The Penn vs HG Vora dispute: What’s going on?

Rarely do they escalate to this degree but, when they do, it’s sure to attract the attention of those across the industry. This is exactly what happened this year when Penn Entertainment fell out with long-term shareholder HG Vora, resulting in around 20 press releases (and counting), multiple presentations, a lawsuit and even the launch of a website. From the outside, it may have seemed like it was only about Penn reducing the number of open Board chairs from three to two, but it goes much deeper than that.  

When Penn announced on 29 January 2025 that it had received the list of three candidates from HG Vora, it seemed like a fairly innocuous business update. These were Johnny Hartnett, Carlos Ruisanchez and William Clifford.  

While Penn agreed with the first two, they refused to appoint Clifford as his skills and experience were “against the needs of the Board” and he “failed to demonstrate the base level of open-mindedness required of all directors in order to explore value-generating solutions.” For the next few months, the two companies published various releases snapping at one another. HG Vora was accusing Penn’s management of “value-destructive deal-making, reckless capital allocation and poor execution,” while Penn was trying to refute the claims.   

If this were an isolated incident, it could easily be attributed to somebody not getting their way, but this investment company was not the first to raise issues with Penn management. A year earlier, on 31 May 2024, Will Wyatt from Donerail Group penned a six-page open letter to David Handler and the Board of Directors at Penn Entertainment, raising countless issues with the company. These included voting patterns for Board members, falling stock prices, troubling financial transactions and the poor current market capitalisation. 

Wyatt also didn’t hold back from making sensationalist claims either, asking “whether Penn’s directors are really just riverboat gamblers, content with doubling down after each loss.” However, it wasn’t until 21 May when HG Vora published its 116-page presentation that people first started to pay attention to the claims in full and realised that it was never just about the chairs.  

What were HG Vora’s claims? 

– Penn invested $4bn+ of shareholder capital, nearly double its current market capitalisation, attempting to build an online sports betting business

– Despite paying $1.5bn+ to launch ESPN Bet, it only held 2% of the market share

– The Interactive segment generated $1bn+ in adjusted EBITDA losses and approximately $850m in write-downs

– Penn is worse off than in 2019 by nearly every financial metric

– More than $11bn of shareholder value has been destroyed since 2021

– Penn paid $550m for Barstool Sports then sold it for $1 four years later

– More than $4bn spent on acquisitions and investments related to online sports betting

– The company’s stock price is negative year-to-date and over the last one, two, three and four-year periods; as well as during CEO Jay Snowden’s tenure

– Snowden’s target compensation is higher than all but one of his peers, even though he is the second-worst performing among his peers, and Penn is the second-smallest company

Barstool Sports  

Barstool Sports, a sports and pop culture blog, had previously been dismissed by several potential business partners, including FanDuel, DraftKings and PokerStars.

It’s unknown whether this was due to the business or perhaps owner Dave Portnoy’s controversial personality. Yet, despite several warnings, Penn acquired 36% of the media company in 2020 for $163m. 

According to media reports at the time, Penn executives wanted to use Portnoy’s notoriety to attract a new demographic of players. And what made him notorious? Well, he had previously filed for bankruptcy following gambling losses, with other alleged misdeeds including: using fake press passes to unlawfully gain entry to events, claiming that some women deserved to be assaulted and even being accused of engaging in violent acts against women while filming them without their consent.How did Penn react? Snowden held a video conference call the next day and defended Portnoy, saying that if Portnoy was sexist or racist, they would not have gone into business with him. Snowden was wearing a Barstool Sports shirt during the call. 

Between 2021 and 2023, Barstool ran a “Can’t Lose Parlay” in which 90% users lost their bet on; it advertised on university campuses; it cost Penn licences; it combined alcohol with in-person sports betting promotions; and it only achieved a 1.7% market share. Considering the above, Penn decided the best course of action was… to double down and purchase the rest of the sports media company for $388m in 2023. 

During an interview in 2020, Portnoy said “Penn needed us… and we named our price. There was no negotiation.” Penn would later sell Barstool Sports back to Portnoy in 2023 for just $1. That is not a typo. 

In Snowden’s defence, he did say Barstool was a learning experience. Not every business decision can be perfect and it can be easy to criticise as an onlooker, but it’s different when you’re the one having to call the shots. 

ESPN Bet 

Later in 2023, Penn agreed to a $1.5bn deal with Disney to license the ESPN brand for its new sports betting division, ESPN Bet. When asked about the deal, The Walt Disney Company CEO Bob Iger said, “Penn stepped up in a very aggressive way and made an offer to us that was better than any of the competitive offers by far.” It was also a strange time to close a deal of this nature, considering that Flutter’s Fox Bet announced only a month earlier it would be closing amid challenging conditions for media-affiliated sports betting brands. Shareholders were also concerned. When questioned about this by analysts and investors, Snowden would avoid giving clear answers: “We haven’t disclosed it and we’re not going to,” “I’d rather wait until our Investor Day more toward the end of the year” and “I don’t want to get into too much detail on 2024 yet.”  

Sports betting had already been legalised for five years by this point, and many of the brands in the space, such as FanDuel and DraftKings, had already capitalised on the market. Penn wanted to snag a 20% market share, but since launching ESPN Bet, the brand has achieved around 2-5%, depending on the state. While average interactive monthly users jumped from 189,000 to 771,000 after the launch, this fell quarter-over-quarter to 429,000. Although there was a small recovery in the last few quarters, MAUs are still down 27% overall. While customer retention is one of the most challenging aspects for any business, shareholders were still unimpressed by these figures. 

Penn was not going to let HG Vora focus on the negatives, though. In an open letter to shareholders, the operator also highlighted that ESPN Bet had around 2 million users and the interactive vertical generated $162m in adjusted revenue in Q1 2025, which was a 78% improvement year-over-year. It claimed results would have been better if not for customer-friendly betting conditions, with profitability expected by 2026.  

Boards behaving badly 

Before launching into the full performance metrics, it’s worth covering something a little more personal, or personnel, if you will. The majority of Penn’s leadership have experience in land-based operations or corporate development, which may explain why the company is so well-known for its retail casinos, but these aren’t at the centre of this controversy. HG Vora claimed Penn has spent $4bn+, almost double its current market capitalisation, on M&A to build a sports betting brand, despite not having enough executives or board members with solid expertise in this area. The team that previously led the interactive strategy segment, the Levy Family, all departed Penn in mid-2024 but were not replaced quickly. 

While it was amusing to watch HG Vora complain about there being one less votable seat on the board and tracking the number of flights Penn executives may or may not have been using to commute on, these might have been ignored if Penn’s financial figures were better than they currently stand.

Additionally, according to HG Vora, since 2020, Penn executives have logged more than 1,100 flights and 1,400 hours of flight time. While some travel is to be expected to different Penn properties, HG Vora has concerns that not all the flights are necessary. The 760 flights to Penn headquarters certainly seem reasonable, but HG Vora has highlighted that 462 flights seem to be to Snowden’s residence, while 212 are to CFO Felicia Hendrix’s home. By comparison, only 58 have been to Las Vegas and 27 to Lake Charles, one of Penn’s casino locations. 

It’s worth noting that Penn refutes all of this. The company has recently hired Aaron LaBerge as CTO and Billy Turchin as CPO to help with digital products, and while they weren’t brought on immediately after the departure of the Levy family, good appointments can take time. Could Penn have found people with online sports betting experience before spending $1.5bn on ESPN Bet? Sure, but at least it is trying to make up for that now. As for the jet use, Penn cites these claims as “simply not based on the facts readily available in our public disclosure.” 

Penn’s poor performance? 

While it was amusing to watch HG Vora complain about there being one less votable seat on the board and tracking the number of flights Penn executives may or may not have been using to commute on, these might have been ignored if Penn’s financial figures were better than they currently stand. Since shares peaked in 2021 at $136.47, Penn has since declined by around 88% to $16.74, which HG Vora translates to around $19bn in lost market value. The investors also complain that the interactive segment generated $1bn+ in adjusted EBITDA losses and approximately $850m in write-downs, leaving Penn worse off by nearly every financial metric compared to 2019. Even in 2025, the interactive segment is still negative in terms of its adjusted EBITDA, with Q1 figures sitting at a $89m loss. While Penn did announce $111.5m net income in Q1 this year, there will still be a long way to go to offset the $804.7m combined annual net losses accrued between 2023 and 2024 – and for investors, it may be too little, too late. 

HG Vora also complained that, despite these results, despite Penn being the second-smallest company in its peer group and despite Snowden being the second-worst performing CEO among his peers, his target compensation is higher than all but one of his peers – beating DraftKings, Caesars and EA.

Is the Penn mightier than the sword? 

By mid-June, both Penn Entertainment and HG Vora had dragged other companies into the fray, touting that third parties had publicly agreed with them in an effort to discredit the other side. When Penn appointed Hartnett and Ruisanchez during the Annual Meeting of Shareholders, there was a collective sigh of relief. Surely the drama was over and the press releases would stop… 

Well, there was one final report from HG Vora. Throughout the year, the capital management company had urged shareholders to vote using HG Vora’s Gold proxy card to signal if they wanted change at Penn – with more than 55% of all votes cast being done this way. A further 60% of votes were against the company’s Say-On-Pay proposal, too.  

So have we seen the end of this? Probably not. Five days after the shareholder meeting, Penn laid off dozens of employees at theScore, cutting editorial in half as it prepares for “the ongoing evolution of our digital business”. This is despite Penn planning on launching theScore in new jurisdictions in 2026. There were also multiple mass layoffs within the past year, including some at ESPN Bet. Between mounting dissatisfaction and distrust between employees and shareholders alike, the operator certainly has an uphill battle to prove its detractors wrong and claim its podium position. 

Indeed, on 4 February 2021, Snowden said: “I think you should assume we are going to be top three [in online sports betting]. We said that before we ever launched. We’re delivering on that.” Perhaps that assumption, publicly stated so boldly, is exactly what’s prompting HG Vora to pile the pressure on Penn.