Vora Criticizes Penn Plan to Refresh Board, Demanding Greater Accountability for the Casino Operator

As a leading casino operator, understanding the essential drivers of industry success is vital; therefore, we have outlined the following key highlights to guide your strategic decisions.

• Hedge fund labels plan to potentially add a director post-annual meeting as “an assault” on shareholder rights.
• Claims of manipulation in the board electoral process have surfaced.

HG Vora, the activist investor engaged in a proxy battle with Penn Entertainment (NASDAQ: PENN), has described the company’s intention to appoint a new director to its board following the annual meeting as “self-serving” and a considerable threat to shareholder rights. Vora’s criticisms highlight broader concerns about corporate accountability and transparency within the company.

The board has come under fire for a recent communication to shareholders, dated May 15, asserting that the company intends to explore opportunities for further board refreshment with shareholder input. Vora interprets this as an invitation for the casino operator to install a director of its choosing that has not been subjected to a shareholder vote. This follows the recent approval of Vora-nominated candidates Johnny Hartnett and Carlos Ruisanchez to the board.

The reluctance of the board to let Clifford run for election was only publicly disclosed in the recent shareholder letter, where the directors contended his skills weren’t “additive or complementary” and that he lacked the necessary open-mindedness to drive value for investors.

Concerns about Insider Appointments

Vora’s proxy fight against Penn is motivated by concerns regarding the potential appointment of an unelected director who aligns with CEO Jay Snowden’s vision, diluting shareholder empowerment post-annual meeting.

PENN’s statement implies a plan to reinstate a board seat that was previously eliminated and to unilaterally appoint a director for a three-year term just after the annual meeting—a move perceived by Vora as self-serving and detrimental to shareholder rights.

Earlier this month, Vora initiated legal action against Penn in the Eastern District of Pennsylvania, asserting that the company’s reduction of available seats for election—from three to two—was an intentional effort to prevent shareholders from selecting the three nominated candidates.

Vora opted not to pursue a preliminary injunction to avoid giving the board any reason to postpone the annual meeting and evade the appointment of the two remaining candidates—Johnny Hartnett and Carlos Ruisanchez.

Penn’s Corporate Governance Under Scrutiny

The hedge fund has noted that over the past decade, Penn’s stock performance has consistently underperformed when compared to its peers. Given this track record, Vora argues that the board lacks the necessary authority to appoint directors without shareholder consent.

Due to PENN’s long history of leveraging corporate mechanisms to undermine shareholder interests and its record of value erosion, HG Vora vigorously contends that shareholders should not accept manipulative practices within the electoral process, and that the board has forfeited its right to name directors without investor input.

Regarding Vora’s proposed “Gold Card” slate of directors, Wall Street has shown considerable support, illustrating confidence in their experience and potential to significantly influence and enhance Penn’s future direction.

In summary, Vora’s actions reflect deep-rooted concerns about governance and accountability within Penn Entertainment. These developments underscore the importance of shareholder engagement in corporate decision-making processes, especially when significant changes in leadership and structure are proposed. Stakeholders are encouraged to keep a close eye on these developments as they may significantly impact the company’s strategic direction.

Federal Lawmakers Demand Reforms to Government Charge Cards Following Exposure of Excessive Gambling Spending

• Sen. Joni Ernst and Rep. James Comer want a probe into government spending
• Ernst and Comer are concerned about federal government charge cards
• Card records show transactions at casino ATMs and strip clubs

Two Republican federal lawmakers — Sen. Joni Ernst (R-Iowa) and Rep. James Comer (R-Kentucky) — are calling for a thorough review by the Comptroller General Gene Dodaro’s office into the management of government charge cards. Their request stems from alarming findings by the Department of Government Efficiency (DOGE), which revealed that government charges were made at high-risk merchants such as strip clubs and online gaming platforms. Most concerning to the lawmakers is the discovery of taxpayer-funded gambling spending, specifically through transactions made at casino ATMs, which they argue warrants immediate investigation.

In February, DOGE reported that the number of active federal government credit and debit cards exceeds the number of federal employees. A staggering 4.6 million active cards were used for around 90 million unique transactions in the previous fiscal year, amounting to expenditures of approximately $40 billion.

Ernst and Comer, especially Comer, who chairs the House Committee on Oversight and Government Reform, have expressed their concerns over the glaring lack of oversight concerning these expenditures.

Audit Needed

In correspondence dated May 16, the two lawmakers stressed the need for an urgent audit of the charge card system to identify systemic risks, remove inefficiencies, and restore accountability. They have suggested that the Government Accountability Office conduct a comprehensive evaluation of the issuance and management of all types of government purchase and charge cards.

During their review, they referenced an audit carried out by the Department of Defense (DoD) Office of Inspector General (OIG), which found that over 15,610 transactions occurred at known high-risk locations, including casino ATMs, bars, and strip clubs.

“We are doubtful that these charges were incurred for legitimate purposes or relevant to the Department of Defense’s official operations,” the lawmakers commented.

“It is unacceptable for DoD officials to waste taxpayer euros at clubs and casinos, particularly during events like Super Bowl Sunday, St. Patrick’s Day, and on federal holidays,” Ernst remarked. “With the nation deep in debt at $36 trillion, we cannot afford bureaucrats racking up charges and burdening taxpayers with the expense.”

Other types of high-risk merchant transactions included spending in online gaming platforms, amusement parks, and even transactions connected to sports betting and cannabis products.

Military Gambling Spending

In another report, Casino.org highlighted that military personnel had used federal charge cards for gambling, covering expenses related to casinos and online sportsbooks. The audit conducted by the DoD found that military credit cards had been used for more than $500K in expenses linked to gambling activities.

“This isn’t the first audit done by the DoD OIG. Concerns over abuse and fraud have persisted due to inadequate implementation of existing regulations and systems designed to detect misuse of government travel cards,” Ernst and Comer concluded.

Key Statistics:

• 4.6 million active federal government credit and debit cards.
• Approximately 90 million unique transactions reported in the last fiscal year.
• Spending reached around $40 billion.
• 15,610 transactions occurred at known high-risk establishments.

This situation highlights the urgent requirement for increased oversight and reforms to ensure taxpayer funds are appropriately managed. The comprehensive review requested by Ernst and Comer could pave the way for necessary changes in the usage of government charge cards.

In summary, federal lawmakers are taking significant steps toward ensuring better management of government-issued charge cards. By opening an investigation into how these cards are used, particularly in high-risk areas like casinos, they aim to promote accountability and restore the public’s trust in government spending practices.

Prioritizing Casino Security: Live! Casino Maryland Addresses Allegations of Property Theft

Key Points: Understanding the landscape of gaming requires a deep dive into several crucial factors, most notably the strength of casino security protocols that protect both players and the house. Before participation, one must consider how these safety measures integrate with the overall gaming environment.

• Live! Casino & Hotel Maryland is reportedly the victim of theft.
• Prosecutors allege two VIP hosts executed a theft scheme.
• The defendants are charged with both felony and misdemeanor offenses.

In a shocking turn of events, two employees of Live! Casino & Hotel Maryland, situated near Baltimore-Washington International Airport (BWI), have been named in a lawsuit related to serious allegations of theft and identity fraud.

The criminal complaint, presented in the Anne Arundel County District Court, reveals that the two defendants, Sonejah Richards, 27, from Forestville, and Allen Hill, 26, from Washington, D.C., conspired to pilfer tens of thousands of dollars from their workplace.

Both Richards and Hill operated as VIP hosts, which granted them access to exclusive comps, including complimentary slot play that could be issued to patrons. The lawsuit outlines that the duo fraudulently produced over two dozen reward cards under fictitious names. Instead of distributing these to genuine patrons, they funneled the loaded cards to two accomplices involved in the scheme.

Filed on May 15, it is claimed that the thirty fraudulent reward cards resulted in a loss exceeding $27,000 for the casino. Interestingly, the two individuals who received the fraudulent cards and proceeded to gamble were not charged by prosecutors.

Casino’s Response to the Allegations

Live! Casino & Hotel Maryland boasts over 4,000 slot machines and 200 live-dealer table games alongside a FanDuel Sportsbook. Since its grand opening in June 2012, the venue has been a prominent player in the Maryland gaming landscape.

The casino is owned by the Baltimore-based Cordish Companies, which undertook a significant sale-leaseback deal in December 2021 with Gaming and Leisure Properties, resulting in approximately $1.14 billion.

The casino’s management has remained tight-lipped regarding the ongoing litigation, stating that they do not comment on pending legal matters. Court records indicate that the defendants, Richards and Hill, do not have legal representation as of the latest updates.

To further enhance its offerings, Cordish recently expanded its slot machine repertoire with an introduction of 30 new Huff N’ Puff terminals, celebrated with a free-play event where over 1,000 slot players received complimentary funds.

Online Gaming Legislation Floundering

In a related vein of gaming news from the Old Line State, attempts to establish regulated online casinos have stalled of late. A legislative proposal, House Bill 17, aimed at allowing the state’s existing six casinos to explore iGaming opportunities, has met significant resistance from Cordish representatives.

Currently, the fate of House Bill 17 hangs in the balance, awaiting further deliberation in the House Ways and Means Committee.

Summary

The recent allegations against two employees of Live! Casino & Hotel Maryland have raised serious concerns regarding internal security and fraud management within the casino industry. As the casino continues to thrive financially, the resolution of this case and the pursuit of iGaming legislation will determine the future trajectory of gaming in Maryland.

Pennsylvania Skill Game Developer Opposes Tax Bill Amid Growing Demand for Slot Games and Gaming Regulation Debate

Key Details: Understanding the scope of gaming regulation is a critical factor in assessing the legal landscape surrounding the industry, particularly when evaluating the fairness and compliance of online slot games.

• Another bill to regulate skill games in Pennsylvania has been introduced.
• Skill games are slot-like gaming machines that incorporate elements of skill.
• A player’s actions can influence the payout rate.

New legislation aimed at legalising and taxing controversial skill games was recently proposed in Pennsylvania’s capital, Harrisburg. The leading developer of these slot-like gaming terminals is voicing concerns, alleging that the impending tax is excessively high.

A collective of five Republican senators has introduced Senate Bill 756, an act to amend Title 4 (Amusements) aimed at establishing a regulatory structure for skill games. This legislation is backed by Senators Dan Laughlin (R-Erie), Rosemary Brown (R-Monroe), Joe Pittman (R-Indiana), Kim Ward (R-Westmoreland), and Chris Gebhard (R-Lancaster), with Pittman serving as the majority floor leader.

Although skill games are akin to traditional slots, advocates argue they don’t fall under the regulatory framework set out by the Gaming Act, as the payout rates can be modified by the player’s skill.

Industry Reaction to the Proposed Bill

Pace-O-Matic (POM), a Georgia-based firm that developed software for the prevalent Pennsylvania Skill cabinet, supports fair regulation and taxation of their gaming products. Likewise, Miele Manufacturing, a Pennsylvania company that assembles these terminals, is in favour of establishing a legal framework for skill games.

However, both companies criticise the proposed tax rate of 35% on gross skill gaming revenue suggested in SB756 as excessively burdensome. Mike Barley, a spokesperson for POM, expressed concerns that the current proposal would siphon crucial funds away from small businesses that use this income to maintain employment and manage escalating costs.

“This bill falls woefully short,” Barley remarked. “The way it’s structured might severely impact local businesses that rely on this revenue.”

POM and Miele advocate for a more reasonable tax rate of around 15%. Meanwhile, Governor Josh Shapiro (D) is pushing for a legislative approach, insisting that at least half of the skill game tax revenue be allocated to state projects.

Pennsylvania’s existing casinos, which remit substantial sums to the state for their slots licenses, oppose skill games, arguing that unregulated terminals harm their business by diverting patrons. In fact, casino slots incur a gross gaming revenue tax that ranges from 48% to 54%.

Future of Skill Games in Pennsylvania

A senior legal representative within the Republican Party, agreed that the eventual legalisation and regulation of skill games is a likely outcome. This sentiment is amplified by Governor Shapiro’s ongoing search for funding sources to support enhancements in education and infrastructure. As it stands, Pennsylvania does not receive any tax income from the estimated 67,000 skill games operating across the state, a situation that is expected to change.

Senator Laughlin noted, “These skill games can be found everywhere, taking a significant portion of both consumer money and revenue from our casino businesses. I am dedicated to finding a viable and fair solution to create a level playing field.”

While SB756 pushes for greater oversight of skill gaming, it joins Senate Bill 626, which proposes a considerably lower tax rate of 16% on skill games.

Summary: The introduction of Senate Bill 756 in Pennsylvania seeks to regulate and tax skill games, but faces opposition from developers who argue that the proposed tax rates are excessively high. With the potential impacts on small businesses and the existing gaming landscape, this debate will continue as stakeholders on all sides weigh in on the future of skill games within the state.

Rockingham Residents Take Legal Action Over Casino Development

Landowners in North Carolina’s Rockingham County have filed a lawsuit against the county commissioners for allegedly ignoring crucial legal standards when rezoning 192.7 acres of land earmarked for a casino project.

In August, the Rockingham Board of County Commissioners voted unanimously to approve a rezoning request from NC Development Holdings, associated with The Cordish Companies. These companies manage the popular Live! branded casinos in Maryland and Pennsylvania.

The county commissioners agreed to transition the nearly 193 acres of land from a “residential/agricultural” designation to a “highway commercial” classification.

The lawsuit identifies seven plaintiffs, including Camp Carefree, a cherished summer retreat for children with disabilities that has served the local community for nearly forty years. The plaintiffs assert that local officials made significant mistakes in approving the rezoning application and that NC Development Holdings did not provide a comprehensive explanation for the proposed changes.

Lawsuit Allegations

The county officials have been reticent about their motivations for swiftly backing the rezoning request. Rumours have circulated that Senate President Pro Tempore Phil Berger (R-Rockingham) was negotiating discreetly with Cordish to facilitate the development of casinos in Rockingham, Anson, and Nash counties.

Berger previously attempted to add a measure to North Carolina’s 2023-25 budget bill to legalise commercial casinos. His argument was that, with new casinos opening in Virginia, North Carolina should provide its residents with similar options.

The accusations against the Rockingham commissioners include breaches of the county’s Unified Development Ordinance, neglect of surrounding land uses, and the engagement in illegal contract zoning.

“We seriously question the judgment of local and state officials who believe it’s wise to place a casino adjacent to a well-loved camp for children with special needs,” stated one of the plaintiffs.

“If these officials had spent even a day at Camp Carefree this summer, they would understand the significance of maintaining our community’s integrity. We aim for this lawsuit to highlight the necessity for transparency and accountability among our elected officials,” the statement continued.

Landowner Claims Deception

The lawsuit also lists the landowners who agreed to sell their nearly 193 acres as defendants. One such landowner from Nash, who consented to sell his land to NC Development Holdings, claims he was misled into the agreement.

I call it deception,” Kent Dozier remarked, who had intended to sell his land on Dozier Road. He explained that he was never informed of NC Development Holdings’ affiliation with a casino.

“I’ve never purchased a lottery ticket. I don’t gamble,” Dozier emphasised. “I cannot fathom throwing my hard-earned cash at an uncertain gamble when the odds are stacked against me.”

In conclusion, the proceedings have set off a fervent debate within the local community regarding the future of the proposed casino and the associated development, as residents seek greater transparency and accountability from their local government.