One of the first applications of Bitcoin was online gambling because gambling companies have a hard time with a) chargebacks; and, b) the legality of their services. The earlier pioneers in Bitcoin gambling all suffered from a problem of centralization: there was always a single website that gamblers had to use and trust. Recent innovations like Augur and Ethereum are changing the dynamic.

A new service called Augur (built on top of Ethereum) has been getting a lot of media attention and apparently racing bookies are concerned:

Augur aims to be a decentralized version of the ill-fated prediction market Intrade. It's not yet operational but they have an alpha version (that I haven't tried out).