A Rule 4 deduction is a cut a bookmaker takes from your winnings when a horse is withdrawn after you have placed your bet. The size of it comes from a fixed industry scale, running from 90p in the pound when an odds-on favourite comes out down to nothing at all once the withdrawn horse was bigger than 14/1. Your stake is never touched. Only the winnings.

For a matched bettor that is half the story, because the exchange reduces your lay bet too, using a different calculation on a different trigger. Most of the time the two roughly cancel. This guide is about the times they don't. If you are new to the lay side, start with what matched betting is and how a lay bet works.

Bookmaker and exchange rules change. Last verified: 2026-08-03.

Summary#

• A Rule 4 comes off your winnings, never your stake, on a 19-band scale keyed to the withdrawn horse's odds at the official notification.
• The scale runs from 90p down to 5p and stops above 14/1. Multiple withdrawals cannot total more than 90p.
• Bets struck at Starting Price are exempt. Early and board prices are not.
• An exchange applies its own reduction factor instead: different setter, different trigger, different arithmetic.
• The bookmaker cuts your winnings while the exchange's win market cuts the traded price, so an identical percentage leaves the two legs of a matched bet at different numbers.
• The bookmaker's each-way place count is recalculated on actual starters while the exchange's is frozen at market load. That mismatch, not the percentages, is what costs extra-place bettors money.

What a Rule 4 deduction actually is#

The name comes from Rule 4 of the Tattersalls Committee's Rules on Betting, first issued in 1886 and last revised in 2010. Rule 4(C) covers a price taken on the day, followed by official notification that a horse is withdrawn. It says the layer's liability against every remaining horse "will be reduced in accordance with the following scale depending on the odds current against the withdrawn horse at the time of such official notification".

The wording does the work. What shrinks is the layer's liability, which is your winnings. Your stake rides free. Back £50 at 8.0, win, and have 25p in the pound applied, and you collect £262.50 of profit rather than £350, plus the £50 back. Sky Bet's rules say the same: your full stake is returned whatever the deduction.

One nuance most ranking pages skip: the Tattersalls rules bind on-course licensees, and online bookmakers adopt them into their own terms rather than being bound directly, which is why the wording around the scale varies by operator.

The deduction scale#

Transcribed from the Tattersalls document itself. Several widely shared versions of this table, including ones currently appearing in AI-generated summaries, get individual bands wrong.

Three facts sit around that table and rarely get printed together. Where two or more horses come out, "the total reduction shall not exceed 90 pence in the pound". Where withdrawals leave a single runner and therefore a walkover, all bets on the race are void. And "over 14/1" means exactly that, so a withdrawn 14/1 shot still triggers the 5p band while a 16/1 shot triggers nothing.

When Rule 4 applies, and when it doesn't#

• Starting Price bets are exempt. Bets made at SP "are not affected, except in cases where insufficient time arises for a new market to be formed". Taking SP puts a deduction out of reach.
• Early and board prices are caught. Early prices are day-of-event prices offered more than 90 minutes before the off, and Rule 4(C) uses the price current at the withdrawal.
• Ante-post bets sit outside Rule 4, with no stake back either. An ante-post bet on a horse that never runs is simply a loser.
• Bets struck after the market reforms are unaffected, and Betfair applies no reduction factor to bets matched in running.

What the exchange does instead#

An exchange does not use the Tattersalls scale at all. Betfair's exchange horse racing rules describe a reduction factor: when a market loads, "each horse is given a 'reduction factor', based on a forecast price, which is expressed as a percentage". The input is a number the exchange sets from its own forecast, not the withdrawn horse's live price read off a table.

Betfair's help copy is inconsistent about how much that matters. Its Rule 4 page tells Sportsbook customers the Exchange "applies a separate non-runner reduction calculation", then a few paragraphs later tells Exchange customers deductions are "pretty much the same" on both. Trust the binding rules page.

The reduction applies to matched bets for backers and layers alike, so your liability moves whichever side you took. In the win market it fires only at a reduction factor of 2.5% or greater, and cancels all unmatched offers to lay when it does. In the place market every factor is applied however small, with unmatched lay offers cancelled only at 4.0% or above. Prices never fall below 1.01. On timing, Betfair says factors may be updated at its discretion "but after approximately 15 minutes (approximately 5 minutes for Australian and US markets) from the scheduled 'off' time of a given race, they will be updated only in exceptional circumstances". No Betfair page disambiguates that, so treat it as approximate.

The arithmetic, side by side#

Here is the part nobody publishes. The two mechanics are not one operation under two names, and the gap shows up in a single line of arithmetic.

Those are Betfair's own numbers. Its place-market page works £10 at 8.0 through a 25% reduction factor to £52.50 of winnings and calls that an effective 6.25. It then notes in brackets that "in a win market a 25% Reduction Factor would calculated a price of 6.0".

Subtract the second row from the first and something clean falls out. The gap is 0.25, which is the deduction itself. That is not a coincidence of these numbers: expand the algebra and every term with the original price cancels, so the bookmaker's adjusted price is always higher than the exchange's by exactly the percentage applied, at any price you took.

That drift runs in the matched bettor's favour, and the reason is structural: a percentage taken off winnings is gentler than the same percentage taken off the price, and you are on the gentle side at the bookmaker. The win row moves by roughly your back stake multiplied by the deduction, so 5p on £50 is small change and 40p on £50 is not.

Two caveats keep that honest. The percentages are rarely identical, one coming off a coarse 19-band scale and the other off a forecast-derived figure normalised across the field. And the cushion narrows at long prices, where the exchange's number needs to come in only slightly below the bookmaker's for the drift to reverse. For the exact figure, the Rule 4 calculator takes both sides and reports the adjusted odds and the lay stake that would level the position again.

Each-way and extra places: the mismatch that actually costs money#

The percentages are the noisy part of Rule 4. The place count is the expensive part, and it is the one nobody warns you about.

At the bookmaker, place terms settle on actual starters. Tattersalls Rule 3 says all each-way bets other than ante-post "will be settled on the actual number of starters". Sky Bet puts it plainly: place terms "will be determined by the number of horses coming 'under starter's orders' and not by the number of declared runners when the price was taken". Its extra place concessions are "liable to change in the event of non-runners" for the same reason. A 16-runner handicap paying four places becomes a 14-runner handicap paying three once two horses come out.

The exchange does the opposite. Betfair's rules state that "once opened, the number of winners in 'to be placed' markets will not be affected by further non-runners", and its each-way markets hold their place count too. The bookmaker's places shrink while the exchange's stay put, and your two legs stop describing the same bet.

Both directions matter. An extra-place offer can lose the extra place it was built on, and the exchange can end up paying a place the bookmaker no longer does. So build one check into the routine: re-read the bookmaker's advertised place count after every non-runner, before the off, and resize from the new terms. Have the each-way calculator and today's extra-place races open while you do it. For the terms themselves, how each-way matched betting works and how place terms are set cover the ground, and each-way arbitrage is where the divergence bites hardest.

There is a reassuring half. In the exchange's place market the reduction applies to potential winnings, the same shape as the bookmaker's deduction, so the percentage side of each-way work behaves better than the win side. It is the place count you are watching, and big-field handicaps like the Ebor at York are where it shows up.

What to actually do when a horse comes out#

Four cases, and only two of them ask anything of you.

You backed and laid before the withdrawal. Usually nothing. Both legs adjust on their own, the drift is small at typical deductions and tends to run your way, and re-laying costs spread and commission to chase it.

You backed but had not yet laid. This is the case that costs money. Work out the adjusted back odds first, then size the lay from that number, because laying against the price you originally took leaves you carrying exposure you never meant to take. Worse, if your lay was still sitting unmatched when the withdrawal landed, a reduction factor of 2.5% or more in the win market cancels it outright. Check the exchange before assuming you are covered, then re-derive the stake in the standard calculator and place it fresh.

Your own selection was withdrawn. Your bookmaker stake comes back and your matched exchange bets on that runner are voided. This is the only case in which both sides of your bet disappear. Worth saying plainly, because the claim that "a non-runner voids both your back and lay bets" is repeated everywhere and is wrong in every other case.

The withdrawn horse was bigger than 14/1. No bookmaker deduction at all. The exchange may still reduce, because its floor is a 2.5% reduction factor rather than a price band, and a 20/1 shot implies a chance comfortably above that. The two rulebooks stop at different points, so one can fire while the other does nothing.

Best odds guaranteed resolves the right way round on top of all this. Sky Bet's terms state that where a price is taken and then subjected to a Rule 4, "the deduction will be applied unless the horse returns at a bigger starting price. In which case their bet will return at the starting price without a Rule 4 deduction".

I went into this expecting to find a leak worth plugging. The maths grad in me assumed two rulebooks doing the same job with different formulas had to be bleeding a percentage point somewhere. So I worked both through, and the answer was almost boring: on the percentage side the position drifts, and it drifts my way. What caught me out instead was a 16-runner handicap where two late withdrawals took the bookmaker from four places to three while the exchange sat where it had loaded. I had checked the odds after the non-runner and not the place terms, which is the wrong half of the screen to be looking at.

The number you're trusting is a number someone sets#

The withdrawn horse's price gets treated everywhere as an objective input. It is a number a human sets, and the regulator has documented an occasion when one was set deliberately.

In its published guidance on Rule 4 application, the Gambling Commission recorded that "a Ladbrokes trader had deliberately shortened the price on Tango Sky in order to maximise Rule 4 deductions", against the operator's own policy. The Commission wrote to Ladbrokes to provide advice rather than taking enforcement action. The operator responded by suspending markets immediately on that kind of information, retraining its trading team on integrity and misuse of inside information, and recording and auditing direct calls to traders.

One documented incident is not a pattern, and the point is not that anyone is cheating you. The Commission's recommendation is the useful part: it advised operators to consider basing deductions on the withdrawn horse's price at the time of bet placement, or at its official withdrawal time as recorded by the British Horseracing Authority. Either way the deduction should be checkable against a price that existed at a known moment. So check it, and if it does not match the band, ask. The bookmaker ratings are a fair proxy for who answers that kind of question well.

Frequently asked questions#

What is a Rule 4 deduction?#

A reduction applied to your winnings when a horse is withdrawn after you took a price, set by a fixed scale keyed to the withdrawn horse's odds at the official notification. It exists because a smaller field improves every remaining runner's chance.

How much is a Rule 4 deduction?#

Between 90p and 5p in the pound of winnings depending on the withdrawn horse's price, and nothing at all above 14/1. Where more than one horse comes out, the combined deduction is capped at 90p.

Does Rule 4 apply to my stake?#

No. Winnings only, so a Rule 4 on a losing bet changes nothing. The one wrinkle is a dead heat, where the stake is halved first and the deduction then applied to the winnings from the reduced stake.

Does Rule 4 apply to SP bets?#

Normally no, because the starting price is struck from the reformed market and already reflects the withdrawal. The written exception is a withdrawal so late there was no time to form a new market.

Is the exchange reduction factor the same as Rule 4?#

No. Different setter, different trigger and, in the win market, different arithmetic. The bookmaker reduces your winnings on a published 19-band scale. The exchange reduces the traded price itself, by a percentage derived from a forecast price, and only once it reaches 2.5%.

Do non-runners change how many places are paid?#

At the bookmaker, yes. Each-way terms settle on the horses coming under starter's orders, so withdrawals can drop a race from four places to three. On the exchange, no. The place count is fixed when the market loads.

The practical takeaway#

Rule 4 is one of the few places in matched betting where the two sides of a locked position answer to two different rulebooks. The honest summary is that the percentages usually work out in your favour by a small amount. The cases worth your attention are narrower than the internet suggests: the place count that shrinks with the field, and the leg you had not laid yet.

After any non-runner, re-read the bookmaker's place terms before you re-read its price, and never size a lay against odds a deduction has already changed. If you work extra-place races regularly, that one check will earn more than any amount of arithmetic about reduction factors. The calculators are free to use, betting is strictly 18+, and if the maths ever stops being the interesting part, GambleAware is the right place to look.