International rating agency Standard & Poor's (S&P) recently took action, downgrading the credit rating of Japan's Universal Entertainment Corp. from "B" to "B-". This adjustment directly points to the continued weakness of its casino business in the Philippines, suggesting that even a layout in a popular gambling area, if not well-operated, can become a "hard injury" on the group's financial report.
First, the core of the downgrade: Continuous decline in Philippine business drags down overall profitability
S&P clearly stated in the report that the downgrade was mainly due to the "consistently below expectations" performance of the company's integrated resort business in the Philippines. Universal Entertainment operates the Okada Manila hotel and casino in Manila's Entertainment City through its subsidiary Tiger Resort.
The report states that the subsidiary's EBITDA (earnings before interest, taxes, depreciation, and amortization) has "seen double-digit year-over-year declines for several consecutive years." In plain terms, this piece of overseas assets, which was originally viewed positively, not only failed to earn the expected money but has been continuously dragging behind. S&P attributed the reasons to poor VIP customer service performance, a decrease in overseas visitors from China and other places, and increasingly fierce local competition. Currently, Entertainment City already has Okada Manila, Studio City Manila, and Solaire competing, with Westside City Resorts World joining the battle in 2026, and about 20 other small gaming halls in the Metro Manila area, the competitive pressure is imaginable.
Second, financial warnings and market challenges under a stable outlook
Although the rating has been downgraded, S&P still gives Universal Entertainment a "stable" outlook, believing that there is a low possibility of significant liquidity deterioration in the short term, and the core business's cash flow and performance will tend to stabilize. In addition to the gambling business, the company also manufactures and sells Pachinko and Pachislot machines.
However, the financial forecast data is not optimistic. S&P expects the company's overall EBITDA for 2025 to drop from 21.2 billion yen in 2024 to about 18 billion yen. Although it is predicted to possibly rebound to around 24-25 billion yen in 2026, this is still full of uncertainties. The report specifically mentioned that although there is some recovery in its Japanese gaming machine business, sales are "difficult to predict," partly because the compliance testing pass rate for new models has always been low. In 2024, due to new models failing the tests, sales in that department deteriorated significantly.
The company's debt burden remains heavy, but S&P believes it is still manageable in the short term. The report also issued a warning: if EBITDA further deteriorates, or if cash reserves fall below the 25 billion yen threshold, it could trigger another rating downgrade.
Third, lessons: Overseas expansion needs to address localization and fierce competition
The case of Universal Entertainment serves as a reminder to the industry: In key markets like the Philippines, having licenses and luxurious properties is not enough. Whether you can accurately grasp the needs of VIP customers, effectively attract and serve international visitors, and find differentiated advantages in fierce homogeneous competition, is the key to determining project success and thereby affecting the financial health of the parent company. For those who want to gain a deeper understanding of global gambling market regulatory policies and competitive landscapes, they can refer to the regular market analysis reports published on the PASA official website for more comprehensive information.
Currently, as new projects in Manila are launched one after another, the competition in the Philippine high-end gambling market will only become more intense. How to reverse the downturn will be a pressing issue for the management of Universal Entertainment and its Okada Manila.
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This article is from "PASA-Global iGaming Leaders" gambling industry news channel:https://t.me/pasa_news
Original deep gambling channel:https://t.me/gamblingdeep
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