Lisa and Wayne Badger bought two-year-old Diddy for their children as a present.
Originally the pony was kept in a field but they say they decided to move the animal to the back garden of their terraced house in Dudley when they became concerned about the pony's health.
But after a tip-off, the RSPCA inspectors found Diddy so emaciated his backbone was visible.
Dudley Magistrates Court head the couple fed the pony on vegetables and potato peelings and kept the animal in the 15 foot long garden surrounded by gas canisters and old toys.
Overnight the pony was locked in the family's small garden shed.
The couple agreed to sign Diddy over to the RSPCA where he was treated for lice and malnourishment. The pony has now been re-homed.
Lisa Badger said: