Shortly after the end of the Berserker war, the Dragon Riders started a tradition of Dragon Racing. As seen in Dawn of the Dragon Racers, sometime during the next three years, Snotlout Jorgenson invented the launcher for the dragon races. It took Snotlout 32 tries to perfect the launcher. He also stacks rocks under it to adjust the aim.
By the time of the events of How to Train Your Dragon 2, Gobber had given the launcher wheels for greater mobility. Gobber then used it during the dragon race to fire the black sheep into the air. It is used again toward the end of the movie as a way of distracting Drago's Bewilderbeast so Hiccup could get Toothless back. Following Drago's defeat, Gobber continued to use the launcher for the dragon races.
The launcher is constructed of a giant cross bow made from wood and iron. It's fixed on a round wooden platform, to which Gobber later attaches wheels. When Snotlout first created it, it was plain and unpainted. By the events of the second movie, it was painted red, with white and yellow designs added to it. The very top of the launcher has carvings of dragon heads, complete with eyes.
The sheep sits in a large cauldron, and at the pull of a lever, the cross bow releases the tension on the straps holding the cauldron, thus launching the sheep high into the air for the racers to catch. The sheep launched is the special black sheep.