An investor in PENN Entertainment is attempting to change the gaming and entertainment giant’s organizational structure.
New York-based investment firm HG Vora Capital Management has nominated three patrons for independent board seats at PENN as part of a proxy battle with the company.
HG Vora wants to make changes at PENN over claims of “reckless spending of nearly $4 billion” on partnerships and the alleged “abject failure” of its online gaming business.
The firm says at PENN there is a pattern of “overpaying, overpromising and not delivering.”
PENN adjusts online sports betting business
HG Vora is making these claims against PENN after the company promised to invest $2 billion to launch ESPN Bet in partnership with the “Worldwide Leader in Sports.”
PENN launched ESPN Bet in late 2023 after shutting operations of Barstool Sportsbook after selling media brand Barstool Sports back to its founder Dave Portnoy for a $1.
In 2021, PENN acquired theScore for $2 billion providing market access to Canada. At the point of sale, the media and gaming company generated less than $25 million in revenue.
HG Vora prepared to launch a proxy battle against PENN by reducing its stake in the company to 4.8%, according to securities filings submitted by the firm earlier this month.
As a result of its proxy battle against PENN, the investment firm has nominated former Pinnacle Entertainment CFO Carlos Ruisanchez, former Superbet Group CEO Johnny Hartnett and former PENN CFO William J. Clifford to the three board seats at PENN.
HG Vora is calling for a change as PENN shares have lost substantial value since reaching their all-time high. In March 2021, shares of the company soared to a high of $136.47 and have since lost nearly 90% of their value, per stock market research company TipRanks.
In Q3 2024, PENN generated $1.6 billion in revenue mirroring results for the same period the year prior. PENN posted a net loss of $37.5 million in Q3 2024. Despite the losses, the quarter marked an improvement from the $725 million net loss reported in Q3 2023.
As of January 2025, PENN has a market capitalization of $3.2 billion.
Familiar territory for PENN
Last June, activist investor the Donerail Group called for PENN to consider a sale amid capital allocation resulting in a loss of credibility for leadership. Donerail claimed PENN’s credibility was beyond repair due to the company’s substantial loss in shareholder value.
Donerail Managing Partner Will Wyatt projects a sale of PENN could fetch up to $7 billion.
