The suitability of Penn National Gaming to hold a gambling license in two states is uncertain in the minds of regulators in those states. Because of Penn’s connections to Barstool Sports, the regulatory bodies in Indiana and Nevada online gaming have initiated a Dave Portnoy investigation.
How deep the probes will go as the bodies look into PNG’s operations and whether that will affect Penn’s reported acquisition of Barstool remains unclear. For certain, though, Portnoy’s alleged behavior has negative ramifications for the company’s partners.
Indiana, Nevada initiate Dave Portnoy investigation
According to Omar Abdel-Baqui and Katherine Sayre of The Wall Street Journal, both bodies are moving forward with probes of PNG. In both states, regulations govern the suitability of gaming licensees related to criminal and unethical behavior.
PNG currently holds a minority share of the company Portnoy founded, Barstool. Twice in the past year, reports have featured claims from multiple women alleging that Portnoy assaulted them sexually.
To date, PNG hasn’t backed off its partnership with Barstool. In fact, Penn CEO Jay Snowden reiterated that it stands by Portnoy amid the allegations. That decision has at least cost it some credibility in the eyes of gaming regulators.
Nevada Gaming Control Board Chairman J. Brin Gibson said the body is looking into PNG,
“To protect the reputation of the state and the reputation of the state’s gaming industry.”
Gibson didn’t give any clues as to what if any action the body might take against Penn.
Regulators have also been silent about what threshold of discovery it would take to spur any action. The bodies do have some leeway within the rules, though.
Regs afford discretion over suitability
The rules in both states are similar in this regard. They afford the gambling regulatory bodies the authority to investigate any individual who has a material relationship or involvement with a gambling license applicant or holder.
As a result of that investigation, the bodies can deny or revoke licensure for “any cause deemed reasonable.” Suitability investigations can include detailed background checks along with inspecting financial and other personal records.
Due to the opening of these investigations, it appears that the bodies see Portnoy as such a person. The regulations do not state that such people have to be employees of or actual stakeholders in such companies.
In the past, disciplinary measures after similar investigations have included requiring companies to sever relationships with people found unsuitable. Furthermore, it’s important to note that such findings are not subject to judicial review in Nevada.
Right now, it’s unclear when the bodies will conclude these probes. Until then, PNG is officially under investigation in both states.