Karen Bertoli, Chief Marketing Officer, Perseus Telecom London
In all honesty, I never thought I would be writing an article on the impact of network speed (latency) for gaming. Being formally trained and gainfully employed in the “financial” technology sector, I’m cognizant the mere comparison of gambling, or betting, or mention-in-passing was, and still is, strictly taboo. It’s as forbidden a fruit as the strategies of the world’s leading market-makers and the Hedge Funds and Investment Banks who profit from them, (and technology vendors too, let’s keep this honest.) Recently, I attended my first iGaming SuperShow in Amsterdam, walking the floor countless times, networking and making relationships that today, have already proven valuable. One of my goals at the show was to identify where a high-speed bandwidth provider that caters to the financial markets could benefit the gaming community and online casinos. Secondly, it was important to learn about the operators and the demands from players. Finally, I had been eager to diversify my knowledge-base and to demystify a sector I knew nothing about.
The Need for Speed and Compliance
It’s all about returns. Hashing between proper definitions of trading and gambling--and what truly is sound investing and measurable risk taking--is an endless conversation. But in both instances, one thing remains clear: performance is measured in results.
For trading, there is money to earn by deploying high-speed (ultra-low latency) technologies as close to the exchange matching engines as possible. Matching engines are collocated and hosted in secure data centers, either owned by the exchanges or by third party providers such as Equinix and others.
Trading between exchanges, to hedge or capture profit from arbitrage, requires access to a secure high-speed network. One where algorithmic strategies are programmed based on latencies one-way or round trip. A few microseconds gained or lost can dictate the return. Speed drives this world which makes up 65% of all equities trading worldwide.
Similarly to trading, online gambling profits from speed and a real-time no down-time network. While the financial markets utilize mathematical intelligence to achieve results, online gaming needs to rapidly capture, entertain and retain the player. Failing to feed the adrenaline rush will negatively impact the returns and buzz kill will set in; players can move in less than a second.
Speed Costs Money.
Leading market makers used to try to do it all themselves and then realized, why bother? Why not outsource to a high-speed technology company, and capitalize on their economies of scale with data center locales, global networks, and innovative products built for the “firm next door, trading the same market”? Thus, the Fintech world was born with investors always asking and hearing the same answers to the question of competition. The competition for Fintech vendors are pretty much the firms who haven’t gone to the next tribal level, focusing on the “we” and trying to internalize speed.
Speed can Create Issues and Certainly Dictates the Need for Controls.
Reliability to date is typically measured as 99.999%, not 100% in the financial markets with regard to network uptime. The race to zero is constantly evolving and the Fintech world has embraced the mantra: “innovate based on the demands of the customer.” Perseus even went as far to solve the elusive global problem of cost effective, secure and accurate time-stamping by providing trusted access to government certified time from the Atomic Clock in Boulder, CO. Perseus provides the High Precision Time™ service as a straight forward secure cross connect to customers, allowing them to mitigate risk and respond to regulatory demands in Europe and USA. A verified time stamp is one way to control execution transaction timing; especially with hyper-competitive trading.
Controls for gaming appear to be growing in the direction of the need for time measurement, but the most important controls seem to be for the expansion of the actual sector globally and how to allocate taxes and fees. Technology plays a huge part in this examination as, comparable to the financial world, some countries impose a tax depending on where the servers of your gaming business are hosted. It’s reasonable to forecast that as rapid growth continues in this space competition will increase, things will speed up, and clearer and more concise risk controls will be mandated. Not now, not tomorrow and not next year; but soon.
Hot beds for online gaming:
- Isle of Man
- and soon, so they say, the USA
“Online gambling is projected to be a $7.4 billion business in the U.S. by 2017, according to researcher H2 Gaming Capital.”
Security, cost efficiency and innovative payment options.
I was lucky enough to meet the CEO of a UK based gaming company who agreed to meet in London for coffee. Secretly, I was interested in spending time with him because he was a former London banker and his knowledge on the transition from trading to gaming could prove powerful. And, so it did. And, so, a few other former bankers have confessed to their new found life in gaming, leaving the pressures and stigma with the financial markets behind them.
All of the “transformed” bankers I encountered in Amsterdam noted security, cost efficiencies and payment options as key items in making their businesses successful. We are running tandem with the demands of market makers again. Security in a collocated facility on a supported 24/7 system is mission critical. Peak times for gambling are night time and weekend afternoons, not exactly common work hours. Our company, Perseus, has fewer than 60 people worldwide currently, but we are almost done building out a 25+ person Network Operations Center (NOC) in Ireland to support our customers. Added to the current team of 20 this will account for over half of our total company population. We have been in business for 5 years and have learned precisely how important engineering and support is to our customers.
Most trading takes place according to various venue’s daytime trading hours, but with the global conflagration of trading it is now a 24/7 reality; iGaming is in a similar situation. I urge all gaming companies to negotiate for the best pricing for connectivity and network access. We've heard the argument that gaming doesn’t need the same high-speed bandwidth that finance does, but I'm witnessing an even greater need. While Finance and iGaming have vastly different business models, they are still eerily similar; both deserve appropriate pricing structures.
Whether you want to jump in the sand box because everyone else is doing it or not, is up to you; but please take a look at accepting Bitcoin for payment. Bitcoin is the baby sister to Fintech and iGaming and is sometimes misunderstood. As a payment method, it allows for ease of payment with one code and no need to deal with credit card validations and failures and rejections and approvals with identity. It puts the liability and risk on the Bitcoin owner and away from your business. Also, the “speed” of which players can spend is that much quicker, but don’t forget: you’re going to have to entertain them that much faster! GoCoin has an excellent reputation and has a strong pedigree in leadership and alliances.
Increase player growth odds with technology and...TRUST.
Speed trumps all, traders get the best price and gamers multiply like Gremlins. Engaging a low-latency global network already collocated in secure data centers, and accustomed to responding to financial regulatory bodies and the demands of liquidity providers is a nice option. There are a few us to choose from. Do your homework; negotiate on pricing as your up-time is ourdown-time, most likely.
The best technology doesn’t automatically equate to success. Only building and maintaining trust with your players, partners, and community members will ensure the ultimate success. People are behind technology and in front of it. They can control it and you can too. Work to ensure controls, innovation, security and payment options. If you’re a transformed banker, enjoy the refreshing, new, lively scene and by golly, leave the navy blue blazer at home.