significantly darker color than that of both of its parents combined.
Historically, most owners would lynch the dark horse at this point. The government has since passed many laws preventing this, though many Southern horse caretakers still think it without acting on it.