What is a reduction factor?
When a horse is withdrawn from a race, the odds for all matched bets on remaining horses are adjusted to account for the non-runner(s). This is because less horses in a race increases the probability of each remaining horse winning.
Reduction factors are similar to Tattersalls Committee Rule 4. This rule applies to all bookmakers and is calculated from the number of runners and the odds of the horse/s removed from the race.
Once calculated the reduction factor is applied by reducing the odds of any matched bets by the percentage of the reduction factor.
If you're using decimal odds, you can check this is correct using the following equation:
Old odds * ((100 - reduction factor) / 100) = New odds