Probably take a piece of it and try a new business, keeping some aside for a rainy day. (maybe an IRA) ... I don't trust the stock market and that kind of money isn't going to get you much in real estate (maybe a 2 car garage)
A racehorse for just $35,000 (Rs. 1,599,325 for me ATM according to XE.com). :| I dunno about Australia but here in India, it would cost 3 or 4 times as much to just buy a good racehorse. Maintainence costs extra.