The results were in line with expectations as both the company and HG Vora backed both Johnny Hartnett and Carlos Ruisanchez.

For context, HG Vora took a 4.8% stake in Penn, which makes it the third-largest investor behind BlackRock and Vanguard. 

The fund has been critical of Penn’s management, including for what it called “misguided transformation into a sports, media and technology conglomerate.”

HG Vora Laments Poor Executive Management

In its presentation, HG Vora said that Penn’s online sports betting pivot has “failed” despite spending $4 billion on the venture over five years. 

It particularly listed the Barstool Sports acquisition, where Penn eventually sold back the venture to Dave Portnoy for a mere $1 after having paid over $550 million initially. 

The fund also lashed out at Penn’s executive compensation, especially in light of its sagging stock price.

HG Vora was looking to add a third nominee, Penn’s former CFO William Clifford, to the board, but Penn reduced the number of directorial candidates from three to two. 

While Penn will officially file the results in the coming days, HG Vora claims Clifford’s candidature also received the support from the majority of shareholders.

Importantly, what appears to be a setback to Penn’s management, HG Vora’s release claims that 60% of shareholders rejected its “Say-on-Pay” proposal.

While two directors won’t exactly give HG Vora veto powers, the fund is expected to pursue changes related to Penn’s online betting business, its partnership with ESPN Bet, and push for deleveraging. 

Meanwhile, Penn shares are trading slightly lower in pre-market today as the results of the shareholder meeting were expected. 

The muted price action could also be because HG Vora does not have any previous track record as an activist investor, and it is the firm’s first foray into activism. 

Markets might wait and see how its nominees help change Penn’s business before reacting to the new directors.

Penn Entertainment’s Underperformance Made It Ripe for Activist Investors

Penn always looked fertile for intervention from an activist investor given its disappointing price action. 

The stock has lost around half of its market capitalization over the last five years and is down a whopping 89% from the record highs it reached in 2021. 

For context, Las Vegas Sands and Playtika Holdings have lost 12% and 84 % over the last five years. Wynn Resorts is flat, while MGM Resorts has gained almost 74% for the period.

While competitors’ performance has been mixed, Penn has underperformed compared to the majority of its peers over the last five years. HG Vora attributes this to the board’s failure to hold management to account for astute execution. 

Why Has Penn Stock Been Falling?

Penn’s dismal price action since the 2021 peak is not surprising, given that its financial performance has underwhelmed, frequently missing earnings estimates (including in Q1 2025).  

The company’s revenues rose 65% in 2021, the year it hit its record highs. However, growth fell to 8.4% in 2022, and in 2023, its revenues declined by 0.6%. Revenue growth did recover to 3.4% last year, and analysts expect topline growth in the ballpark of 5% in 2025 and 2026.

The bottom-line performance has deteriorated badly, and its adjusted net income fell from $428.3 million in 2021 to $401.8 million in 2022 and $60.8 million in 2023. Last year, the company reported an adjusted net loss of nearly $252 million, while its free cash flow was -$123.4 million. 

What’s the Forecast for Penn Entertainment Stock?

There has been no major analyst action following the AGM, as the results were in line with estimates. 

In its release welcoming the two new directors, Penn said, it is “intently focused on driving profitability in our Interactive segment and growth across the business.” It also talked about the need to deleverage its balance sheet and return capital to shareholders.

The company repurchased $35 million worth of its shares in Q1 and intends to scale up repurchases in the second half of the year, as it views its stock price as “severely dislocated” from its fundamentals.

Penn’s valuations have plummeted amid perennial underperformance, and it trades at just 0.34x its projected sales over the next 12 months, which is not only the lowest among its major listed peers but is also a discount to its long-term average multiples.

While HG Vora and the analyst community agree with Penn’s management on its valuations, given the over 41% discount to the median target price of $23.23, the company might need to change its strategy to drive shareholder returns.

That said, the record of activist investors in driving turnarounds is mixed at best. While there are success stories, such as Dan Loeb pushing Yahoo to divest its Alibaba stake, there have been many failures, including Bill Ackman’s ill-fated efforts to transform J.C. Penney.

The post Penn Entertainment Stock Outlook Uncertain as Activist Fund HG Vora Gains Influence appeared first on CasinoBeats.

A week after sending a letter to shareholders, the hedge fund created a website and published a 116-page presentation arguing for strategic changes. 

The vocal shareholder asserts that Penn stock has declined 90% since its peak in 2021, destroying nearly $19 billion in shareholder value.

The hedge fund has once again urged shareholders to vote for the three independent board candidates it has nominated using the Gold proxy card, not Penn’s white card.

HG Vora Proxy Claims Penn’s Digital Pivot “Misguided”

In its “Genuine Change Is Needed At PENN” presentation, HG Vora highlights that before 2020, Penn Entertainment focused on brick-and-mortar casinos.

Since then, the company has shifted its priority to its Interactive division, particularly online sports betting (OSB), and has committed over $4 billion in shareholder capital. Yet, the digital segment only accounts for 15% of the company’s revenue.

While the retail casino sector has been successful and proven to return shareholder investment, the move towards the digital segment has diminished value. 

According to the presentation, from 2000 to 2020, shareholder return was 4,926%, compared to the 416% growth of the S&P 600 index. However, since 2020, that return has plummeted to -37%, compared to 19% growth for the S&P 600.

The strategy shift toward the Interactive division has generated an EBITDA loss of about $1 billion and write-downs of approximately $850 million.

Late OSB Entry and Failed Partnerships

HG Vora suggests that Penn got into the OSB business too late. 

In January 2020, FanDuel and DraftKings accounted for over 60% of the market. Still, the company pursued a deal with Barstool Sports that never materialized. Penn initially paid $163 million for a 36% share in Barstool in 2020. In 2023, it spent another $388 million for the remaining share. However, at that time, Barstool’s market share had dropped to 1.6% from the all-time high of 5% in 2021.

Less than six months later, Penn sold the brand back to its founder, Dave Portnoy, for $1. It then announced a partnership with Disney to form ESPN Bet, a move which has cost the company $500 million. 

The ESPN Bet deal has not paid off either. In January 2025, the brand held only 1.9% of the US market. When it launched in November 2023, it created a buzz and captured 8.2% market share. 

The platform lost 27% of its active users from November 2023 to January 2025. For context, the company had set goals for ESPN Bet to capture between 10% and 20% market share.

HG Vora also points out that the OSB focus was detrimental to the company’s online casino, Hollywood Casino. In 2020, the app had a 15.8% market share in Pennsylvania; by 2025, that had dropped to 1.9%. 

Meanwhile, rival Rush Street Interactive’s focus on the vertical allowed it to capture 11.9% market share in March 2025.

Criticism of Leadership and Executive Pay

HG Vora claims the Penn Board of Directors lacks the experience and skills to align with its strategy focused on the Interactive division, even after the recent restructuring. 

Out of the eight directors, only two had previous experience with Mergers and Acquisitions, while only one had experience with Technology Product Development and Operations. Meanwhile, none had worked with Online Gaming or Strategic Transformation.

HG Vora also believes Penn’s directors are not aligned with shareholders, because they own little stock. According to the presentation, CEO Jay Snowden owns eight times less stock than HG Vora. Meanwhile, the independent directors’ aggregate ownership is 35 times less. Instead of buying, the leadership sells stock, distancing itself from the company’s decline.

While shareholders have lost money recently and the company trails peers, executive pay has not reflected the decline. According to HG Vora, Snowden has been the second-worst-performing CEO among his peers. Meanwhile, his $25 million total compensation in 2024 was the second highest (the highest among all gambling operators).

The hedge fund also suggests that Snowden and CFO Felicia Hendrix “appear to be using Penn’s corporate aircraft as their personal Uber service.” According to the data, two of the top three most frequent flights since 2022 were to airports close to the executives’ residences.

Nominees Bring The Necessary Experience

As the current Penn board lacks experience with areas like OSB, Mergers & Acquisitions, and Strategic Management, HG Vora believes it will benefit from the addition of the three independent candidates it has nominated:

• William Clifford: Former Penn CFO
• Johnny Hartnett: Former CEO of Superbet Group, Chief Development Officer at Flutter
• Carlos Ruisanchez: Former CFO of Pinnacle Entertainment

According to the hedge fund, all three bring experience in Mergers & Acquisitions and Strategic Transformation. Two have experience with Online Gaming, and one with Technology Product Development & Operations.

HG Vora Proxy Outlines Paths to Value Creation

As a solution to the issue, HG Vora has suggested three paths to turn the company’s fortunes around:

• Enhance board composition: Refresh the board by adding the three independent HG Vora nominees
• Align pay with performance: Correct executive compensation through peer benchmarking analysis and set more challenging performance goals. Hold leadership accountable.
• Review the company’s leadership and strategy: Conduct a fresh examination of the company’s capital allocation. Examine the Interactive division and develop a plan for each component. Directors should be tasked with responsibilities that match their skill set and experience.

The post HG Vora Steps Up Pressure on Penn Entertainment with 116-Page Proxy Presentation appeared first on CasinoBeats.

The listed company claims the report is “full of false claims and mischaracterizations” about the company’s governance and leadership.

The response comes as the latest chapter in the proxy battle between the two parties ahead of Penn’s 2025 Annual Meeting.

Penn Says in Response It Tried to Reach an Agreement

In a letter to shareholders, Penn stated that it will not continue to solicit votes for its proxy card over HG Vora’s. That’s because both parties support the same two board nominees, Johnny Hartnett and Carlos Ruisanchez.

The company claims that despite its attempting to settle with HG Vora “in good faith”, the shareholder rejected the proposals. Instead, it wanted to impose its own conditions, which would have violated directives from a gaming regulator.

Still, Penn claims that HG Vora successfully achieved changes to the company’s board. The two nominees will eventually represent 25% of the board after the annual meeting.

However, Penn criticized the activist investor. The company described HG Vora as consistently disregarding the gaming regulatory regime in its quest for more control and influence in Penn, without all the necessary licenses.

“Rather than operate within the well-established gaming regulatory framework, HG Vora has chosen to test boundaries and blame-shift, even concluding that we “[r]epeatedly sought to weaponize the Company’s regulators.”

Penn also rejected HG Vora’s allegations and claims over executive compensation, insider trading, and personal use of corporate assets. The company says that while the claims are attention-grabbing headlines, they’re not based on public disclosures.

HG Vora’s Claims of Strategic Failures and Mismanagement

HG Vora launched its proxy battle with Penn in February, when it blamed the company for strategic failures and mismanagement. It also nominated three candidates for the board. In addition to Hartnett and Ruisanchez, the list included William J. Clifford, a former Chief Financial Officer of Penn.

On May 13, the firm sent an open letter to Penn shareholders. It stated that it had filed its definitive proxy statement with the Securities and Exchange Commission. In the letter, HG Vora urged shareholders to vote with its Gold Proxy Card, not Penn’s white card.

The letter went on to call Penn’s act of reducing the number of candidates from three to two (after it claimed the two parties agreed on three) “illegal and undemocratic.”

Shortly after, HG Vora stepped up its pressure on Penn. It published a website and a 116-page presentation arguing for strategic changes.

In the presentation, the investor claimed the company’s pivot to the digital segment was misguided and has failed. It also criticized the leadership and executive pay.

The post Penn Entertainment Issues Response to the Latest Criticisms by HG Vora appeared first on CasinoBeats.

The move follows a protracted battle with activist investor HG Vora Capital Management and implies its shifting emphasis towards growing its digital footprint in the industry. In response to the stakeholder criticism, Penn announced the nomination of HG Vora-recommended Johnny Hartnett and Carlos Ruisanchez, both gaming industry veterans, to help shore up its board ahead of the next AGM.

New Directors Bring Digital and Financial Expertise

Should Hartnett and Ruisanchez garner shareholder approval, they will fill the vacancies left following Ron Naples’s immediate retirement and the planned departures of Barbara Shattuck Kohn and Saul Reibstein later this year.

The new Penn board will consist of only eight members, seven of whom will be independent directors. Nonetheless, insiders view the new appointments as Penn’s attempt to bolster its leadership by recruiting proven industry heads with a wealth of digital and retail gaming experience.

“We look forward to benefiting from Johnny’s and Carlos’s fresh perspectives as we enter into a critical phase for the business,” the board said in its press release about the restructuring. In doing so, they also declared that the appointments have already been reviewed and are supported by Penn’s Nominating and Corporate Governance Committee.

Hartnett most recently served as CEO of Superbet Group, which, under his stewardship, has demonstrated strong growth within the sector and transformed Superbet’s product offerings. He has also held several senior positions at Flutter Entertainment, including leadership roles at Paddy Power Betfair and Sportsbet Australia.

Ruisanchez is heralded for his financial and strategic expertise, as seen during his role as President and CFO of Pinnacle Entertainment, which was sold in 2018. Currently, Ruisanchez is CEO of hospitality investment firm Sorelle Capital but also sits on the board of Cedar Fair Entertainment Company.

“Johnny and Carlos bring critical expertise and experience in the gaming industry, across both digital and retail, that are aligned with the Board’s priorities and are tailored to the opportunities in front of us,” the company added. 

Penn: Aligning Board Changes With Digital Ambitions

 Penn hopes the appointments of Hartnett and Ruisanchez will help accelerate its digital growth, particularly through its Interactive segment. The suggested appointments also follow the recent hiring of former FanDuel executive Billy Turchin, who became Penn’s Chief Product Officer earlier this month.

Penn Entertainment operates in 28 jurisdictions across North America, split across a range of diverse venues, including casinos, racetracks, and online betting platforms. Within this portfolio, Penn owns household brands within the gaming industry, including Hollywood Casino, L’Auberge, ESPN BET, and theScore BET.

Currently, the company also has over 32 million members enrolled in its PENN Play loyalty program and benefits from its digital platforms being supported by partnerships with sports broadcasting giant ESPN.

Although Penn and HG Vora have not reached a formal consensus, the board has acted on its investors’ insights to avoid a costly proxy showdown. Nevertheless, adding Hartnett and Ruisanchez to the board, in tandem with Turchin’s appointment as CPO, will certainly position Penn as a more aggressive player in the sports betting sector.

The post Penn Entertainment to Restructure Board Following HG Vora Dispute appeared first on CasinoBeats.