Should Operators Own or License their iGaming Platform?

Ashley Lang, CEO of Pragmatic Solutions, presents a modern alternative that transcends this debate.

Guest column published on GIFriday, September 2024.

Succeeding as an online gaming and betting operator has never been more challenging. The competition is fierce and the demands of local regulations, that vary between markets, impose many new operational and technical demands. What they require from their Player Account Management (PAM) platform, or indeed their entire technology strategy, has become more complex.

Many procurement models, vendors and technologies that were prevalent in the first two decades of the igaming industry are no longer viable or fit for purpose in today’s market.

These challenges are causing many operators to reconsider their original platform technology strategy.

Build, Buy or License?

When evaluating options for their core platform, operators historically focused on a binary approach. The question they pose is whether to own it (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 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.

This resulted in severe technological limitations when operators, adapting to market changes, 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).

The “Forced ecosystem model” PAM platform vendors applied contractual restrictions and limitations on any such integrations, as the vendor’s main goal was to “force” their own products onto the operator. 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 marketing-leading).

Past difficulties with third-party PAM providers can push operators towards initiating in-house platform development projects, leading to the adoption of a Buy/Build approach, where basic PAM platform source code is acquired (or internally produced) and then constantly developed upon by in-house technology teams.

While the reasons for this choice are understandable, it is worth noting that many operators with proprietary PAM platforms run into serious technological bottlenecks. Their speed of new customer experience enhancing development is very low (due to limited development capacity being deployed to the production of commodity services necessitated by regulation or basic operational needs), causing them to fall behind on competitors and limiting or heavily restricting their continued growth.

The “CPU model”

In today’s dynamic environment, the "Forced Ecosystem model", or the alternative of platform development in-house severely fall short of the operators needs as operators require more control and flexibility to integrate a mix of the best multi-vendor and proprietary technologies into a cohesive stack.

That is why we argue operators must evaluate a third alternative; a hybrid approach, unique to Pragmatic Solutions, that we refer to as the “CPU model.”

As designed by Pragmatic Solutions, a modern PAM platform can be metaphorically likened to a Central Processing Unit (CPU) in computing.

Under this analogy, 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.

This denotes a PAM platform that, like a CPU, allows for the integration of varied components – be it third-party services or proprietary technology – without restrictions and limitations. Such flexibility is indispensable for tailoring offerings, swiftly incorporating superior third-party products, enhancing the user experience, and establishing a competitive edge in the market.

This model enables the creation of a unique technology stack suited to operators’ immediate and future needs, empowering them with superior adaptability and customisation possibilities.

For further information on the “CPU model” and major considerations when choosing platform technology, we encourage readers to download our free white paper, "A Pragmatic Approach to Platform Selection."