Latency in games are a huge issue.
Very much effort is put into making it as low as possible, to make the gameplay better, but it could also be utilised as a game mechanic.
During my research of my diploma i explored how i could do just that, The result is the human latency device.
The human latency device is kind of a multiplayer device, the master holds the controller. This kontroller got 6 buttons up, down, left, right and two action buttons (a, and b) the other "players" have a led attached to their forehead.
They each holds a object with a button on it. Thoose buttons are hooked up to the game console.
So, the master presses "left" and a led blinks up on the forhead to the "player" holding the object with the button coresponding to "left" in the game. When this person sees the red light he have to press his/her button as soon as possible, this wil make the game recieve a "left" command.
This creates an interesting gameplay, where you as the master have to account for the time it takes for the other players to see the the red led adn tehn react by pressing the button.