Betfair Rule 4 / RF / Douvan Fiasco

[spreadbetting]

The reduction factor is similar to a tissue price it is not supposed to be a constant reflection of the horses chances. Once a market has started trading the reduction factor is set and very rarely amended. It is not supposed to track the odds like a rule 4, so just because Douvan was trading at 7's (14%) there's no reason to believe it couldn't be trading at 5's (20%) within the next 10 minutes or so. Constantly amending the RF's for each horse on each odds change would become a nightmare for exchange punters and Betfair with the way exchange markets operate.

[Derek27]

DegenerateTrader, I took the time and trouble to post the explanation of how RFs are calculated.

Douvan's price was entirely irrelevant to its RF - it could have hit 20 or got backed down to 2 - it would make no difference.

No RF would satisfy everyone - sometimes it's advantageous to layers and sometimes to backers, it will never be spot on. You can't complain about 20% because that's what it was overnight and never changed, so it was possible to calculate what odds your back bets would be settled at.

RFs are frequently changed during the course of the day and they use to be (probably still are) published on the Betfair forum under Betfair's section (can't remember it's title). When a market is momentarily suspended I think it's often to update the RFs.

The only thing I would blame Betfair for is not removing liability offset, which they usually do when a key horse isn't likely to run. As I already said, this would stop anyone from exposing more than the funds in their account.

[Derek27]

Heres the blog I was referring to, it contains the links to the forum where it all unfolded
https://www.betangel.com/blog_wp/2016/0 ... e-markets/

I ended up reading the two MSE threads in full (missed US racing to do it).

Very sad reading. I really felt for them and understand their limited understanding, but I didn't like the way some of them blamed the trading software downloaded, believing it was that that caused the problem, or the trolls that enjoyed other people's difficulty.

PS: Sorry, I didn't realise that F***B** was a swear word.

[ShaunWhite]

I'm no expert on horse fatigue, one day preperation etc but his chances surely weren't helped by an intense half race and fall 24hrs earlier even if we presumed he would run. !

The horse may have been entered in both races, but would never have run in both. High quality horses simply don't run on consecutive days. I agree it seems misleading but the trainer doesn't officially have to confirm the withdrawal until the morning.

I noticed the same anomaly as you but was confused about why Douval was still listed, 'I'm no expert'. So I asked for advice, and thankfully at 3am Derek explained the RF and the risks, especially as he'd noticed BF didn't have the usual liability clause in the rules for that particular race. The lunch wasn't free.

I think this is another case for why the exchange isn't a straight swap for a bookie, they have their faults but bookies operate under consumer regs rather than industry rules and user is therefore insulated against this sort of danger to a large extent.

[ANGELS15]

I recall from a conversation with Betfair many years ago that when they apply a 'rule 4' they apply it to the whole return including the stake. In an example I'd backed a short price favourite Evs. there was 50p rule 4. with a conventional bookie or even Betdaq if you'd backed it at Evs for say £100 you'd be returned £150. However with Betfair as they apply it to the whole return you'd actually just receive back your £100 stake.

[Derek27]

I recall from a conversation with Betfair many years ago that when they apply a 'rule 4' they apply it to the whole return including the stake. In an example I'd backed a short price favourite Evs. there was 50p rule 4. with a conventional bookie or even Betdaq if you'd backed it at Evs for say £100 you'd be returned £150. However with Betfair as they apply it to the whole return you'd actually just receive back your £100 stake.

I'm surprised Betdaq are in line with the bookies. For an exchange with 100% book Betfair's method makes more sense as an even money favourite literally takes 50% of the book, whereas bookies have a much larger overround.

It's extremely unlikely that an even money favourite would have a 50% reduction on Betfair because it would mean the non-runner must also have been at even money!

[Derek27]

I emailed Betfair to ask why liability offset wasn't removed from the market to prevent this sort of thing happening, only to find they have closed their email service, "The reason being is that Live Chat and Phone are immediate tools, and this means that we can respond to your query quicker and more efficiently."!!!!!

Being kept on hold for an hour while they deal with a complexed question and consult their trading team or managers may be quicker, but it's certainly not more efficient from our point of view.

[LeTiss]

Sad to see this, but that book was broke for a reason - people were expecting Douvan to be declared as a non-runner, and as a result there were all sorts of manipulation going on in preparation.

I have no idea what BF's tactics are for pursuing money, as I have never been in that position, but you've just experienced a very expensive lesson - I NEVER dutch or use bookmaker when there is a possibility of a selection being withdrawn from the market, as the exposure could kill you.

I learned this myself a few years back when I dutched a broken book when the World Darts had reached the QF. There were 8 runners and the book was at 99%, so I happily dutched away, locking in a green of £60. However, when 4 of those players got eliminated my BF bank showed -£350! I still made the £60 after the tournament, but the exposure on the 4 eliminated players left my bank in arrears, so I had to put more money in to cover that bank, so I could trade again.

[ANGELS15]

Hi Derek27. Unfortunately the example I was trying to give was so long ago that I can't remember the exact odds, but I recall the favourite was either 10/11 or 5/6 more likely my selection would have been around Evs,11/10 big gap to the rest. I think they flip flopped in the betting then one was withdrawn. But yes on the odd occasion when I've experienced similar on Betdaq it has worked out more favourably in line with regular bookies. When this first happened to me on Betfair I recall being quite livid. I rang Betfair to have it out with them. Their argument was that they do it to protect the layers.

[ANGELS15]

I also remember at the time a betting professional friend of mine experienced the same thing and also noted Betdaq treated rule 4s more like bookies. TBH many people may be unaware of it if they tend to avoid backing very short prices as the odds on the exchange tend to be better anyway.

[Derek27]

Hi Angels15. I remember a really bazaar situation (think it was a maiden) where the 3.0 favourite drifted to about 9. The new favourite was withdrawn at about 2.8 and reduction factors applied. An outsider got backed down to 3.0 favourite and then got withdrawn with RFs applied.

The end result was, anyone who backed the original favourite at 3.0, with two favourites pulled out, would have got odds of 1.03, even though it was now trading between 3 and 4 !!

I think it's technically possible in a very volatile market with a few non-runners to get odds under 1.00 !

[ANGELS15]

Yes! this is one of the 2 risks which come with straight betting on Betfair the other being that you're not protected by the double result guarantee. But back on the subject of rule 4s, yesterday I backed 3 horses for small stakes in the 1.40 Lingfield. I laid each one at 1.33 (lay bets to keep in running). One of the horses 'Bungee Jump' won. According to my screen I should have made a £29 profit on the market. However after a few minutes the market was settled and my balance did not go up at all. I rang Betfair and spoke with some guy who sounded like he was in Malta or possibly Gibraltar. He insisted that I hadn't allowed for the bets on the orher horses. I was trying to explain that my profit was after all that (i.e a green up). Anyway the discussion was to no avail. I then heard in the background on SIS a commentator mentioning 'the horse that was withdrawn....rule 4 to follow'. I then realised it was likley that their rule 4 had killed my profit.

I've seen Betfair reform the market before the off when something's been taken out, it would seem on this occasion it must have been a very late withdrawall.

[DegenerateTrader]

This is taken directly from Betfair;

· Betfair's non-runner rule relates to the adjustment of odds on bets already matched when a horse in a race is declared a non-runner. In order to make the adjustment Betfair applies a reduction factor to the remaining runners. The reduction factor allocated to a non-runner is a calculation (the details of which are described below) of that horse's chances of winning (or being placed, etc as appropriate) and is applied to bets already matched on the other runners in the relevant market or markets.

· When the market is loaded each horse is given a 'reduction factor', based on a forecast price, which is expressed as a percentage. These reduction factors may be updated periodically at the discretion of Betfair based on trading in the market, but after approximately 15 minutes (approximately 5 minutes for Australian markets) from the scheduled 'off' time of a given race, they will be updated only in exceptional circumstances. The current reduction factor percentage for each horse can be viewed on the 'info' page on the Betfair website or by asking the Helpdesk.

13.6 How the Reductions are applied

· In the win market, reductions will be made on the traded price.

· For example: if the non-runner's final reduction factor is 25% the traded price on all previously matched bets on other horses will be reduced by 25% - traded price of 8.0 would become 6.0 etc. And these might be further reduced if another horse is subsequently declared a non-runner.

· In the place market, reductions will be made to the potential winnings on the bet only, and not the traded price.

· For example: if the non-runner's final reduction factor is 25% the potential winnings on all previously matched bets on the other horses will be reduced by 25% - a traded price of 8.0 would become 6.25. For example a £10 bet on a horse to be placed at a traded price of 8.0 would provide winnings of £70. If there is a non-runner with a reduction factor of 25% in the race, that factor will be applied to the £70 of potential winnings leaving potential winnings of £52.50. Therefore the revised traded price will be 6.25.

· The traded price may be further reduced if any other horse(s) is subsequently declared a non-runner, however odds cannot be reduced below 1.01.

So the figure they come up with is at Betfair's discretion - no one could have reasonably known what his final RF would have been in the morning, so when I stopped trading and had my green book I was legitimately in a strong position, and fell victim to their "discretion".

Is there anyone knowledgeable enough that could form an opinion on what Douvan's realistic % of winning that race was if he was declared? Is 20% accurate?

I think I'll get in touch with them early next week and try and sort this out.

[spreadbetting]

You posted up a link from Boyle sports with the odds at 4/1 so 20% was a reasonable reduction factor to open the market with.

Did your withdrawal manage to hit your bank account.

[DegenerateTrader]

You posted up a link from Boyle sports with the odds at 4/1 so 20% was a reasonable reduction factor to open the market with.

Did your withdrawal manage to hit your bank account.

It's irrelevant what his opening price was, what's important is the final factor they applied at 10am on the day. I seriously doubt he kept his 20% chance given he raced less than 24 hrs before.

Yeah, it went through before the race started.