INSIDE PADDY POWER:AND THEY'RE off. Day two of Cheltenham in "Power Tower", the Clonskeagh head office of Irish bookie Paddy Power, and there's an air of relative calm on the trading floor as the amateur riders take the flag in the first race.
“Yesterday was quite tense and very busy but things always settle down after the first day,” says Dermot Golden, Paddy Power’s head of risk.
Golden, a former banker, is a key player in the bookie’s effort not to lose its shirt this week. Paddy Power closed the opening day on Tuesday at par, despite refunding about £2.5 million on the Arkle Trophy after pledging to give punters their money back if favourite Sprinter Sacre won.
The first race on Wednesday is only a warm-up for the main action of the day – the Sportingbet.comQueen Mother Champion Chase and the Coral Cup.
Chief executive Patrick Kennedy strides in to Golden’s room for an update on betting and to watch the race. Tea for Tree comes home at 5/1 putting, costing the Irish bookmaker a small sum.
Kennedy sighs, twists his head in my direction and says: “You’re bad luck, Ciarán.”
“We need to up our game,” says Golden.
Kennedy departs but returns in time for the second race. It’s more bad news. Simonsig goes off the favourite. Coming to the second last fence, he’s under pressure from 8/1 shot Cotton Mill which had been leading. However, he refused the jump, unseating his rider and leaving the way clear for Simonsig.
This time, Paddy Power drops a chunky six-figure sum. More sighs from Kennedy. “Don’t take this the wrong way but when are you off?” he asks me light-heartedly.
By this time, we’ve been joined by Stewart Kenny, company founder, former chief executive and the marketing mastermind behind the brand.
“It’s great for the punters . . . I always like the punters to win,” he chuckles sarcastically with his distinctive laugh.
Outside Golden’s office, traders are busy monitoring bets and adjusting odds. It’s a hi-tech operation these days based on complex mathematical formulas driven by software created in house. There’s no gut instinct involved anymore, no sun visors, blackboards or dodgy waistcoats.
“It’s very process driven,” says Golden.
Betting is a cutting-edge operation now, involving multiple flat-screen TVs and computers, sophisticated software, multiple feeds of data and live sport, and savvy traders.
There’s remarkably little shouting or roaring.
Race three: the RSA Chase. It’s the final straight and there’s plenty of encouragement from traders in the “race room” for Barry Geraghty on Bob’s Worth.
“Go on,” says one trader, getting moderately animated. “C’mon Bob,” another shouts at the TV screen.
Bob made it, ahead of Michael O’Leary’s First Lieutenant.
At last, Paddy Power is in the black on a race. A case of third time lucky or the bookmaker always wins? Take your pick.
Golden is doubly happy that the favourite Grands Crus fails to deliver for punters. It saves the bookie a packet on race payouts and takes down a lot of multiple bets based around favourites.
The concentration of risk during Cheltenham is hugely important to Paddy Power.
Golden explains that if you had put the four championship favourites into a six-fold accumulator bet along with the other two big bankers of the meeting – Sprinter Sacre in the Arkle Trophy and Quevega in the David Nicholson Mares’ Hurdle – you’d have got a price of 50/1. If you’d added Grands Crus to get a seven-fold accumulator you’d have got 125/1.
“Getting him out of the multiples is a big result,” he says with a smile.
I nod, as if I know what he’s talking about.
Patrick Kennedy pops his head around the door again. He’s in better form now. I no longer face eviction from the building.
It’s all hands to the pump for the Olympics of national hunt racing. When Cheltenham is in full swing, Paddy Power tends to ease back on other sports. But there are a handful of traders following events elsewhere.
One young chap is monitoring data on six different obscure tennis matches from around the globe while finishing off a snack.
Who says men can’t multitask?
The data is being fed from people at the matches clicking key statistics into the system. Feeding the monster and most probably slowly losing their minds.
Another trader is watching the snooker results from a professional tournament in Galway. The bookie is collating information on every pot so that it can devise models on how many blues are put in the left middle or how many yellows in the top right. That type of thing.
Elsewhere, the customer support team is humming. An officious looking woman strides purposefully around the room with a clipboard. Bags of crisps are stacked at one end, presumably to encourage staff to stay close to their desks.
Paddy Power adds dozens of extra staff to its customer services team for Cheltenham week. T-shirts and jeans are the uniform of choice. One young lad is sporting tracksuit bottoms. Another is wearing a beanie hat. All very cool.
The four-day festival generates more than four million bets for Paddy Power and equates to about 1.5 times a normal week’s betting.
With Paddy Power now registering about €4.6 billion in bets every year, Cheltenham isn’t as important to it as it used to be. The company has also spread its wings to Australia and Italy, and offers casino games as an alternative to its traditional sports book.
But such is the volume of bets placed on Cheltenham, that a strong run of results for favourites could put a significant dent in its profits.
“It would take a lot of races at the likes of Navan and Kilbeggan to make that up,” Golden says.
Golden joined Paddy Power in 2004. The bookmaker was growing at a rate of knots and needed to bring a bit more structure to its risk department. He had worked for ABM Amro, Depfa Bank and Citibank but quit banking after two heart-related health scares.
It was a “reality check” he says. He subsequently went to work for a biotech company and held a consultancy role with Irish Life before being tapped on the shoulder by a recruiter for Paddy Power.
“I just laughed,” he said. “I didn’t know anything about horseracing.”
Golden warmed to the idea and hasn’t looked back. “I love this job,” he says genuinely. When he joined, the risk team was 28 strong. Today it employs 160.
Many of Paddy Power’s staff, including Golden, aren’t fans of horseracing. Some aren’t interested in any sport. They don’t need to be. There’s a rich mix of mathematicians, engineers, statistic geeks, IT nerds, accountants and so on. “They are all very bright, well qualified and highly motivated people who aspire to keep Paddy Power as the leading innovator in the bookmaking industry,” he says.
“We don’t sit around here all day watching racing.”
Race four is the biggie – the Queen Mother Champion Chase. After an incident-packed race, including a controversial mix-up at the last fence, it’s Barry Geraghty again, this time on Finian’s Rainbow.
“Yes!” exclaims Golden.
Sizing Europe, last year’s winner and an Irish “banker” was the red hot favourite and Paddy Power would have been substantially out of pocket, had he come home.
“That will knock out a few more multiples,” Kennedy says to his risk man. “We’re OK now.”
Kennedy departs for some important meetings.
Race five is the Coral Cup, a grade three handicap hurdle with 28 runners. “A bit of a bun fight” is how Golden describes it.
Son of Flicka comes home at 16/1, leaving the favourite Get Me Out of Here in his wake. That result alone involves a swing of about €1 million in Paddy Power’s favour. Get me out of here, indeed.
“That solves a lot of problems, man,” says Golden with a grin.
Race six also goes the way of the bookie, with the 40/1 outsider Une Artiste taking the Fred Winter Hurdle.
“That’s a beano man, you don’t get too many of those, I tell you.”
Willie Mullins finally raises an Irish flag in the winner’s enclosures as Champagne Fever wins the final race, the festival bumper.
Paddy Power drops a few quid on the race but Golden declares it’s a case of winner all right after the day’s racing.
“It’s been a good day for the bookmakers,” he says.
“It was all about Grands Crus and Sizing Europe. If they had won, we would have been on the back foot and it would have been a losing day.”
While the horses head for their stabled and the punters rush to the bars, Golden’s working day still has a couple of hours to run.
There’s a bit more number crunching to be done and odds to be agreed for the following day.
“I won’t be happy until it’s Friday night and I’m heading to Thurles to meet a few mates,” he says. “When it comes to Cheltenham, you just take it one day at a time. Some days will be good and some days won’t be. That’s gambling.”
