By
Amelia Walker
Senior Content Writer Updated: 15 June 2024
Amelia Walker Senior Content Writer
Amelia Walker is a Senior Content Writer at Betting.US. She has a law degree and deep knowledge of the gambling laws in the United States. Her mission is to keep players informed about responsible gambling, while her passion for sports helps her create useful guides. Amelia has over a decade of experience in betting, which has positioned her as a trusted voice among our readers.
According to recent reports, Penn Entertainment is facing intense pressure from investors to consider selling up amid concerns over performance failures relating to online sports betting. The Donerail Group, a key investor in the company, recently sent a letter to Penn Entertainment’s board of directors, urging them to take decisive action to enhance shareholder value.
In the letter addressed to Penn Chairman David Handler, Donerail Managing Partner Will Wyatt expressed deep dissatisfaction with the company’s efforts in relation to online sports betting. He claimed that this had consumed a large chunk of shareholder capital without delivering the expected results.
Over the past four years, Penn Entertainment has invested billions of dollars in an attempt to establish a foothold in this rapidly growing market. However, despite these huge investments, the company’s initiatives have failed to deliver the desired outcome.
In his letter, Wyatt wrote:
Moreover, the growing pattern of guidance misses, alongside a demonstrated unyielding appetite to continue to invest in the Company’s fledgling Interactive projects, irrespective of past results and without a clear return framework, has significantly damaged the credibility of this management team and Board of Directors.
A key moment in Penn Entertainment’s online sports betting journey was its acquisition of Barstool Sports for approximately $551 million in January 2020. The move was designed to make use of the strong brand presence of Barstool Sports to drive growth in both online and retail sportsbooks.
Unfortunately, the acquisition did not generate the returns anticipated by Penn, leading to the decision to sell Barstool back to its founder for a mere $1. Subsequently, Penn Entertainment entered into a costly agreement with Walt Disney to utilize ESPN branding for its mobile betting app, ESPN Bet.
Despite this move, the company struggled to gain significant market share, lagging behind competitors such as DraftKings and FanDuel.
In addition to the underperformance of Penn Entertainment’s online sports betting ventures, concerns have been raised about CEO Jay Snowden’s compensation. Donerail argued that Snowden was being overcompensated, given the company’s lackluster financial performance and shareholder returns.
This sentiment was echoed by several other Penn Entertainment investors, including David Einhorn’s Greenlight Capital and HG Vora, both of which have stakes in Penn Entertainment.
In response to Donerail’s letter, Penn Entertainment’s stock closed 19.62 percent higher than the previous day’s trading volume. However, the company’s overall stock performance has declined by 80 percent over the past three years.
Despite the recent increase, concerns over the performance of Penn Entertainment when it comes to the online sports betting market continue to prompt calls for the company to consider strategic alternatives, including a potential sale.
While Donerail did not explicitly identify potential buyers for Penn Entertainment, the company has attracted interest from various sectors of the investment community. Greenlight Capital and HG Vora’s stakes in the company have led to a belief among some investors that a change in ownership or management could unlock shareholder value.
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