michael,

Without going into an essay on it I will try and explain it.

The chi square does not take into account just the winners it takes into account the number of losers as well. What I posted was a simple quick test (not the chi square test).

An easy way to do it has been posted by AngryPixie in a previous thread. Its easy to do in excel. In cell A1 put the number of winners, in cell A2 put the number of losers (not races but races minus winners), in cell A3 put the expected number of winners (sum of 1/price) and in cell A4 put the expected number of losers (races minus expected winners).

Then in another cell (lets say B1) put in the formula

=CHITEST(A1:A2,A3:A4)

It will come out with a probability for you. Most people adjust the prices to a true 100% market but it isn't necessary. You are looking for a number less than 1% in order to know whether the system is a winner or loser. Anything higher than 10% is regarded as being heavily affected by random noise (good or bad luck).

Good Luck.