PENN Entertainment, a Pennsylvania-based gaming company located in Wyomissing, has come under scrutiny recently for an alleged improper board structure. HG Vora Capital, an investor in the company, notified PENN that it is violating the Pennsylvania Business Corporation Law.
HG Vora Capital, a hedge fund out of New York, is seeking board seats at PENN Entertainment.
Not only is PENN Entertainment’s headquarters in the Keystone State, but it also operates one of 21 PA online casinos, an online sportsbook and four Hollywood-branded retail casinos.
PENN Entertainment investor accusing company of improper board structure
HG Vora Capital wants more seats on PENN’s board. However, the hedge fund, which owns an 18% stake in PENN, filed a complaint against the size of the company’s board.
According to Reuters, PENN’s board members are up for election every three years. Two directors who stand for re-election this year have served on the board for more than 20 years. HG Vora Capital’s regulatory filing stated:
“The current structure of the Board is legally improper and disenfranchises shareholders by artificially constricting the number of directors who may stand for re-election at the Company’s 2024 annual meeting. We expect the Company to remedy this violation promptly.”
PENN’s stock has not performed well over the last two years or so. The company’s price once stood at $130.47 on March 12, 2021. As of Jan. 19, 2023, the price has plummeted to $23.33.
The dismal stock performance has caused concerns for HG Vora Capital, which could potentially nominate its own board candidates that all shareholders would vote on.
PENN Entertainment’s presence in PA gambling market
PENN has a large footprint in the Pennsylvania gambling market in both the online and retail verticals. The company has the following Hollywood land-based casinos in the Keystone State:
- Penn National Race Course
- The Meadows
Hollywood Casino Morgantown and York are both considered mini-casinos, which can’t hold more than 750 slot machines inside the facility.
PENN also operates an online sportsbook and casino within the state. After splitting with Barstool Sports last summer, PENN forged a partnership with ESPN and launched ESPN Bet PA last fall. Hollywood Casino PA, PENN’s online casino brand, is now available through the ESPN Bet app.
The online sector for PENN must improve for the company’s stock price to increase in the near future. Luckily for PENN, the Keystone State is one of the most robust gaming markets in the country for both retail and online.
The launch of any new online product, such as ESPN Bet, is going to be a long-term investment. Hopefully for PENN’s sake, the return on investment will be worth it.