To get true 'optimal execution' in an over/under markets for instance, you need to offer to lay the inverse of what you want to back as well as placing your back bet, or vice versa.

If you offer to back at 1.12, it makes sense to offer to lay the inverse at 9 first, to save yourself getting matced at 9.33 when you could get your lay matched at 9.00.
It's tremendously inefficient, and results directly from Betfair not passing the benefits of cross-matching on to the customer.

investor - just while you are on the over/unders i've never understood why they need back and lay sides on over 2.5 and under 2.5 for example - why don't they just have over 2.5 goals and a back side and a lay side - so if you want to back overs then back it if you want overs you lay it - no need for 2 sets of back/lay sides if you know what i mean

I asked them about that red (as the 1% site don't do it that way) and they claimed it's easier for punters to understand to have two choices!

I'm pretty sure Betfair either don't get the concept of one line, or don't want to get it.

^
on top of that, Betfair would lose out on the significant cross matching profit [;)]

Forget 2 runner markets. Betfair make buttons from cross-matching on them. The genius for Betfair is in multi runner markets. Take a match odds market in football. If I offer to back A at 3, the other two runners (B and C) are offered at 1.5. If someone backs B at the offered 1.5 then my back of 3 is matched with their back of 1.5. Sounds fair enough, we both got what we asked for. The problem is, if C is the winning outcome neither of us win and Betfair scoop the lot.

In football it barely presents a problem, except in unformed markets. However, during in-running racing, Betfair will often enc up scooping the lot on the field.

Betfair will build up some nice positions on runners with x matching the way it's currently run with no risk whatsoever. These situations will occur alot more than people think especially when markets go in play and are just forming and because most matching will be done well before any prices have chance to be displayed on the site.

It was argued that if betfair are treating your bet as a lay of B rather than a back of A that is the bet you should be given.

I'm not sure I totally get this.
As per Bayes example, isn't it currently the case that there are liquidity providing bots prowling out there, that if these two bet submissions were posted openly on the exchange, then they would fill them in this manner, taking the risk free third outcome position.
Why does BF feel it has to do this ?
Are you saying that these bet submissions would now not ever even make it onto the open exchange for others to fill them ?

These situations will occur alot more than people think

Almost every race in fact.

Is the above example the way it works tho? If it is then I fully agree that should outcome C win then Betfair are sitting pretty. Exchanges are where for every backer you have a layer as seen on all the Betfair adverts. As I understood X matching if you offered to back something for £2 at 3.0 odds then a lay for £4 at 1.5 on another selection would be added to the market. In 2 runner markets this is obviously very easy. Where there are 3 or more then there are obvious complications. If your offered back is taken by another back then yes Betfair take both stakes should the 3rd 4th or 5th runner etc win. By the small announcement made it appear that best execution would be used so they would use existing liquidity to get you bet matched rather than introduce new bets. So it would still be Backer against Layer. If they are using backers against backers in a very clever algorithm then it's a license to print money for Betfair.

As ever with Betfair their communication of these potentially very serious matters are shockingly poor. A small announcement in the services section of the Forum. What about those that don't use the forum? A proper explanation of this matter would go a long way to alleviating some of the fears expressed here. That would require Betfair to give a hoot about their ahem Customers. What odds would you give me on that??

I suspect for many they won't care who is matching their bets if they are matched with greater frequency at often better odds. I agree with previous posters that most of the value will now turn into Betfair's increased profit.

For My own example I was trading IR yesterday unaware this trial at Lingfield was taking place. I commented to myself that for several races no opportunities arose for me to place bets into the market. After several more races I noticed it was only at Lingfield. At the end of the day I checked my P/L and I had only placed bets in 1 race at Lingfield. On checking the forums and service announcements I discovered the trial.

I am by no means a big player but would generally add about 1K to 2K of matched bets IR. I day at one track by no means stops me playing but I shall watch the next month with interest. This only applies to Win markets and as mentioned before as one door shuts another opens. Betfair also have competitors but like most of the others using Betfair we do so as they are the market leader and the all important liquidity. You might find that increases elsewhere in the coming weeks.

Good luck all

Maybe BF has decided that it's real future lies with satisfying and attracting the normal punter, who is unsophisticated in the ins and outs of bots, high speed bets, arbitraging value discrepancies etc etc etc.
Maybe they see no long term future in having a realitevly few highly skilled operators making guaranteed profits at the expense of others' naivety.
And you know, maybe they're even right.

Cheers for that, my assumption about Cross matching is totally wrong then. It appears the TV adverts are misleading and it is no longer Backer against Layer but Backers and Layers against Betfair.

Very worrying times for some and very profitable times for Betfair. Fair play to them, they are determined to squeeze every last penny out of winners. As they say many will not notice and indeed benefit. Watching brief for many I feel in the weeks to come.

Tomb raider
And some would say that BF is just returning it to the original concept, before all the sharpies moved in and removed all the actual or potential profit available for the average joe playing against the average joe.
The sharpies have just replaced the bookies in the old pre-exchange model.

Strictly speaking it's backers against other backers - which is a fair enough exchange model. In any case laying is just another form of backing.

Mugs against Mugs is a better description though, good players get cut out of the loop whether they're backing or laying.

It's still fair enough from BF though, it will make them a lot of money and that's what they're here to do. If I ran Betfair I'd bot it like you wouldn't believe.

Thank you Mr Alive.
At least someone can understand that BF is perhaps taking the McDonalds approach to all this, for good, sound business reasons

LOL Yeah I suppose that's pretty obvious! Early indications are that Betfair are now taking this cash but I may have spotted another opportunity! Way to early to tell properly. On the downside for Betfair they will now lose my commission and charges, considerably smaller than my profits. Ho hum

Do you think they will now do a new TV ad where the man in the middle takes both the punters money when they both lose???

Obviously it's very early days- but from where I'm sitting it's so far, so good for me. It doesn't seem to be causing me a big problem yet.

Are we sure the x matching is working.  So far (small sample of 14 races I know) but things are looking better than ever, and I was expecting to take a big hit.

Here is the first test. Cape Dor still IR despite not going into the stalls! Not touching this race with a barge pole!

Aye Robot - I make markets laying IR (not entirely sure as my neural network selects the bets).  Although it's adaptively self training it couldn't have caught up yet with the x matching change.

I saw your P&L numbers on another post - I don't do as many bets (say 800 a day), and P&L is of the same order of magnitude as yours - probably a little more.