If a horse is withdrawn before the race, it means the remaining horses have a better chance of winning - consequently a Rule 4 is applied which is basically an adjustment of the odds based on how much they think the outcome of the race will be affected (The favourite being withdrawn will have a bigger impact than an outsider being withdrawn). However, as long as you have laid your bet before the Rule 4 is applied, then both the bookie and the exchange will adjust the odds relative to each other, though it may result in a smaller profit margin if a free bet.
Betting on the horses is generally more complicated than betting on the football for multiple reasons - while PA don't make a 'thing' of it, personally I think betting on the horsies is only something you should do if you are already fully confident with MB.