If you are matched betting on horses, you will inevitably come across a Rule 4 at some point. Most people first discover them when they look at their betting history and find that they have been paid (sometimes a lot) less than the stated return when they placed the bet. There is generally no need to panic, as your lay bet and resulting liability will have been reduced by a similar factor. It is worth noting that the exchanges and bookmakers reduce the amount in slightly different ways and this will be explained in this article, sometimes it works in your favour and sometimes it doesn’t, but that is the risk we take when it comes to matched betting on horse racing.

What is a Rule 4?

A rule 4 occurs when a horse is withdrawn from a race after you have placed a bet. Let’s say that You place a bet on a horse at odds of 5.0, but there is another horse in that same race that has odds of 1.5. This horse is a heavy favourite and is therefore very likely to win. This has been factored into the price of your horse and is why you were able to back it at odds of 5.0. It has a lower chance of winning because there is another horse that is better than it.

Now let’s say after you place your bet on the horse with odds of 5.0, the favourite (the one at odds of 1.5) now withdraws from the race. Your horse now has a much greater chance of winning because that better horse is now a non-runner. Of course it would be great if you could keep the odds of 5.0 on your runner, but alas, the bookmakers and exchanges are allowed to reduce the payout (and liability) of any horse that wins the race by what’s known as a Rule 4 (bookmakers) and a reduction factor (exchanges).

Rule 4 at the Bookmaker

The odds of the horse at the time it was withdrawn, will decide the how much the payout is reduced by for all winning bets and these are as follows:

 

Fractional Odds at Withdrawal Decimal Odds at Withdrawal Deduction
1/9 or shorter 1.11 90%
2/11 to 2/17 1.18 to 1.11 85%
1/4 to 1/5 1.25 to 1.2 80%
3/10 to 2/7 1.3 to 1.29 75%
2/5 to 1/3 1.4 to 1.33 70%
8/15 to 4/9 1.53 to 1.44 65%
8/13 to 4/7 1.62 to 1.57 60%
4/5 to 4/6 18 to 1.67 55%
20/21 to 5/6 1.95 to 1.83 50%
Evens to 6/5 2.0 to 2.2 45%
5/4 to 6/4 2.25 to 2.5 40%
8/5 to 7/4 2.6 to 2.75 35%
9/5 to 9/4 2.8 to 3.25 30%
12/5 to 3/1 3.4 to 4.0 25%
16/5 to 4/1 4.2 to 5.0 20%
9/2 to 11/2 5.5 to 6.5 15%
6/1 to 9/1 7.0 to 10.0 10%
10/1 to 14/1 11.0 to 15.0 5%

 

Rule 4 at the Exchange

The exchanges reduce the payout (your liability) using a slightly different method, by what’s known as a reduction factor. This basically reduces the payout and therefore liability by a percentage, based on it’s likely chance of winning the race and is very similar to a rule 4.

You can read more about Betfair reduction factor here.

How to settle Bets with Rule 4 / Reduction Factors

When you come to settle your bets on Yesbets, you will need to check the resulting returns on any bets that win. You will need to enter the new win amount as well as the new liability amount and then settle it, this will give you your new profit/ loss. You should be checking the returns and liability are correct for every bet to keep your balances up to date in any case, but this should help explain why the numbers are vastly different in the case of Rule 4’s.

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