Nevada Gaming Control Board clashes with supervisor of hedge fund that owns PENN inventory – CDC Gaming

The founding associate and supervisor of hedge fund HG Vora Capital Management got here underneath sharp criticism Wednesday whereas searching for licensing from Nevada gaming regulators.

George Assad, a member of the Gaming Control Board and former decide, referred to as out Parag Vora, at one level reminding him that he was underneath oath. After greater than an 80 minutes of dialogue, the agenda merchandise was suspended. It might be resumed in May after the Board receives solutions from the corporate to questions raised through the assembly.

In late February, it was introduced that PENN Entertainment, which operates M Resort in Henderson south of the Strip along with its portfolio of regional properties, signed an settlement with HG Vora and appointed three new unbiased administrators to its board, ending a months-long authorized and proxy battle over nominating board members. HG Vora owns lower than 10% of PENN voting inventory.

In 2025, HG Vora launched a proxy battle in opposition to the on line casino operator because it tried to elect three of its director candidates to PENN’s board. Vora manages a number of billion {dollars}, totally on behalf of institutional shoppers.

Vora used the platform Wednesday to inform the Board that the corporate was solely performing within the curiosity of their buyers and referred to as out PENN’s choices about distant playing, together with its cope with Barstool Sports that it acquired for $700 million earlier than promoting it again to founder Dave Portnoy for $1. Vora referred to as that “highly embarrassing” and put the corporate in a defensive posture. PENN later reached a cope with ESPN earlier than terminating the 10-year $2 billion ESPN Bet partnership in December after failing to satisfy market targets.

Vora stated PENN permits anybody holding greater than 1% to appoint members of the board, however Gaming Control Board Chair Mike Dreitzer questioned why Vora received concerned in an aggressive method.

“We didn’t view anything we did as aggressive,” Vora stated. “We viewed what we did as rights PENN gave us as a shareholder, the only right you have as shareholder, voting on directors. Our goal was to nominate directors for shareholders to vote for.”

Vora stated his hedge fund didn’t had an issue with PENN till in 2023 the corporate entered right into a collection of transactions over on-line gaming, which he felt “did not exercise the best judgment. We felt David Portnoy, given his (controversial) background, could be challenging for regulatory bodies. The economics of a deal where you buy a company for $700 million and sell it for $1 is the sort of transaction that shareholders typically don’t approve of. That transaction, along with others specifically for online gaming, were the areas where we had concerns. They bought Score for $2 billion, committed another $1 billion for ESPN Bet, and spent about $4 billion on transactions, which have not generated any value. We found that as a shareholder to be a big concern.”

Vora stated after they proposed nominating administrators with extra expertise in on-line gaming, they moved to file a 13D with the SEC (that signifies activist investor exercise) and notify state gaming regulators to find out one of the best path for that. Board members stated Vora turned an activist earlier than the submitting.

“We went from a passive investor to one that wanted to help the company improve,” Vora stated.

Some states didn’t require something. Others needed Vora to undergo licensing. Nevada stated they didn’t have to undergo licensing, being beneath 10%, however Vora stated they did it anyway. “We were dealing with 30 states and went through each one on a case-by-case basis.”

Dreitzer indicated he had lingering considerations about what he referred to as Vora’s “aggressive tactics.” They’re acceptable as an investor, however as a licensee, the Gaming Control Board wanted to ensure such techniques are finished in a manner that’s truthful and clear and adheres to statutes and laws.

Dreitzer then introduced up the concept of a restricted license, during which the hedge fund must come again for approval sooner or later. It would additionally include circumstances. “I think this activity in this particular case is walking the line,” Dreitzer stated. “Mr. Vora, you have to prove yourself more to me with respect to your ability to participate in Nevada gaming. A limited license with conditions is a way to do that.”

Nearly 50 minutes into the listening to, Assad weighed in, saying he had the identical considerations as Dreitzer. He accused Vora of making an attempt to take over PENN, quite than promote their inventory and stroll away.

“The only thing we were trying to do was nominate directors and nothing more than that,” Vora stated in response. “That is a fairly fundamental right of shareholders, and that was our goal.”

Vora stated they didn’t wish to promote the inventory, whcih has declined about 90% since 2021. It was $20 billion 5 years in the past, however $2 billion as we speak.

Assad tried to attribute the decline to Vora’s “takeover tactics” with the publicity generated and authorized motion and proxy battle. Vora responded that their actions didn’t damage the inventory worth.

“A corporate raider takeover,” Assad stated, then cited Vora’s unsolicited takeover bid of Ryder Systems that Ryder rejected. Vora pulled out of that inventory in February. As a part of a settlement, with out admitting guilt, Vora obtained a $950,00 fantastic from the SEC for failure to well timed disclose a 9.9% stake and management goal.

Assad accused Vora of “greenmail” by threatening that if PENN didn’t purchase again shares, there could be a takeover try. He requested if Vora was against on-line gaming.

Vora stated they weren’t, however they had been in opposition to unqualified administrators with out on-line expertise.

“Online casinos are where Penn can have a very profitable business, but sports betting is very challenging to compete in when you’re smaller scale,” Vora stated. “It is less about whether I am a fan or not. I would say the partnership with Barstool and working with that particular company was not the path we would have recommended.”

Vora stated he didn’t have an opinion on the ESPN deal, however wasn’t excited PENN committing billions of {dollars} with none certainty of return.

“Everything we were concerned about transpired exactly the way we (thought),” Vora stated.

A pissed off Assad requested Vora if he was pleased with PENN CEO Jay Snowden. He accused Vora of threatening him in 2023 at a dinner in Boston, saying that if Snowden didn’t put his members on the board Vora, would take over the corporate.

“No, that did not happen,” Vora stated of any threats.

When Assad requested if Vora advised Snowden to purchase again inventory, he responded that as an alternative, they needed investments in casinos and to not be “distracted by trying to build a shiny sports-betting machine.”

“You were hoping new board members would fire Mr. Snowden,” Assad stated. “Is that correct?”

“No, that’s incorrect,” Vora stated in response.

“Let me remind you, Mr. Vora. You are under oath.”

Assad then accused Vora of shopping for tens of millions of shares of PENN via choices and spinoff contracts to regulate these shares sooner or later, whereas holding the proportion underneath the required quantity.

“You deprived the shareholders of PENN and Ryder of being able to do a poison pill,” Assad stated. “A poison pill is something a company’s shareholders have in their quiver to negate a hostile takeover.”

Vora stated nominating board members with the hope that shareholders would vote for them isn’t company raiding.

When requested about pressuring PENN about inventory buybacks, Vora stated he didn’t. He’s joyful PENN is shopping for again inventory, however nonetheless upset the corporate “flushed $4 billion down the toilet” with its acquisitions.