This was actually the subject of one of the very first Questions of the Day, which ran back on May 14, 2005.
For those of you who don't know the game and didn't catch the original answer, Sigma Derby is an endearingly low-tech electronic horse-racing game with a horrible house edge (12%-15%) that was often found close to the race and sports book. Up to 10 people could play at any time and everyone sat around the miniature "track" as five mechanical horses competed in race after race. The minimum bet was 25ยข and the only bet you could make was a "quinella," i.e., choosing which two horses would finish first and second, in either order.
Note that we're using the past tense here. Until not too many years ago, Derby was available in at least 10 casinos around Las Vegas, including the New Frontier, but by the time the original QoD ran, there were but three games remaining at MGM Grand, Excalibur, and, as you mention, Luxor (which used racing camels instead of horses).
Today it's almost extinct in Las Vegas, with just one Sigma Derby game remaining at the MGM Grand, and we feel its days must be numbered. (We actually found an online petition titled "Save our Sigma Derby Game From Extinction," but it had garnered only 181 signatures by the closing date, which was July 2 last year -- somewhat short of the goal of 10,000.)
Back when we ran this answer before, other Sigma Derbys had been spotted in casinos in Cyprus, Malaysia, Venice, Panama, Venezuela, Canada, and Japan (the latter two had a much fancier modern version called Sigma Derby VI), but we wouldn't recommend making a special trip to any of these places, as we can't guarantee that the game, and in some cases the casino itself, is still there: Windsor's went about six month ago, as did the Flamingo Lauglin's, and the Cypriot casino in question seems to have vanished off the map altogether.
To see Vegas' last remaining Sigma Derby machine in action, click here for a blog by Vegas Rex, who recently took photos and even posted a video of a game taking place.
