Stamp of approval
HG Vora gets boost from independent shareholder body in Penn fight
Penn leadership lambasted by ISS over failures in interactive and M&A.
In +More: Polymarket now the official prediction market to X.
Markets: Boss buying spree boosts GiG Software.
The teardown: An M&A panel keeps it all on the QT.
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Endorsed
Rebel yell: Penn shareholders should support the push for three new board members as proposed by activist investor HG Vora and ignore the company’s attempt to shut out ex-Penn CFO Bill Clifford, according to an independent shareholder body.
Institutional Shareholder Services has accused the current leadership team of having been “disappointing over all measurement periods.”
It has also lambasted Penn over its interactive efforts and its record of M&A.
Trifecta: The boost to HG Vora’s long-running campaign to effect change at Penn comes less than a fortnight ahead of the culmination of the proxy fight at the June 17 AGM.
Shareholders will be asked at that meeting to cast their votes in favor of HG Vora’s three candidates, Johnny Hartnett, Carlos Ruisanchez and Bill Clifford.
Penn has already accepted Hartnett and Ruisanchez but, via a disputed boardroom maneuver, rejected Clifford’s candidacy and attempted to restrict the number of seats up for election to two.
Lucked out: ISS pointed out that, in Johnny Hartnett and Carlos Ruisanchez, HG Vora has “fortuitously presented the board with a ready-made solution to a problem it was otherwise unprepared to address.”
But the shareholder body added that the “more important point” is the “board requires additional direct gaming industry experience, which Clifford can impart.”
Small mercies: In a somewhat limp reply, Penn said it welcomed the acknowledgement from ISS that its board “appears to have given serious consideration to all three dissident nominees, and was open to accepting two of these nominees as its own.”
But it added that the ISS conclusion over the Clifford candidacy “fails to reflect a realistic view.”
Mis-shapes, mistakes, misfits: ISS has also backed HG Vora’s arguments over the failure of the interactive experiment at Penn and the list of expensive M&A mistakes. “The company’s push into interactive has not been successful,” the report said.
“The overall story is one of M&A that has generally failed to drive the returns expected by shareholders,” it added.
In its attacks, HG Vora has made much of what it claims is a “flawed” strategy that has cost the company $4bn so far and generated over $1bn of losses. The missteps include overpaying for theScore, the failed Barstool adventure and now the so far unimpressive ESPN Bet venture.
Said ISS: “It is particularly difficult to overlook the negative inflection that coincided with expansion into online sports betting, which is highlighted by the dissident.”
“Most worryingly,” it added, Penn has “pursued M&A and partnerships that have failed to meet the expectations of shareholders, and failed to meet the company’s own stated goals.”
“The board appears not to have taken tangible lessons from its record in approving company acquisitions.”
No accountability: ISS noted the interactive strategy has “translated into disappointing total shareholder returns and operational results.”
Moreover, there is “little evidence the board has been able to hold management accountable, as the company has continued to pursue a strategy that has failed to deliver on expectations.”
Urgings: HG Vora pointed out that another independent proxy advisory firm, Egan-Jones Proxy Services, has also recommended Penn shareholders cast their votes in the election for all three independent director candidates.
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+More
Grok and roll: Polymarket has been announced as the official prediction market provider to Elon Musk’s X. Under the terms of the agreement, Polymarket predictions will be combined with X data to provide live insights on market moves. Shayne Coplan, Polymarket founder, said the deal would give users an “instant sense of breaking news” and enable them to make “informed decisions about the future.” Recall, a fortnight back Kalshi first announced and then rescinded a deal with Musk’s xAI to provide “tailored information to offer guidance for bets made by the site’s users.”
🍿 New market on Polymarket: ‘Will Elon Musk unfollow Donald Trump before July?’
Catena Media continues to offload assets with the company having sold its Esports.net and EsportsBet.com sites to an unnamed buyer. As reported by The Esports Radar, Catena Media has also laid off its GM for esports and APAC, and one of the founders of Esports.net, Gianfranco Capozzi.
Codere Online has regained compliance with Nasdaq’s listing rules following the publication of its Form 20-F annual report for 2024. The delisting notice issued in late May has now been cancelled.
Circa Sports is to launch a retail sportsbook this summer at the Mint Gaming Hall in Franklin, Kentucky, the sportsbook’s fifth state after Nevada, Illinois, Iowa and Colorado. The 5,100-square-foot property will feature an 80-foot-wide LED screen and a 31-foot-wide odds board.
I don’t want to talk about it: Rod Stewart has canceled two appearances at Caesars Palace Las Vegas and one at the Caesars in Lake Tahoe due to flu.
What we’re reading
“In the US, you have the right to walk into a casino and put your life savings on red or black, for better or worse. Under the Trump administration, the movement is to let people fail or succeed, and they’re not going to stop you.” Bill Singer, a lawyer and former regulatory attorney at the American Stock Exchange, in an FT article on how ‘bored’ investors are plunging on ever-more exotic ETFs. This includes the Canary Pengu ETF, which will invest in the “official token of the Pudgy Penguin project”.
The earnings edit
Bid happy: Allwyn CEO Robert Chvátal suggested the “extremely close competition” provided by the Flutter-led consortium had driven up the bidding for the Italian lottery license, which was won by the incumbent partnership his company had forged with IGT.
He said he was “delighted” with the win despite the final price of €2.32bn being well above the €1bn minimum bid and more than three times the €770m paid in 2016.
Recall, Allwyn is the minority partner alongside Arianna 2001 and Novomatic Italia.
In Q1, the company said revenue growth of 6% was driven by “strong growth” in Austria, Greece and Cyprus.
The quarter saw Allwyn lap its takeover of the UK lottery license vs. the inherited Camelot licensing term. UK revenues rose 6%.
The company is now pushing ahead with renovations of both the retail and online product, including a recent deal to launch new scratchcard technology with supermarket chain Asda.
Profit share from investee companies rose 61% to €42m, driven by the company’s 37% stake in Kaizen Gaming.
Markets watch
Carter the unstoppable buying machine: Certain to be happy with the 14.5% uplift for GiG Software this week will be CEO Richard Carter, who has been steadily acquiring shares in the company over the past few months, including three batches of purchases since late May.
After his last purchase on Thursday, Carter now has a total of 2.23m shares, pushing the percentage of the company owned by the management team to over 4%.
Do it in the mix: PointsBet was up 10% this week after Japanese entertainment group Mixi upped its bid. Rival bidder Betr was down 4.5% for the week, suggesting investors don’t believe it will be able to match Mixi.
Rollercoaster: One of the winners from May came down with a bump this week as High Roller Technologies gave up a chunk of its 62% gains with a 27% fall. Investor sentiment won’t be helped by the news on Friday that the company has been issued with a delisting notice by the NYSE American.
At issue is the low level of stockholder equity, which stands at $2.8m vs. the requirement of no less than $4m.
The company said it has until December 2026 to achieve compliance and is “confident” it will be able to do so by that date.
Deep shit pizza: Bally’s, down 4% for the week, continues to be dogged by doubts over its permanent facility in Chicago. The latest commentary came from a note on the gaming REITs from Truist, which suggested landlord Gaming & Leisure Properties own lagging share price performance was likely related.
👀 The analysts made the suggestion that, were the property truly in trouble, “alternative operator demand” would be available should Bally have to exit.
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The teardown – M&A chat
Don’t stop believing: In a world of climbing regulatory pressures and uncertain economic fortunes, dealmaking experts still expect plenty of M&A in the gambling world. Even in Europe’s rule-rich operating environment, the industry should expect acquisitions to happen.
“People continue to want to get bigger,” said a group of experts, predicting “a lot” of M&A activity in the near future.
There are also massive unregulated markets, such as India and Japan, which could unlock waves of purchases if they move to regulate.
Keep it to yourself: Insiders from industry, banking and deal advisors spoke under Chatham House rules at a conference organised by London law firm CMS. They pointed to several tailwinds for gambling M&A, not least a major shift in gambling’s reputation.
“Institutional capital is becoming more and more comfortable,” with gambling, they said.
Wynn’s project to build a casino in the UAE has opened new eyes and “led to a lot of the emirate funds looking at investing in gambling.”
Life in the old girl yet: Europe is sometimes portrayed as unfriendly to acquisitions thanks to mature regulatory environments, but the experts said successful revenue growth in the broader sector has prompted eager international investors to look back to the old world.
Markets with dominant local players will also prompt European mergers, they predicted, where “national champions” in search of growth will need to merge internationally to unlock their growth potential.
The investor appetite is “evolving into these people now looking into opportunism in Europe as well as the US.”
Gray is not OK: While M&A activity will continue, the profile of companies being acquired is changing thanks to a shift in the way major players approach unregulated markets.
Both operators and suppliers are under intense pressure from regulators and law enforcement to justify their gray market activity.
“That does narrow the aperture if you’re operating in gray markets,” said the experts, who warned that even suppliers “will be subject to a lot of due diligence”.
This phenomenon is depressing prices for US sweepstakes operators that “would love some liquidity” but face “a huge disconnect in the number of buyers and value.”
Jeff doesn’t fancy it: Operators can also breathe a sigh of relief that the big boys of US tech and media are not interested in entering the gambling market.
Earlier at the same conference, a representative from Amazon said its largest shareholder Jeff Bezos doesn’t want the scrutiny that would come with licensing, and the same is true of leadership at Disney, Apple and others.
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