Yes, and this is how Swedish people pronounce this word. It's just an exception you have to learn.
Another one is "det", which sounds like English "day" or Swedish "dig" but with an elongated, lifted "y" sound at the end. You'll come across it soon.
The suggested translation is They have horses and dogs. In some versions of English, they say They have got … instead.
Possessive "have got" in English is synonymous with the possessive usage of "have". Confusingly both of these have other meanings (e.g. "have got myself" or "have a laugh") where they are not interchangable.
It really sounds like "De ÄR hästar och hundar" to me. :( I wish I were better at distinguishing är and har when the speaker's talking fast