Crazy Horse accepts races (5)
I believe the answer is:
batty
'crazy' is the definition.
(thesaurus)
'horse accepts races' is the wordplay.
'horse' becomes 'bay' (I've seen this before).
'accepts' means one lot of letters goes inside another.
'races' becomes 'tt' (Isle of Man Tourist Trophy races).
'bay' placed around 'tt' is 'BATTY'.
(Other definitions for batty that I've seen before include "Crazy (sl.)" , "out to lunch" , "As mad as a mouselike mammal" , "not sound" , "Nuts" .)