Remember when Steele's team comes in from the sled-race in the beginning? Well, you may also recall when Rosie's hat was blown out of her hand and onto oncoming sled-team. Balto then darts out and beats Steele to it. Nice job Balto!
 

Then, when the Steele's musher gets his photo taken for winning the race, Steele comes in to hear his musher say "do you think Steele is losing his edge?" The photo guy replies with "yeah, it looks like any dog can out run him."

The point is, Steele just ran a full blown race across some great distance while Balto sprinted 100 feet, now of course a young, well- rested dog can beat another dog that was just finishing a long race, thus the second dog was tired to the bone, and easy to beat.