Igaming platform Strive Gaming has been busy grabbing the headlines of late, most recently achieving GLI-33 certification from Gaming Laboratories International. With that accreditation freshly secured the firm’s new CTO, Jesse Cary, spoke at length with SBC Americas about some of the technological opportunities, challenges and pain points for incumbents in the US igaming sector.
What platform challenges are operators facing in the early stages of the US market?
Operators seem to be facing a number of challenges. The speed of regulation is creating huge challenges for operators trying to compete in this market. There are 26 states and counting that have either enacted or drafted legislation for sports wagering, five states for icasino plus Canada (including Ontario) in the mix. All this activity and opportunity in just a few short years means trying to maintain a first mover advantage in all these states with a profitable, let alone competitive CPA, is a tall order.
Keeping up with North America requires a complete focus and not being distracted by other markets. Some operators who have full control of their own technology in-house still can’t manage to keep up with existing operations elsewhere globally and adapt for the US at the same time.
Scalability is a challenge from various points of view, both in terms of handling the load that US sports betting brings and scaling out infrastructure without, in most cases, the ability to leverage public cloud computing.
In regulated states, many operators have gone for the “IBM” safe choice platforms that no one gets fired for choosing, aka vendors or platforms that were just live already regardless of how good they were. They are now facing operational challenges because these platforms were not designed and purpose-built for this market so they lack some of the more modern, real-time operational capability and flexibility needed to maximize customer experience and value that other platforms can provide.
Compounding this is the fact that because many of these platforms have legacy issues or technical debt, it prevents them from servicing their operators’ requests for changes and upgrades even if they could prioritize them. This itself is an issue because most operators don’t have the sway to be at the top of a very long client list given the limited number of solutions in play today.
Essentially, the desire is to have a single solution that can quickly be rolled out into any state, still retain a central customer database to make a seamless experience nationally and in many cases also tie in a retail element.
What impact is state by state regulation having on these challenges?
The varying types of regulation per state which don’t conform with other states is making it hard to compete profitably on a national scale. Speed of regulation would be more manageable if regulations were identical and conformed to some sort of national standard, but they aren’t, they don’t and why should they.
New deployment topologies are creating headaches in terms of geographical compliance and operational excellence. Local reporting and regulatory requirements are different enough that vendors are having to effectively draw straws on division of responsibilities, basing solution decisions on resources more than sound design choices. This can have an impact commercially and in terms of delivery. Local nuances in the KYC process including vendor availability, as well as customer and product management, mean that no two states are quite the same.
The Wire Act prevents taking cross-border wagers so depending on the geography, in practice this can mean some customers in dense areas might place a bet right after finishing work but have no option to cash it out early after commuting home over a bridge! It’s a logistical nightmare and there is not a healthy number of vendors to choose from who solve this well. It also results in server sprawl, with server deployments necessary in each state.
Data sovereignty stipulations create their own issues also. Serving multiple jurisdictions and requirements for launching within tight timelines with little lead time afforded by rapidly moving regulation is putting a strain on operators who can’t rapidly and cost-effectively deploy infrastructure, let alone configure it to meet the demands without lots of development.
Because of the delivery challenges to comply with the variations in state legislature, many platform vendors are struggling to keep up, which is forcing operators to use multiple platforms across different states because the platform they have in one state can’t cope with another state’s regulations in time for launch. This is not what operators want. In some cases, they are sticking with products they recognize as inferior just to avoid adding more vendors to the mix, where a single solution would be much better.
What are the current platform/tech options available to operators?
Operators have not had the most comprehensive choice to date due to the technical and regulatory barriers built. Some of the options out there are sitting on 15+ year old code bases, requiring expensive licensing or very specific hardware setups which isn’t cost-effective in the US. To serve the US operator a player platform really must have modern, multi-tenant, modular tech stacks to solve these problems.
We are also now starting to see some entrants to the US market who have worked in grey/black markets previously, as well as white label providers, and there are a lot of unknowns regarding how they will perform, what the confidence is in them being permitted to regulate widely across the US and how they will be received by US players.
Can we broadly categorize these?
It will be hard to categorize the providers here as there are so many ways to look at it from an operator’s perspective, but I would say some are derived from retail, lottery or social platforms and so weren’t built at their core to meet the requirements at hand. There is clear evidence in the market that specialist providers yield the better results from a delivery and creation of value perspective.
This comes down to how a specialist platform will unify the gaming experience across all channels. Specialist providers who aim to be the best solution in their respective verticals will offer so much more to operators who try to be everything to everyone.
How does this impact the approach taken in each state (legacy rebuilds/modern can be configured)?
I think many operators feel like they are hostage to the situation as only a limited number of platforms are available to meet the regulations (or promise they will be ready) for any new state roll out. This is now forcing companies to face up to whether they should do M&A to acquire the technology they really need or look at more advanced B2B solutions that weren’t available when PASPA was repealed.
For anyone with one or more existing PAM deployments, this choice feels limited to what’s already in place, so they are often considering these options begrudgingly to avoid perceived data integration problems down the road by adding more software into their landscape. This comes at a high cost because the products out there require a lot of re-development to meet the regulations. A more configurable platform alleviates a lot of this, despite the requirements to deploy on-prem as the overall time to deliver is reduced.
Can you dig into a bit of detail for each?
KYC providers and flows may change per state; tax rules and regs as well. Platforms requiring new business rules to be developed, as opposed to be configured in the back-office settings, will take more time (and cost) to get in shape for new state regs.
This also can lead to one of two suboptimal architectural situations: spaghetti code aka ‘ball of mud’ platforms where lots of intertwined logic becomes ever-increasingly difficult to maintain, or split-code platforms which diverge to meet the individual requirements for the sake of simplicity for short term delivery, but then require separate maintenance for each branch and risks losing the ability to share core features. The symptoms are long, expensive delivery times or a linearly increasing operational expense over the long run respectively.
The ability to easily configure customer workflows and other behaviors within the back office can prevent the above issues, keeping delivery times short enough to make the tight deadlines regulators are creating with last-minute legislation. With the core codebase unified, it will keep overall maintenance costs of the platform low, leading to better value for operators and in-state deployments will remain compatible with each other, opening the possibility to truly deliver a seamless interstate wallet and single-app customer experience as well as shared core updates across each state’s deployed platform.
What risks do operators face with legacy tech?
Operators face a number of risks both from a technology and business standpoint, either of which can be disruptive to the customer experience.
Performance is a risk, more specifically with platforms not designed for sports. I’ve spoken to operators who say platforms are not coping with the demands of digital sports betting traffic, which puts heavy transactional spikes on these systems leading up to games when activity is high, then again after the results to quickly settle all the bets. This is in contrast to the generally steadier flow of bets you see from casino traffic. Platforms need to be prepared to cope with both eventually. Being able to maintain high performance at scale is key for player platforms to succeed in the US.
How do they ensure operators can easily launch into multiple states?
Configurability is crucial. This takes care of so many things in terms of business process flows. Requirements for a lot of custom code to be written to comply from one state to another should be seen as highly negative for a platform.
Modularity; if responsibilities need to be divided across different lines, being able to compose the platform into a hybrid on-prem and cloud solution based on the right mix of building blocks eliminates incompatibilities and provides an open ecosystem for creating API-driven solutions based on operator needs, not driven by technology limitations.
This also includes good modular design within the application architecture that allows any mix of integrated vendors to be activated for a given deployment, whether KYC, payments or content.
A platform designed with unification of the back office in mind, with a real single customer view that can accommodate the satellite accounts per state necessary to maintain compliance, is the way forward. This means launching a new state just attaches to a system which has value that exceeds the sum of its parts. The appropriate buzzword to use here is “synergy”.