For Continent 8 Technologies, online gaming is in the blood. Nick Nally, chief development officer, tells iNTERGAMINGi why the company’s pedigree is key to future success.
In simpler times, when busy homepages were slowing, revealing themselves via a patchy dial-up connection, few thought about a future when the data being exchanged as part of that communication would be as valuable as currency itself.
A decade or two later, pin-sharp animated web pages appear almost instantly and vast sums of money move across the internet in real time (or as near as makes no noticeable difference).
The increase in network capacity, in speed and in the agility of the systems handling the transactions has been steady but constant, with innovation at times delivering a new reality every few months.
In online gaming, the impact of real-time systems has revolutionised the market with in-play wagering (and cash outs) now a huge part of the market and live odds beamed worldwide in seconds. High definition live casino feeds can be securely streamed to any one of the three or four devices found in most households. Robust, reliable, responsive networks are the arteries from which the industry feeds.
The lifeblood of these interactions – these transactions – is the constant stream of protected digital data flashing between nodes on the network at lightning speed. For the most part, communications companies provide the fibre down which the data courses but it is the data handling organisations that store and manage the information.
Companies like Continent 8 have helped revolutionise the online gaming industry as hosts of a range of online operations. In i-gaming, the Continent 8 network is uniquely expansive, linking as it does the UK, France, Malta, Ireland, Italy, the Isle of Man, Asia and North America – with more planned.
It is this broad, mature network that underpins the Continent 8 offering and, in turn, provides critical infrastructure to global gaming operations.
The company also helps to drive the industry forward by examining potential new regulated markets and, where appropriate, working with operator partners and regulators to help ensure the i-gaming offering is robust and workable.
It is a dialogue that Nick Nally, the company’s chief development officer, knows well. INTERGAMINGi spoke to Nally about the changing face of the i-gaming landscape – not least in the US – and the part Continent 8 will play in the future of the industry.
INTERGAMINGi: As new regulated online gaming markets open up, what are the challenges facing a data services business like Continent 8?
NN: “Continent 8 has built its business predominantly in the online gaming market and we’ve been operating in that market for 15 years or so. We started off with one data centre in North America in the late 1990s. Since then we’ve built that offering up to around 10 data centres worldwide.
“The difference between our business and many other data centre companies centres around the risk and the complexity. It’s relatively easy to set up a data centre business in the traditional markets and many do but entering online gaming jurisdictions is not so simple.
“If you consider Europe, for example, it’s not difficult to set up a data centre business with offerings in London, Paris, Dublin, Amsterdam, Frankfurt and Madrid, for example, and run a competitive model against all other data centre providers in those markets.
“The success of your business is dependent on your ability to sell in that market and to maintain a cost-effective operation – to keep your costs low so that you have reasonable margins. In the online gaming market, that traditional model doesn’t apply, although it is moving more towards that.
“Building a data centre model with centres in Gibraltar, the Isle of Man, Malta – even in Atlantic City – is quite difficult because the market is limited to gaming mainly and you don’t have a great number of other verticals that contribute to your business. You have one main vertical and, to a large degree, the success of that data centre is heavily dependent on the success of online gambling in that region.
“It can be a huge risk and we have to undertake a lot of assessment to make sure the decision [to enter that market] makes sense for us.”
So what are the key considerations when weighing up a move into a new market?
“You have to make decisions in terms of building, buying or leasing space in any market you wish to venture into. We’ve looked at ways of getting into new markets without having to build new data centres but sometimes your up-front capital costs can be huge.
“For example, we moved into Gibraltar in late 2011 and we started off by leasing a room from an existing data centre provider. Our business grew so quickly that the only way we could control our destiny in Gibraltar was to purchase the data centre and, following on from that, we have invested heavily in order to bring that data centre up to the standards we would like.”
Some markets require local architecture; others permit remote hardware – what difference does that make to your strategy?
“When you talk about new markets that allow remote hardware or infrastructure to be located in a different location or country, our objectives and those of platform providers and operators are well aligned – we want to take advantage of existing infrastructure as far as possible so as to reduce our costs of venturing into that market.
“It’s the same for us and our operators and that’s why we’re always working with operators and regulators to see how we can limit the exposure for ourselves and our operator partners.
“In online markets where infrastructure must reside, the decision as to whether operators (and indeed ourselves) enter is then based upon traditional models. Taking France as an example, the regulator took the decision that all infrastructure must sit within the country itself. So decisions are then based upon things like the available population, the nature of the gaming space and on the likelihood of success, etc.
“Such countries are effectively limiting the competition in their market because every operator and data centre provider has to make a decision based upon that country or market alone. In the case of France, it’s a large country so most companies decided that it was a good market and that they were going to move into it.
“But take a country with a population of just three or four million people: if the regulator there also decides the architecture must sit within that country’s borders those decisions become much more difficult and some operators and service providers will simply opt out of that market.
“As a result, I think those markets suffer because of reduced offerings and competition.”
What are the company’s specific plans regarding new US markets?
“I think that going forward in the US we would like to see some kind of convergence in terms of data centres within the national market.
“If you take the three states already regulated, Delaware has a population of fewer than one million people and it was pragmatic in its approach in that it decided that providers coming into that market could host their infrastructure in other states, so long as that hardware was within the US.
“But in the case of New Jersey, not only did all operators and providers have to locate infrastructure in the state but they also had to sit within licensed premises in Atlantic City itself. So we had to decide whether or not we could work within those regulations. We did enter the market but also decided to work with the regulator to develop other models.
“In New Jersey we supported a model to allow infrastructure to be hosted outside of the casino premises but within Atlantic City itself; a model that would allow for scale and would facilitate a proper data centre company to come into the region and offer a full set of services.
“In New Jersey we have established a presence and it would be good if, in the future, regulators in other states would allow operators to host their architecture outside of those particular states, enabling operators to make use of established infrastructure sitting in some of the bigger states.
“Operators will make their decisions based on the market size and their ability to make some money. If they had to place their infrastructure in certain smaller states to access those smaller markets alone, they would decide against doing so.”
Which states do you think will allow architecture to be held beyond state lines, if any?
“In the long run I see a number of the larger states requiring architecture and infrastructure to sit within the state boundaries and after that a whole host of states will allow infrastructure to sit within other states but probably within the US.
“In a state like California – one state we’re looking at presently – there are a multitude of data centre companies offering services to the marketplace.
“California has a very high density of data centre companies but in the case of New Jersey, in Atlantic City, there is no single data centre company operating outside of the casinos. In New Jersey, we’ve already been approved for a Transactional Waiver [permitting Continent 8 to provide data centre services to licence-holding operators].
“It will be interesting to see if that same model is employed in other states.”
When approaching these new markets – in the US or elsewhere – what differentiates the Continent 8 offering?
“Continent 8 has built its products and services around the needs of the online gaming market, although these offerings are easily transferable to other verticals. Our customers have become familiar with those services over the years and like to see them in each market.
“As we expand into new markets, if we have a customer already in, say, five data centres, when we bring a new centre into the mix, its quite easy for our customers to avail of the same services – such as DDoS protection, MPLS [multiprotocol label switching] connectivity, backup services, etc.
“One of the key reasons people come to Continent 8 is that we like to offer customers our complete range of services in every market we go into, we offer customers a one-stop shop, meaning that they don’t need to deal with different data centre providers or telecoms companies or data centre in each new market. It really simplifies things for them.
“And we continue to expand those product offerings. Recently we replaced our complete DDoS infrastructure and that is available to customers across all of our data centres.
“We also have a new cloud back-up solution that can back up data across numerous locations and markets and across third-party sites, so this becomes hugely advantageous to our existing customer base as we move into bigger markets.”
Nick Nally was speaking to Stewart Darkin.
Article appeared in iNTERGAMINGi, Issue 4, 2014