Wednesday, September 15, 2010

TIME IS MONEY. DOWNTIME IS MORE MONEY.


Unlike the traditional merchant transaction processing environment, the delivery of cash access services, and the products through which they are delivered, need to meet extremely high standards of reliability and efficiency in order to handle the high transaction volume of the casino gaming industry.

The overall US gaming industry operates in over 40 States and generates an estimated $90 billion in revenue (Data: American Gaming Association). Cash access services are present in numerous venues, which include the traditional casinos of Las Vegas and Atlantic City, Native American Casinos, Riverboat Casinos, Pari-mutuel Race Tracks, and Card Rooms.

Cash access products play a mission critical role for gaming operators with an estimated 70% of gaming revenue being derived from such services. Most gaming operators rely on outsourced third party companies like Sightline Payments to provide these services to their patrons. We estimate the North American (on an annual basis) Gaming Cash Access market to be $25 billion dispensed to patrons and over 100 million transaction approvals, generating an estimated $950 million in revenue for the industry.

High availability with a goal of zero downtime is a Sightline Payments system design approach and associated service implementation that ensures a prearranged level of operational performance will be met during a contractual measurement period. Casino operators want their cash access systems, for example ATM’s, cash advances, check cashing services, and redemption devices to be ready to serve their guests at all times.

Availability refers to the ability of the casino guest to complete a transaction using the various as access systems. If a guest cannot access the system, it is said to be unavailable. Generally, the term downtime is used to refer to periods when a system is unavailable.

A casino operator must also make the distinction between scheduled and unscheduled downtime. Typically, scheduled downtime is a result of maintenance that is disruptive to system operation and usually cannot be avoided with a currently installed system design. Scheduled downtime events might include patches to system software that require a reboot or system configuration changes that only take effect upon a reboot. In general, scheduled downtime is usually the result of some logical, service provider-initiated event. Unscheduled downtime events typically arise from some physical event, such as a hardware, software, or telecommunications failure or environmental anomaly.

Many casino cash access service providers exclude scheduled downtime from availability calculations, assuming, correctly or incorrectly, that scheduled downtime has little or no impact upon the casino guest. By excluding scheduled downtime, many service providers can claim to have phenomenally high availability, which might give the illusion of continuous availability.

Availability is usually expressed as a percentage of uptime in a given year. The following table shows the downtime that will be allowed for a particular percentage of availability, presuming that the system is required to operate continuously:

Uptime and availability are not synonymous. A system can be up, but not available, as in the case of a network outage.

Casinos are a 24 hour business and as you can see in the above table anything less than 99.5% availability is equivalent to closing the casino doors for days. Gaming revenue impact from downtime can be substantial if the cash access service provider is less than 99.9% availability which is why it is critically important to fully vet a casino cash access supplier’s systems.

Mr. Sanford, President, CEO and Director was featured by Business Week Magazine as one of the Top 100 CEO’s Under 40 and has also been involved with a number of other successful businesses. He started Sightline Payments LLC in 2009.

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