Just 1%—Enough to Change the Odds in Gambling’s Boardrooms
Maksim Afanasev
Director, Platform Strategy at Sportradar | iGaming Product & Tech | MBA HSG
The Myth of the Passive Investor
Many people think that once you buy shares of a public company, your only move is to sit back and hope the price goes up. But for some investors, that’s just the beginning.
These are the activist investors: individuals or funds who deliberately seek out underperforming companies, acquire a significant (but not always massive) stake, and then actively push for change - sometimes shaking up the entire organization.
Even owning just 1% of a public company can be enough to drive management changes, influence board seats, or steer the company’s strategy in a completely new direction.
Classic Cases of Activist Investing
History is full of high-profile examples where activist investors turned small stakes into outsized influence:
Carl Icahn vs. Apple: With just a 1% stake, Icahn convinced Apple to expand its share buyback program, ultimately earning over $2 billion in profits
Starboard Value vs. Yahoo: Starboard held just ~0.8% but orchestrated a boardroom overhaul, forced out the CEO, and drove the sale of Yahoo core business to Verizon
ValueAct Capital vs. Microsoft: Owning less than 1%, ValueAct Capital secured a board seat, pushed for the departure of Steve Ballmer, and helped Microsoft pivot toward cloud computing
The Gambling Industry: Not Immune to Activism
Activist investing used to focus on tech, retail, and conglomerates. But in recent years, even the gambling world - long seen as an insular, “closed" club - has become fertile ground for shareholder revolts and boardroom battles.
Carl Icahn and Caesars Entertainment
As Axios noted back in 2019, Carl Icahn pulled off a remarkable activist campaign with Caesars Interactive Entertainment Inc. (Axios, June 24, 2019):
Carl Icahn gambled again. And won again, given Monday’s news that Eldorado Resorts agreed to buy Caesar’s Entertainment for $17.3 billion (including assumed debt), or $12.75 per share in cash and stock.
The price is a 29% premium over where shares closed Friday, and nearly an 88% increase from where they entered 2019
Icahn first disclosed a 9.8% stake in Caesar's in mid-February, and began pushing the company to sell. Caesar's quickly folded, giving Icahn three board seats and a say in picking its next CEO
This created the largest owner and operator of U.S. casinos, with the combined company to retain the Caesar’s brand.”
It was a true case of shareholder activism - driven not by a controlling stake, but by influence, leverage, and media pressure. And it worked.
Icahn’s return to Caesars as an investor in 2024, as reported by Forbes, suggests that lightning may strike twice (Forbes)
Activist Storm at Penn Entertainment: Donerail Group & HG Vora
Right now, two activist investors are battling for influence at PENN Entertainment, Inc - a prime example of how the gambling sector is in flux.
Key Facts & Timeline
2019-2024: Penn spent $4.25B on digital bets - Barstool Sports ($550M), theScore ($2B), and ESPN Bet ($1.7B partnership with The Walt Disney Company / ESPN ).
Ambition announced: Capture 20% of the U.S. online gambling market by 2027
Reality Check:
Barstool was sold back for $1
ESPN Bet’s market share lags at 3–5%
Management has faced criticism for excessive executive compensation, including high bonuses and perks (such as private jet use), despite poor financial results
Activist investors have questioned the transparency and honesty of board communications, even filing lawsuits alleging misleading SEC disclosures
Speculation is growing around ESPN Bet’s future, especially given the 2027 option for Disney to exit the partnership if targets aren’t met
Penn’s market cap crashed from $19B (2021) to just $2,2B today
The Activist Play
HG Vora Capital Management , holding 4,8% has repeatedly pushed for board representation, accountability, and new strategic direction, launching a proxy battle and legal claims against management
The Donerail Group , another shareholder at Penn has also gone public with calls for leadership changes and renewed focus on profitability
Recent Developments
What do Activists want
Whether the PENN vs Activists saga ends in a settlement or a shakeup, one thing is certain: activist pressure is reshaping the narrative - not just at Penn, but across the entire gaming industry.
Why Does This Matter
For Investors: Activist investing can drive real value, discipline, and innovation—but also chaos and short-termism
For Management: No company is immune. Underperformance or missed promises can invite aggressive outside pressure
For the Industry: The gambling sector is no longer a quiet backwater. With billions at stake and new digital business models, it’s drawing sharp attention from activist investors and the broader market
Final Thoughts
Activist investors, whether you love them or fear them, are a fixture even in the most unlikely industries.
Their influence can lead to dramatic shakeups, strategic pivots, and sometimes—big wins for all shareholders.
So, next time you see news about someone “only” owning 1% of a company, remember: that might be all it takes to change everything.
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CEO, BoD at BetGames | Building Games & AI | Follow for iGaming and Enterprise AI Insights
2moSolely depends on the other 99% :) the successful 1-5% activist is often just the spokes person, otherwise they will be shut down quickly.
ⵙ Positive Constraint
2moVery interesting, thanks for sharing. These investors may have a small stake in the companies but held a very powerful force to lead change. They were a powerful constraint in the system.