PENN Entertainment’s board of directors has hit back at HG Vora in an open letter to its shareholders, accusing the activist investor of making demands that are “value-destructive” and in violation of state gaming regulations.
Earlier this week, HG Vora wrote to PENN’s shareholders criticising the direction of the operator under its current senior leadership team, accusing them of reducing the value of the company due to decisions made.
The criticism came after HG Vora filed a lawsuit against PENN and its board last week, following the news that the investor’s third proposed board candidate had been denied the opportunity to stand for election.
PENN’s board of directors has since penned its own open to letter to shareholders, outlining its performance, progress on key strategic priorities and efforts to reach a “mutually agreeable and reasonable resolution” with HG Vora.
The operator’s letter stated: “After engaging extensively with shareholders including HG Vora, our board has nominated two of HG Vora’s nominees for election at the June 2025 Annual Meeting, while two incumbent directors will step down and one has recently decided to retire.
“These decisions were made following a process which involved (a) thoughtful consideration of the range of skills and backgrounds required to oversee risk and strategy at the company, (b) the engagement of an outside search firm, and (c) constant adherence to the regulatory requirements of our business across the country.”
PENN stressed the importance of listening to shareholders, and that the operator routinely solicits feedback and engages with the investment community about its strategy engagement.
The letter noted that engagement with HG Vora predates 2023, but since that time: “Members of the PENN board and management team have held more than 25 meetings or calls with representatives of HG Vora.
“On 19 September 2023, only one week after it was requested, PENN invited HG Vora to present its ideas to the full board and hosted a 90-minute-long discussion with its representatives about strategy and other matters. Notably, HG Vora expressed enthusiastic support for the ESPN partnership during this meeting.
“PENN entered into an NDA to “wall cross” HG Vora for one quarter to receive HG Vora’s input on the company’s earnings materials.
“In January 2025, after HG Vora nominated three candidates for election to the PENN board, we promptly included those candidates in our active and ongoing director search process. The board conducted thorough and extensive interviews with each HG Vora candidate, consistent with our standard evaluation procedures.”
The letter continued: “Between 25 March 2025, and 24 April 2025, we held eight meetings with HG Vora’s representatives to attempt to reach a mutually agreeable resolution.
“On 24 April 2025, we held a call with HG Vora’s outside advisor to communicate that PENN would be willing to appoint two of HG Vora’s candidates – Johnny Hartnett and Carlos Ruisanchez – to serve as directors of the board as part of a settlement.
“In response, on 25 April 2025, HG Vora rejected this proposal as the basis for a resolution. Notably, the only counter-proposals HG Vora made over the course of our engagement were the appointment of all three of its nominees or a settlement involving the appointment of two of its nominees in addition to commitments around governance and strategic changes, despite the fact that state gaming authorities had explicitly directed both the company and HG Vora that HG Vora was not permitted to seek governance and strategic changes without obtaining all necessary licences.
“Later that day, given our determination that Mr Hartnett and Mr Ruisanchez would be additive to PENN’s board, we nominated them to the company’s slate.”
PENN went on to detail its experience of the working relationship with HG Vora and accused the investor of consistently making demands that would have been “value-destructive” and that were “short-sighted, short-term and self-serving in nature”, as well as demonstrating “flagrant disregard for the views and directives of state gaming authorities”.
The operator also shared that HG Vora “rejected each of our reasonable offers to reach a mutually agreeable resolution”.
The letter added: “Given these actions, we believe HG Vora is intent on ensuring all three of its candidates are appointed to the board, regardless of their suitability and qualifications.”
PENN explained its reasoning for not electing HG Vora’s third proposed candidate to the board, William [Bill] Clifford.
PENN claimed, among other reasons, that Clifford “failed to demonstrate the base level of open-mindedness required of all directors in order to explore value-generating solutions” during the interview process, and raised further examples of what PENN considers to be HG Vora’s “value-destructive” demands.
“In a challenging M&A environment and while the business was gaining momentum, HG Vora also demanded PENN publicly announce a strategic review of the whole business and the interactive segment – despite explicit direction from state gaming authorities that HG Vora was not permitted to seek provisions of this nature.
“These short-sighted and self-serving proposals would destroy significant shareholder value while potentially helping HG Vora partially or fully exit its PENN position.”
The board accused the activist investor of violating state gaming regulations, providing an example from December 2023 when HG Vora filed a Schedule 13D with the SEC and disclosed that it wanted to nominate director candidates to the board and push for governance change.
Because HG Vora did not go through the “rigors” of the state gaming licence, the filing ultimately violated the institutional investor waiver granted by state gaming authorities that had allowed HG Vora to accumulate an 18.5% position in PENN.
At the time, State gaming authorities told both PENN and HG Vora that the latter’s efforts were “improper and impermissible” and “resulted in state gaming authorities instructing PENN to limit engagement with HG Vora while its licensure was under review”.
The letter noted: “HG Vora has asserted that the company publicly ‘lobbied’ a state gaming regulator to their detriment.
“This characterisation, which presumably refers to a publicly broadcasted meeting before the Massachusetts Gaming Commission, demonstrates a fundamental lack of understanding of the gaming regulatory framework.
“The company and its counsel appeared at this meeting at the invitation of the Commission (as is customary in many gaming jurisdictions where a matter involving one of the company’s licences is being considered) and provided accurate responses to questions from the Commission.
“Ultimately, the Commission made its own determination pursuant to the Massachusetts gaming statute and regulations and determined that HG Vora would not be permitted to move forward with a nomination of directors until it had completed its licensing requirements.”
The board highlighted that HG Vora’s “reckless disregard for regulators and applicable laws” had placed PENN and its shareholders at risk.
The letter concluded: “The board and management team are committed to acting in the best interest of our company and shareholders.
“We continue to take action to drive growth, expand margins, improve cash flow generation and accelerate capital return to shareholders.
“We recognise there is more work to be done, but our business has strong momentum, and we are confident in the direction we are headed. We look forward to updating you on our progress as we continue to execute on our plan to generate significant value.”
EGR has reached out to HG Vora for comment.
The post PENN’s board accuse HG Vora of making “value-destructive” demands first appeared on EGR Intel.
Response arrives shortly after activist investor penned open letter criticising the operator’s strategy and leadership
The post PENN’s board accuse HG Vora of making “value-destructive” demands first appeared on EGR Intel.