Applies to Tournament style bets only - A ruling which can be applied at the bookies discretion, when a competitor withdraws from an event or race that then changes the other competitors' chances of winning.
Rule 4 is invoked when a horse is withdrawn, and the withdrawal is deemed to have some impact on the other horses. The punter (you) gets his stake refunded less a deduction of the stake, the size of the deduction depends on the odds which applied to your bet.
When a horse is withdrawn shortly before a race and there is insufficient time to form a new market, rule 4 laid down by the Tattersalls Committee, the ruling body on matters concerning betting on horses, comes into play in order to compensate for distortions in the market once a runner has been removed. The rule dictates the percentage of winnings to be deducted, the shorter the price of the horse at the time of withdrawal the larger the deduction. (The returned stake money is not subjected to a percentage deduction.)