Key Points
- The net profit of PAGCOR is predicted to fall by 91% from PHP17.47 billion to PHP1.66 billion in 2026, way more severe than the general income decline of 18% indicates.
- The Bangko Sentral ng Pilipinas disconnected all of the e-wallets from the online casinos in 2025, which resulted in a 40% decrease in gaming and made recovery impossible because of the Middle Eastern crisis.
- According to the Supreme Court, the retroactive decision of 1993 obligates PAGCOR to pay PHP3.7 billion annually for the next ten years to the Philippine Sports Commission.
PAGCOR Is Facing Its Worst Financial Year in Recent Memory — Here Is Why
What is notable about the presentation of the PAGCOR budget numbers for 2026 to the Philippine House of Representatives on 25 August is that it was not just a matter of reduced income; rather, it was the almost total collapse of the net income, owing to factors that have come together one after another and amplified the impact without any buffer in between.
The total income for the year 2026 is estimated at PHP86.95 billion (US$1.41 billion), 18% lower than the PHP106.03 billion recorded in 2025. In itself, this would have been a challenging year. However, the net income paints a grimmer picture: down by 91%, from PHP17.47 billion to PHP1.66 billion. This is where the story lies in the difference between 18% and 91%.
The Chain of Events That Broke the Numbers
The decline did not come from one shock. It came from two back-to-back blows, landing on a regulator that was already absorbing the loss of Philippine Offshore Gaming Operators, which were banned in late 2024 and had been generating billions in annual licence fees.
The first blow landed in August 2025, when the Bangko Sentral ng Pilipinas ordered e-wallet providers including GCash and Maya to immediately remove all icons and links connecting to online gambling platforms, following a Senate committee hearing. Both providers pledged compliance within 48 hours. For millions of online players who had grown used to funding accounts with a single tap from their digital wallet, the change was immediate and jarring. PAGCOR Chairman and CEO Alejandro Tengco described what happened next to lawmakers at the budget hearing: “After that was implemented, we experienced a downtrend of about 40 per cent in gaming activities because it’s not as easy as before when platforms were linked.”
Gaming activity was starting to recover in the early months of 2026 when the second blow arrived. The escalation of the Middle East conflict pushed fuel costs higher, squeezed household budgets, and hit discretionary spending directly. Tengco was precise about which players felt it most. “Truly, both the land-based casinos, which were our licensees, were affected, and so was online gaming. As you very well know, in the online gaming market, our main customers come from the C, D, E market. And that market was the one truly affected by the Middle East crisis,” he told the congressional panel.
What the First-Half Numbers Confirmed?
When PAGCOR officially announced its financial results for H1 2026, the extent of the destruction became obvious. Total revenue decreased by 26.64% to PHP43.32 billion from PHP59.05 billion for the corresponding period of 2025. Gaming revenue, which is the biggest part of the revenue stream, fell by 27.11% to PHP38.92 billion.
It appears that the electronic gaming business received the worst blow. Revenue from eGames, eBingo, and bingo grantees decreased by 41.85% to PHP18.60 billion, which is the result of banning the use of e-wallets. Licensed casinos and PAGCOR-operated casinos declined by 3.85% and 8.67% correspondingly, meaning that land-based gambling was not untouched either. In the first half of 2026, net income decreased by 85.29% to PHP1.58 billion, which was almost equal to the annual forecast.
The gaming industry in the whole country demonstrated the same dynamics. Gross gaming revenue of the whole industry was reported as PHP88.13 billion in Q2 2026 and it was 20.33% lower compared to the previous year when it was PHP110.63 billion. The contribution of licensed casinos was PHP45.37 billion, or 51.49%.
A Court Ruling That Added Billions the Budget Never Planned For
Revenue weakness alone cannot explain a 91% net income collapse. The third layer of pressure came from the Philippine Supreme Court. Its ruling in G.R. No. 223845, with PAGCOR’s final motion for reconsideration denied in October 2025, established that the regulator must remit 5% of gross income, not gaming revenue, to the Philippine Sports Commission. The distinction matters enormously. Gross income is a larger base, and the ruling is retroactive to 1993, building up a total liability estimated at PHP37 billion.
The court gave PAGCOR ten years to pay off the arrears at an average of about PHP3.7 billion per year, which amounts to more than PHP300 million per month. The cumulative effect of both the current and retroactive payments from PAGCOR to the PSC was well described by Tengco using a term that is very clear even without any translation: “Double whammy ang effect nyan sa Pagcor.” Just during the first six months of 2026, PAGCOR paid PHP2.01 billion to the PSC, 58.68% higher compared to PHP1.26 billion during the same period of 2025.
July Brought a Lift, and Tengco Is Counting on Peak Season
Not all the signals coming out of the budget hearing pointed downward. Tengco told lawmakers that gaming activity climbed 10% in July 2026 and held steady through August. Tourist volumes at integrated resorts also picked up during the same period. “Considering that the peak season for gaming activity is coming up, hopefully we’re able to recover the weak revenue in the first half towards the latter part of this year,” he said.
This positive outlook of a recovery is not bereft of backing from the private sector either. For instance, DigiPlus Interactive, which is one of the biggest listed digital gaming corporations in the Philippines, has expressed expectations of complete recovery in either Q3 or Q4 after stating the occurrence of a “steady recovery” in the months after the e-wallet delinking. It remains to be seen if this operator-specific positivity turns out to be an actual source of income for PAGCOR before year-end.
For 2027, PAGCOR is targeting total income of PHP88.33 billion, with PHP63 billion earmarked for nation-building programmes.
Half the Online Market Is Still Illegal — and PAGCOR Is Building an App to Fight It
Tengco disclosed at the hearing that approximately 50% of online gaming sites accessed in the Philippines operate without a licence. That share has improved from the roughly 90% he estimated when he first took office, but it represents a significant pool of activity generating no regulatory revenue and offering players no legal protection. Most illegal operators are based abroad, using Filipino social media influencers to reach local players.
PAGCOR’s response is a dedicated app planned for launch before the end of 2026, built on its existing PAGCOR Guarantee verification platform. The app’s stated goals are to identify licensed operators for players and to cut off traffic to illegal sites. A parallel push on the responsible gaming side saw PAGCOR launch a 24/7 National Problem Gambling Helpline in May 2026, staffed by trained counsellors and run in partnership with Seagulls Flock Organisation Inc.
Despite the income drop, PAGCOR’s nation-building contributions are forecast at PHP61 billion for 2026, with that figure set to rise to PHP63 billion in 2027. The commitment is notable given the financial conditions, though it reflects the mandatory nature of most remittances rather than discretionary generosity.
Expert Analysis
We think the 91% net income figure is the number that deserves far more attention than it has received. The 18% total income decline is bad but manageable for a government regulator. A 91% collapse in net income is something else entirely; it points to a fiscal structure that cannot absorb simultaneous revenue shocks and court-mandated cost increases without the bottom line essentially disappearing.
What strikes us is the compounding sequence. PAGCOR had already lost POGO licence revenue before the e-wallet ban hit. The e-wallet ban arrived before the Middle East crisis. The PSC ruling came on top of all of it. No single shock caused this; the timing of all three together did. And with PSC payments locked in for a decade, the question of when PAGCOR genuinely recovers is not answered by a strong Q4 gaming season alone. The regulator needs structural revenue additions, whether through Special Class BPO licensing, the Casino Filipino privatisation proceeds, or tighter enforcement against illegal operators, to rebuild the net income line that 2026 has nearly erased.
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