You might still be confused after reading my post. I tried to say it in plain English as good as I could but statistics are not an easy area to understand without a lot of study.

So after reading my post you are probably going to go ... ****** ? How do I use this for making money in gambling ?

Well the only areas I know of that it is extensively used is prediction in football scores. Here is an example http://www.bettingexpert.com/blog/h...-poisson-part-2

But here are some ideas where statistics might help you with ratings and punting in general:
- Find confidence intervals for your ratings
- Find your edge using chi tests
- Using distributions to model your odd distributions.
- Using distributions to model your profit distributions
- Using distribution on odds vs finishing position to determine likely finishing chances.
- Using distribution of your rating to finishing position to likely determine finish position.

The list could go on forever. If I had to decide on what I concentrate on if I was you I would look into is understanding the confidence level of each of your ratings and coming up with a "ratings range" for each horse. If you find you rated a horse 20% and you find standard deviation is 5% then your rating of 20% is really a rating range of 15%-25%. You could come up with 1 std dev ratings and 2 std deviations ratings.

If you do this you would then have a rating system that says :

Horse A : Predicted 20% chance of winning, but range 15%-25%. (5% deviation)
Horse B : Predicted 50% chance of winning but range 38% - 62% (12% deviation).
Horse C : Predicted 30% chance of winning but range 23% - 37% (7% deviation).

Looking at the above you could be fairly certain Horse B is going to win. Its lowest rating is 38% and the highest possible rating of any other horse is 37%. The overlaps is where you are going to be able to identify the races where the favourite is likely to lose or the field is so close its too hard to pick a winner.

Hopefully someone gets something out of this.