Loss limit explanation
What are loss limits?
Loss limits allow you to limit the amount of money you can lose over a given period. The limit can be set over a period of one day, one week, one month or one year.
The limit functionality can be expressed in a simple formula as:
Limit amount + total account exposure + profit/loss in limit window >= 0
The loss limit is therefore a net limit, meaning any money won during a given limit period will be added to your limit amount for that period. Losses will be deducted from the remaining limit amount in the period in which they settle, regardless of when bets were placed.
A user sets a £100 daily loss limit and immediately places a £100 back bet on day 1. The bet settles in the same period, day 1, winning £50. The user can now reach an exposure of £150 during this period.
The user places a further bet of £50, which loses on day 2. The user will only be able to bet a further £50 in this new period, despite having placed no bets in it as yet, as the £50 losses were recognised in this period.
Setting a loss limit will also prevent your account from exceeding this amount, plus any winnings accrued in that period, in total exposure. This means that if you set a limit of £100 and then place a bet for £100, you will not be able to place further bets until this bet settles. This is the case except where a further bet would reduce your overall account exposure, such as a trade out. This means that if you bet £100 on an event that is happening 7 days from now, you will not be able to place any bets that increase your exposure until that bet settles, even if you have chosen a daily limit.
A user sets a £100 daily loss limit and immediately places a £100 back bet on an event finishing 5 days from now. The user will be unable to make any further bets that would increase total exposure until that bet settles. If the bet loses, the user cannot place any further bets until the following limit period, as £100 of losses were recognised in the current period.
Loss limits at Smarkets will reset the next time the exposure of the account changes following the expiry of the current limit period.
A user sets a daily limit of £100 at 15:00 on day 1. The limit will reset the next time the user's account exposure changes after 15:00 on day 2. If this is 15:36 on day 2, the limit will reset next on the first exposure change after 15:36 on day 3 and so on. The same logic applies to weekly, monthly and yearly limits.