I think it all has to do with math --- so like, 7 horses to a race, and since there were 3 races -- well, thats possibly 7x7x7 = 343 possible combinations of winning horses....

So,
Race 1 Race 2 Race 3
Horse #1 Horse #1 Horse #1 ==> combo 1
Horse #1 Horse #1 Horse #2 ==> combo 2
...
Horse #7 Horse #7 Horse #6 ==> combo 342
Horse #7 Horse #7 Horse #7 ==> combo 343

So, i guess if the con man charted all this out, and then called 343 different people, he'd start out with 343 people (49 people for each horse, 7 horses) on the first race with all combos, and the drop all the people with the wrong bets.

Then, for race #2, he'd be down to 49 people to call (7 people for each horse, 7 horses), and then drop all the losers from that race.

For the 3rd race, he'd only have called 7 people, and kept the 'winner' -- so in this case Tom.

stupid math :P