At Pragmatic Solutions, we spend considerable time in discussions with leadership teams of online gaming companies who are facing the critical business decision of choosing their platform technology.
Through these conversations, we have noticed a predominance in the industry to approach this choice in binary terms; the question operators pose is whether to own their igaming platform (by building it in-house or buying it) or license it from a third-party provider.
This understanding is based on the original conditions of the igaming industry, where platform technology followed what we call a ‘forced ecosystem model’. Initially, a player account management (PAM) platform – either in-house or offered by third-party providers – was part of a monolithic technology stack, with services and applications interconnected through opaque or poorly segregated protocols.
However, in today’s dynamic environment, this traditional model falls short of operators’ needs. Operators now require more control and flexibility to integrate best-in-class multi-vendor and proprietary technologies into a cohesive stack. Operators express frustration over the technological and contractual restrictions inherent in the forced ecosystem model, which hinders their ability to quickly adapt to market shifts, enter new regulated markets, innovate with new features and integrate third-party vendors or in-house solutions of their choice.
This is why Pragmatic Solutions encourage operators to move beyond this dichotomy and consider a third option: a hybrid approach we call the ‘CPU model’.
This name comes from an analogy, where we metaphorically liken a modern PAM platform to a central processing unit (CPU) in computing. In this model, the platform acts as the core of the operator’s online gambling technology, handling essential but uniform services – such as bet processing, account management and compliance functions that are crucial yet standard across the industry. This central role is comparable to a CPU within a computer that coordinates and executes instructions with reliability and efficiency.
The CPU model enables the creation of a unique technology stack suited to operators’ immediate and future needs, empowering them with superior adaptability and customisation possibilities.
We have recently released a white paper that addresses the characteristics of both models to help operators make crucial decisions regarding their platform technology strategy. While we encourage leadership teams to read it in detail, here I will address some of its major points.
The challenges of licensing in a forced ecosystem
Forced ecosystem models of platform provision, as mentioned, are not restricted to in-house technology. Operators which licensed their platform from third parties that follow this legacy approach have encountered a great number of limitations, particularly when, adapting to market changes, they required integration of a mix of the best multi-vendor and proprietary products and technologies. These integrations were either difficult, not supported or against the commercial interests of the platform vendor (and therefore a point of frustration).
Contractual limitations with respect to integration of the best multi-vendor products, in addition to technical limitations with respect to any integrations, effectively force the operator to – predominantly or exclusively – use products and services offered by the PAM platform vendor (which were often not independently market-leading).
In contrast, the CPU model, while still effectively a licensing model, empowers operators with the flexibility to enrich their platform with products from leading third-party vendors or custom developments, enabling the creation of a unique technology stack suited to their immediate and future needs.
A sustainable model for evolving market needs
Sustainability is a top concern for any operator aiming to meet changing player expectations and adapt to market dynamics. Pragmatic Solutions developed the CPU model in response to direct operator feedback and the need for a more effective approach to platform licensing. The model offers several key benefits, including lower upfront costs, quicker market entry and a shared master codebase that evolves with the needs of other operators in the network. These elements contribute to long-term sustainability and ensure operators can scale effectively.
The CPU model has also demonstrated the benefits of maintaining stability and scalability, since the platform has been built and designed for its intended purpose from the outset. By leveraging containerisation and the elasticity of cloud-hosting environments, our platform scales efficiently and has seen no upper boundary to its capabilities in production environments.
Adapting to local market conditions
Localisation is crucial for operators expanding into new markets, and the CPU model’s modular design provides operators with this necessary flexibility. Operators can customise their offerings with the integration of local content providers and address market-specific regulatory requirements.
The CPU model’s agility in adapting to local conditions gives operators the ability to deliver an experience tailored to each market. This adaptability is essential in the igaming industry, where swift adjustments are needed to respond to new regulations, market trends and player preferences.
Data security
There could be a misconception that owning the platform would bring a higher level of security and data protection. However, today’s best practices on data protection rely on the capacity of the technology and development teams to adapt to the latest security measures, and it is ensured by the integration of the best-in-breed services and the strict adherence to data security protocols.
The CPU model’s architecture allows for an advanced level of data security. Each licensed platform operates within an independent instance hosted on a virtual environment, such as AWS, enabling operators to control their security policies while complying with regulatory standards. This ensures data integrity and mitigates the risk of security breaches, a crucial advantage in an industry where data protection is paramount.
Cost efficiency
Cost-effectiveness is another factor operators must consider when selecting a platform. Developing an in-house platform requires substantial upfront investment and a commitment to ongoing maintenance, often diverting resources from core business functions. By licensing a platform instead, operators can structure their costs according to the revenue generated on the platform, creating a more scalable and cost-efficient solution.
The CPU model minimises operational costs while allowing operators to focus on enhancing customer experiences and developing innovative products. By alleviating the resource demands of in-house technology development, operators can concentrate on their competitive positioning in the market.
Transitioning to a new way of working
As more operators recognise the advantages of the CPU model, an increasing number are making the transition from forced ecosystems to this modern approach. The ones that have made this transition often find it an adjustment to a different way of working where they have more of a voice in the forward development of the technology that supports their business. They will have more options available to them in terms of third-party vendors to integrate or more control over their front-end websites and native apps, the customer journeys and bonuses and promotions offered.
For some operators, this requires a difference in thinking from an attitude of frustration – making do with what you have – to an attitude of creativity and strategic planning to define the business priorities (supported by technology) that can give them an edge over the competition. Fortunately, these are positive adjustments, and we are with them every step of the way to offer consultation and support.
Ashley Lang is the CEO of Pragmatic Solutions. A serial entrepreneur, Lang has more than two decades of leadership experience in the igaming industry, having founded B2B marketing firm Green Room Media, B2B technology provider Odobo and igaming operator Lottomart. He has also held senior leadership positions in established gaming companies including as a founding executive member of Mansion and a non-executive director at bet365 for 14 years.