Universal Ent plans return to overseas gaming equipment business via Nevada firm

Japanese gaming conglomerate Universal Entertainment Corp says it plans to re-enter the overseas gaming equipment business through a recently established company based in Nevada, in the United States, and linked to the firm’s president. The group says it intends to develop a “third pillar” of revenue alongside its amusement equipment and integrated resort operations. Universal Entertainment’s board approved on Friday a series of agreements with UDN Gaming Inc, a business wholly owned by Universal Entertainment’s representative director and president, Tomohiro Okada. Tomohiro Okada is also the controlling shareholder of Universal Entertainment’s parent company, privately-held Okada Holdings Ltd. UDN was established in Nevada in March “for the purpose of promoting the business of development, manufacture, and sale of gaming equipment including slot machines overseas”. Universal Entertainment is the parent of the Okada Manila casino resort in the Philippine capital, and it also makes pachinko and other amusement machines mainly for the Japanese market. The parent company said in Friday’s filing that it intended to include UDN in its consolidated accounts, although the timing had yet to be determined. The Japanese group currently holds no voting rights in UDN. The business scheme envisages Universal Entertainment or a designated third party eventually acquiring all UDN shares from Tomohiro Okada, following an assessment of the progress and outcome of Universal Entertainment’s own applications for gaming licences in the United States. The group said it planned to use UDN during the initial phase of the business because gaming licence reviews in the United States – particularly in Nevada – were among the world’s “most stringent”. A direct application by Universal Entertainment would require suitability reviews of major shareholders, directors, key employees and other relevant persons, a process the company said was likely to take a “considerable” amount of time. “During the business launch phase, Universal Entertainment has decided to first use UDN… to apply for gaming licences and to advance the business in stages, while Universal Entertainment also intends to apply for licences in due course,” stated the filing. Intellectual property, US$25mln loan Under an agreement scheduled to be executed on September 30, Universal Entertainment subsidiary Aruze USA Inc will provide UDN with a credit facility of up to US$25 million. The facility will carry an annual interest rate of 5.12 percent and run until December 31, 2035. All UDN shares held by Tomohiro Okada will serve as collateral. Aruze USA will also have the right to require the shares to be transferred to Universal Entertainment or a designated third party at their original subscription price. Universal Entertainment will separately license UDN to use intellectual property related to gaming equipment development, manufacture and sales. The fee will be US$100 for each gaming equipment unit shipped. The Japanese group will provide UDN with engineering, accounting and administrative support, charging its direct expenses plus a 6-percent profit margin. Universal Entertainment has historical ties to the overseas gaming equipment sector through Aruze Gaming America Inc, a business established by the Japanese group’s founder, Kazuo Okada. Aruze Gaming America developed and supplied slot machines and electronic table games to casino markets worldwide, although it was not a Universal Entertainment subsidiary. The relationship between the two businesses later broke down, with Universal Entertainment pursuing legal action over the alleged unauthorised use of its gaming-machine patents. Aruze Gaming America filed for Chapter 11 of the United States’ Bankruptcy Code in 2023. The firm’s slot-machine assets were acquired by Play Synergy, while Interblock acquired certain electronic table-game assets of Aruze Gaming America. In Friday’s announcement, Universal Entertainment said the latest step was part of its effort to establish a new revenue base amid a “downward trend” in Japan’s domestic amusement equipment market and “intensifying competition” in the Philippine integrated resort sector. “There is a need to promptly secure a new revenue base in the form of a new business,” the Japanese conglomerate stated. “Re-entry into the [gaming equipment] business is considered reasonable from the standpoint of purpose and necessity, as it would enable the Universal Entertainment group to leverage the tangible and intangible resources it has cultivated over the years,” the firm added. As UDN is wholly owned by Tomohiro Okada, the arrangements constitute related-party transactions. Universal Entertainment said Tomohiro Okada did not participate in the board’s deliberations or vote on the matter. The remaining eight directors “unanimously approved” the transactions after concluding that they would support the group’s business development and would not disadvantage minority shareholders, according to the filing. Universal Entertainment expects the initiative to have an immaterial impact on its consolidated financial results for the year ending December 31, 2026.