HG Vora Sues Penn Entertainment Over ‘Board Reduction Scheme’ to Protect Shareholder Rights
HG Vora Capital Management’s lawsuit against Penn Entertainment, filed May 7, 2025, accuses the casino operator of slashing board seats to block shareholder influence.
A Proxy Fight Turns Legal
HG Vora Capital Management, holding a 4.8% stake in Penn Entertainment, filed a lawsuit on May 7, 2025, in the U.S. District Court for Eastern Pennsylvania, targeting Penn’s board, CEO Jay Snowden, and Chairman David Handler.
The beef? Penn’s April 25 decision to cut board seats up for election at the June 17, 2025, Annual Meeting from three to two, dubbed a “Board Reduction Scheme” by HG Vora.
The hedge fund calls it a “self-serving action with no legitimate corporate purpose,” claiming Penn dodged shareholder influence after HG Vora’s three nominees, William Clifford, Johnny Hartnett, and Carlos Ruisanchez, looked set to win. “
Penn’s manipulation of election rules is an affront to shareholder democracy,” HG Vora stated, alleging the move protects entrenched directors.
Allegations and ESPN Bet Woes
The lawsuit throws three punches: Penn violated Pennsylvania’s Business Corporation Law, breached fiduciary duties, and broke federal securities laws by flouting universal proxy rules and filing misleading SEC proxy materials.
HG Vora says Penn’s board shrank the election to block Clifford, a former Penn CFO, after talks on April 25 suggested all three nominees had strong shareholder support.
The fight’s timing tracks Penn’s struggles with ESPN Bet, launched in 2023, which HG Vora slams as a “complete failure.” Penn’s stock has tanked 81% since 2021, lagging peers like Boyd Gaming, while $4 billion in online betting spends yielded slim market share.
“Penn’s board enabled reckless spending,” said HG Vora’s Parag Vora, also blasting Snowden’s “inflated compensation” as the third-most overpaid S&P 500 CEO in 2023.
Stakes and Shareholder Sentiment
HG Vora, a 16-year gaming investor, says this is its first-ever board nomination push, underscoring Penn’s dire state. The fund seeks a court order to nix the seat reduction, fix Penn’s proxy materials, and restore three seats for Clifford, Hartnett (ex-Superbet CEO), and Ruisanchez (Sorelle Capital CEO) to boost oversight.
Penn, which nominated Hartnett and Ruisanchez but snubbed Clifford, defends the cut as bylaw-compliant.
. A win for HG Vora could shift Penn’s board, forcing accountability on ESPN Bet and spending. But Penn claims gaming laws limit concessions, citing HG Vora’s 2024 regulatory hiccups.
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