You will need to have a
VERY POWERFUL computer to run 500 karts in a race.

Even if you did have a computer that was powerful enough to do that, it wouldn't work with any of the current tracks because they don't have enough starting positions. You can increase the maximum number of karts you can have in a race by changing the following line in stk_config.xml. The comment above it explains why you can't have a lot of karts in a race.
- {l Code}: {l Select All Code}
<!-- Maximum number of karts to be used at the same time. This limit
can easily be increased, but some tracks might not have valid start
positions for those additional karts. -->
<karts max-number="20"/>
If you tried increasing this number to something huge like 100, the game would probably crash if you started a race. Thus, this is just not possible to change it to 500. You might be able to change it to something like 30-50 karts for some of the newer tracks (could someone confirm this?).
Hope you found this helpful!
ArDanWol