PENN Entertainment, Inc. 10-Q

ITEM 1. LEGAL PROCEEDINGS We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, results of operations, or cash flows. On May 7, 2025, HG Vora Capital Management, LLC, HG Vora Special Opportunities Master Fund, Ltd., and Downriver Series LP – Segregated Portfolio C (collectively, the “HG Vora Plaintiffs”) filed a lawsuit in the United States District Court for the Eastern District of Pennsylvania against PENN, the members of PENN’s Board of Directors (the “Board”) and PENN’s former director Ronald Naples captioned HG Vora Capital Management, LLC, et al. v. PENN Entertainment, Inc., et al., No. 5:25-cv-02313 (the “HG Vora Complaint” or the “HG Vora Action”). The HG Vora Complaint alleges, among other things, that PENN violated Pennsylvania’s Business Corporation Law and the individual defendants breached their fiduciary duties when the Board decreased the number of Class II directors from three to two (the “PENN Board Reduction”) and PENN violated federal securities laws by failing to abide by the universal proxy rules and making materially false and misleading statements in, and omissions from, its press release and its proxy materials filed with the SEC. The HG Vora Complaint seeks, among other things, a declaration that the PENN Board Reduction is invalid, injunctive relief ordering PENN to correct the alleged materially false and misleading statements in its proxy materials, injunctive relief allowing PENN shareholders an opportunity to elect three directors at our 2025 annual meeting of shareholders and damages in an amount to be determined at trial. The defendants believe the allegations set forth in the HG Vora Complaint are without merit. On May 8, 2025, the Board voted to constitute a special litigation committee to evaluate the HG Vora Plaintiffs’ claim that the individual defendants breached their fiduciary duties in connection with the PENN Board Reduction. On May 14, 2025, the HG Vora Plaintiffs filed a motion for an expedited trial and early case management conference. On May 19, 2025, the defendants filed a motion to stay the HG Vora Action for the time reasonably necessary to permit the special litigation committee to complete its investigation. On July 7, 2025, the court denied the HG Vora Plaintiffs’ motion in its entirety and partially granted the defendants’ motion to stay. The court stayed the breach of fiduciary duty claim for 30 days but declined to stay the other claims in the HG Vora Complaint. On July 28, 2025, the defendants filed a motion to dismiss the non-stayed claims in the HG Vora Complaint.