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SportsTranscript
00:00Okay, so this is not an argument of dumb,
00:02although I do feel dumb trying to read
00:04and understand this story.
00:05I gotta be honest with you, I've read it several times here
00:07in Legal Sports Report.
00:08It seems to me that there's this battle
00:11over the amount of money that they spent
00:12in terms of advertising with Penn Entertainment
00:14and this whole debacle, how it turned into ESPN bet.
00:17So I'm gonna ask you, Sam, to sort of summarize this
00:20for everyone watching out there,
00:21because I think you're gonna have to read this thing,
00:23no offense, gonna have to read it a couple times
00:25to understand it.
00:27Yeah, shout out to all the other reporters
00:30at Legal Sports Report who do the hard work
00:31of digging through the 10Ks, the other SEC filings
00:35to kind of make sense of what's going on.
00:36And to your point, Craig, even when you do all that,
00:39it can kind of seem pretty complicated what's going on.
00:41At the end of the day, you have Penn Entertainment,
00:43which is a major gambling company,
00:47major company traded on the New York Stock Exchange.
00:50They've been trying to compete in online sports betting
00:52for a while now, and online sports betting
00:56is sort of a sum of a lot of investment upfront,
00:59and hopefully we see the returns later.
01:01Now we're at the point where FanDuel DraftKings,
01:03they're starting to see some of that return on investment.
01:05And then you have the investors at Penn Entertainment,
01:08which had famously bought Barstool Sports
01:11to run Barstool Sportsbook.
01:13That was a disaster.
01:14They sold it back to the founder for $1
01:16after paying billions of dollars for it.
01:19Then they moved over to give ESPN a ton of money as well,
01:22just to use their name.
01:24That so far has not been working out great for the company,
01:27although they say they're improving their metrics.
01:28And there's been a group of investors at Penn
01:31that owns a sizable amount of shares
01:33that has gotten really frustrated with that
01:35and does not like the direction the company is going.
01:38This week, they filed with the SEC in a major move,
01:41nominating three directors to the board,
01:44essentially trying to take over more seats
01:46and control away from the leadership
01:49that runs Penn right now.
01:50So what we're talking about is basically a proxy battle
01:52that Penn has on its hands.
01:55This group, HG Vor, has criticized Penn harshly,
01:58mainly around online betting.
01:59Remember, Penn is a company that owns a ton of casinos,
02:02ton of resorts, other assets across the country.
02:05They've pretty much said,
02:06hey, we've wasted all this money on online gaming,
02:08about $4 billion to be exact,
02:10and we really don't have anything to show for it.
02:12And we're still just kind of being told,
02:14wait for the results, wait for the results.
02:16They call the strategy overpriced, poorly negotiated,
02:19and they've really taken issue
02:20that leadership hasn't really, to this point,
02:23faced any repercussions for kind of their failures.
02:26So what they want is instead to kind of, as I understand it,
02:29sell off the remaining online tech assets that they have,
02:34kind of get out of the game,
02:35and then just really double down
02:36on what has made them a good business in general,
02:38is their casinos.
02:39So this is definitely not the last we'll hear of this story.
02:42It's gonna develop.
02:43But if I'm Penn right now
02:44and I'm struggling to stay alive with online betting,
02:46this is the last thing I want in my hands.