Clearly a number of questions to answer...
1: Hedging policy...
All SB bookmakers take on at least some exposure. If they didn't, and went away to hedge every single trade, they would make very little in the way of profits. This is for the simple reason that hedging costs money, both in terms of market spread and broker commission.
A bookie hedging/not hedging is a risk-managment decision, rather than a view for or against underlying clients. All sensible bookmaking companies assume that, in the long run, some clients will win and a slightly larger number will lose; what matters is to ensure that any large aggregate position that builds up because of client business is monitored and contained by making hedging trades to keep its size within a preset limit.
This isn't the easiest thing to get across, so let me give an example:
On the daily dow, a company might start the day pretty flat, exposure-wise. The company sees a £10 buyer here, a £50 seller there, etc and will do nothing. If, however, the consensus of client opinion is that today will be an up-day, then clients as a whole will be going long. So, as the day develops, the bookie will go shorter and shorter. Eventually he will go shorter than what policy dictates to be prudent. At this point he will go into the market, buying dow jones futures contracts or, more likely, S&P futures as a hedge. He will buy just enough to bring himself back under his limit. So if the limit is +/-£1000 per point, and client biz takes him short £1100 per point, he will buy just £100 per point-equivalent in the futures market, and see where client biz takes the exposure from there.
There is no discretion about whether or not to hedge, and no notice is taken of which clients have built up the position. Your particular bet may end up getting hedged, or it may not - it's really nothing personal.
Some less intelligent salesmen try to turn hedging policy into some kind of marketing tool - i.e. "we hedge everything, so we want you to win, unlike companies x, y and z". This is a pretty weak argument. Firstly, they are lying about their company policy, at least to some extent. Secondly, if they genuinely are hedging everything you do then they'll have to read the price aggressively against you every time you trade, or they'll make no money (because they're paying away most of the spread they receive from you). Thirdly, bookmakers don't actively cheer on client misfortune. If a client is a nice guy and is clearly a reasonable person, seeing him make money doesn't particularly annoy us (I speak as someone who once saw a particular client take £200,000 out of my book on one particular evening a couple of years ago. We still chat about it when he phones in). If a client is known to be a complete w*nker then we laugh when he loses and wish him extreme malice when he wins. That's human nature. But the personal views of dealers has no effect on the (automated) prices at which a client deals, and most dealers are bright enough to understand that profits or losses at the level of individual clients don't mean anything. Take enough business and the magic of spread/efficient markets will make you plenty of money in the long run.
It is true that some companies hedge more than others. But this isn't because they want to be "on your side", it's because they have unsophisticated risk management systems and therefore can't be relaxed about aggregating and monitoring net client positions.
It's difficult to know individual hedging policies for sure, but I'd put CMC and IG towards the "not hedging" end of the spectrum, and City and Cantor towards the "hedge it all" end. But don't take my opinion as gospel.
2: Arbers
I think someone else correctly answered this one. We don't like arbers because, in the long run, they always win and the bookmaking industry always loses. No company is so arrogant as to believe that the spread they make is always correct, and that they are always going to end up on the right side of an arb. It's a straightforward transfer of wealth from the two bookmakers involved to the arber. In the long run each bookmaker will end up wearing half the loss.
3: Spreads on US shares
Again, already answered correctly. I don't think the company involved would have widened the spread out of malice - that's bad for business and, apart from that, is labour intensive. Most dealers would rather all trades went through automatically, as it involves less work. It's probable that you were dealing in a size too big for the order book at that moment. It's the same reasoning as that behind not quoting dailies round the cash - if we can't deal at a certain level, it's daft to let clients do it.
4: Arbing binaries against Betfair prices
Possible, but don't forget that betfair take 4% out of you if you win, so it's difficult to create a robust arb.
5: Who I work for
No great secret, as I did reveal it in response to clearly libellous posting by another user (since edited by the moderator). But I'd prefer not to talk about my company. For what it's worth I think we're about as honest/respectable as they come (not saying much in the world of bookmaking, perhaps). But there will be inevitably be people out there who've had problems with us and I'd prefer not to waste everyone's time in slanging matches over long-dead disputes.
