I think Karma is a useful concept for some people, in that it makes them be more responsible for their lives, since they expect a "luck reward" for their deeds. We can say this is not much different from how Christians think, since they also expect a reward for their good deeds (both now and in the after-life). Useful as it is, it's still quite pathetic for people to act morally just because they'll gain something from it, but I digress... The idea of Karma is not really harmful when it's used for "this life" only, but it becomes really dangerous when reincarnation is incorporated.
The problem reincarnation introduces is quite obvious: all the suffering and injustice in this world are attributed solely to the individual, but not only to what he/she has done in this life, but to all his/her previous lives too. In other words, if something bad happens to you, it's because you deserved it.
This line of thinking led to the creation of the most morally disgusting, racist religion ever -- Kardecist Spiritism (which for some reason is quite big here in Brazil). Spiritism tries to explain the difference between "civilized" and "uncivilized" nations by saying they are due to differences in race intelligence and "spiritual development". But it gets worse, Spiritism teaches that being born in an "inferior race" is a punishment for your past lives misdeeds, and that if you be a "good person" in this life you'll be blessed by being born white on the next one. In fact, if you mix Karma with reincarnation, this is the only possible explanation for why "black countries" are less developed than "white countries". Of course, if you are white and poor it's probably because you were a rapist or something in a past life... Yes folks, this is the fastest growing religion in Brazil.
The concept of Karma is not a good explanation for why some people are more "lucky" than others (since in many cases a bad effect comes from a good cause, or no cause at all; or vice versa), unless you also incorporate reincarnation, which leads to all sorts of sick ideas. Like most religious concepts, Karma only becomes useful and beneficial if you ignore all evidence and logic, but we can say the same about any kind of crazy ideas...