An investigation by a special litigation committee ruled in favor of PENN Entertainment regarding the company’s disagreement with an activist investor over board seats.
According to an 8-K filing with the SEC, PENN formed a special litigation committee to review HG Vora’s claims against the company after the activist investor sued PENN in Pennsylvania, claiming the gaming giant evaded regulatory oversight and violated the law by removing one of the three board seats up for election at PENN without notifying shareholders. In 2024, HG Vora requested that it have a representative sit on the board to help drive long-term value for shareholders amid concerns about “underperformance.”
PENN would later elect two new board members despite HG Vora’s request for three. The company also reduced the total number of board seats from nine down to eight. HG Vora claims the personnel changes violated the board’s fiduciary responsibilities.
Report suggests to not ‘pursue’ HG Vora’s claims
PENN’s board formed the special litigation committee to investigate the claims and also enlisted Philadelphia-based law firm Dilworth Paxson LLP to assist with the probe.
PENN’s investigation into the matter included interviews, law research and a review of documents, with the probe finding PENN “acted on an informed basis, in good faith and for the best interests of PENN in the exercise of its business judgment in its decision to reduce the overall size of the board from nine to eight” before the company’s annual meeting.
The special litigation committee also determined that “it would not be in the best interests of the company to pursue the HG Vora claims or take other action.”
Earlier this year, HG Vora filed a motion for expedited trial and an early case management conference for its suit against PENN. The motion was denied by U.S. District Court Judge Catherine Henry. In response, PENN filed a motion to stay while the special litigation committee investigated the issue. The motion was granted in part, putting a pause in the case while the special litigation committee was developing its report.
HG Vora creates a website criticizing PENN
HG Vora also took issue with PENN’s spending, notably its $2 billion investment to launch ESPN Bet. The activist investor is a minority owner of PENN, holding an 18.5% stake.
In May 2025, HG Vora launched a website to promote its displeasure with PENN. The website hosts a 116-page investor presentation on how PENN is mismanaged.
HG Vora is taking issue with PENN’s business practices despite a “history of pushing the boundaries of gaming control restraints” related to violations of institutional investor waivers granted by gaming regulators, per the special litigation committee’s report.
The violations led to a $950,000 civil penalty against HG Vora, which was paid to the SEC. The penalty was for failing to meet SEC disclosure requirements ahead of an acquisition.
