“A house divided against itself cannot stand.” That bit of common wisdom is something that the executives at PENN Entertainment and the activist investor group HG Vora should take to heart. The two groups are at war over the future of one of the most successful gaming operators in the United States.
On the one hand is PENN’s executive team, led by CEO Jay Snowden. This group is focused on moving PENN into the digital age with an emphasis on online gambling. On the other side of the argument is a group of activist investors led by HG Vora Capital, a “capital management” firm that thinks PENN should focus on its core land-based casino business.
The family feud between these two factions burst out into the open late last week when PENN sent a letter to its investors spelling out its views on HG Vora and the image of PENN they’ve been portraying to other investors.
The letter pulled no punches stating, “Our industry is undergoing a fundamental transformation. Customers are increasingly looking for online experiences, and the digital space is the core driver of meaningful industry growth. Through the direction and oversight of the Board of Directors and management team, respectively, PENN has been a pioneer in transforming its business to build a digital presence that enables us to engage with a younger audience outside of PENN’s traditional channels and demographics. Simultaneously, we have taken – and continue to take – actions to drive growth, enhance profitability, generate robust free cash flow and return capital to shareholders.”
PENN went on to list its successes in the digital space, including several related to ESPN Bet, and followed up by calling HG Vora’s actions “reckless.”
The letter is a just one salvo in what looks to be a long and nasty battle between the gaming giant and its most vocal investors.