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Penn National’s Legal Chief Cashes Out as Gaming Stocks Rally

Nov. 20, 2020, 6:54 PM

Penn National Gaming Inc. has hired a veteran gambling industry lawyer to assume leadership of its in-house law department next year.

Harper Ko, chief legal officer and general counsel at slot machine maker Everi Holdings Inc., will succeed the retiring Carl Sottosanti as Penn’s top lawyer on Jan. 1. The Wyomissing, Pa.-based casino and racetrack operator announced Nov. 19.

Sottosanti didn’t respond to a request for comment about his decision to step down at Penn, which he joined as deputy general counsel in 2003 before being promoted to the company’s top legal role a decade later. He will retire as legal chief Dec. 31.

Earlier this year, Sottosanti was one of many law department leaders across America that had their compensation reduced as a result of the coronavirus pandemic.

The gaming industry, which saw many of its revenue-generating establishments shuttered due to Covid-19 lockdown orders in various states, was particularly hard hit when it came to remuneration reductions. But on Oct. 1, Penn disclosed that it had restored Sottosanti’s 20% pay cut and reversed reductions for other top executives, including a 25% salary slash for president and CEO Jay Snowden.

Those moves came shortly before gaming industry stocks like Penn rallied this month after Louisiana, Maryland, and South Dakota passed initiatives legalizing sports wagers. On Thursday, Bally’s Corp. paid $125 million to acquire online sports betting platform Bet.Works Corp.

Betting Boom

Penn praised Sottosanti for his contributions over a 17-year period that saw the company expand from a relatively small gaming operator to a “country wide omnichannel provider of retail and interactive gaming, sports betting, and entertainment,” the company said in a statement announcing his retirement.

Penn is reportedly one of several potential bidders for a sports information business owned by Z Capital Group LLC that could fetch $350 million in a sale. In January, Penn paid $136 million in January for a 36% stake in Barstool Sports Inc.

That cash-and-stock deal gave Penn the exclusive right to use the Barstool brand for casino and sports betting products, while also helping Penn raise $850 million through a September share sale.

The Barstool purchase came a year after Penn received regulatory approval for its $2.8 billion acquisition of Las Vegas-based rival Pinnacle Entertainment Inc. Wachtell, Lipton, Rosen & Katz advised Penn on the Pinnacle and Barstool transactions.

Penn said that as its operations increased in size following those acquisitions and other deals, Sottosanti helped oversee the company’s focus on corporate governance and labor and employment matters.

“Carl has been known for his tireless work ethic, dogged determination, and fierce advocacy in support of our company’s interests,” said a statement from Snowden, who added that while Sottosanti is “leaving behind some big shoes to fill,” he’s confident Ko is up to the challenge.

Legal Transition

Ko, who has spent the past three years at Everi, didn’t respond to a request for comment about her new role.

Penn said she brings with her two decades of corporate legal and regulatory compliance experience at several casino operators and gaming equipment suppliers, including Scientific Games Corp., Bally Technologies Inc., and WMS Gaming Inc.

Snowden said Ko’s “expertise regarding the industry’s complex regulatory and compliance requirements” will help Penn as it continues to “execute our growth strategies across our land-based, interactive, and sports betting platforms.”

Ko owns roughly $406,000 in Everi stock, according to Bloomberg data. Proxy filings by the Las Vegas-based company, which is currently embroiled in a patent dispute over casino ATMs with rival NRT Technology Corp., show it didn’t make Ko among its top-five compensated executives in 2019.

Sottosanti, however, received nearly $2.7 million in total compensation from Penn in 2019, per a proxy statement filed by the company for that fiscal year. Nearly $1.5 million of that pay package was in cash, with the remainder in stock.

Bloomberg data shows that Sottosanti owns more than $5.8 million in Penn stock. He unloaded more than $12 million in Penn stock in three separate sales between July and October, per securities filings.

A retirement agreement between Sottosanti and Penn disclosed in a Nov. 20 securities filing shows that he will remain in an advisory position through March 1, 2021, at which time he will officially separate from the company. Sottosanti will receive his $675,000 base salary through that time and be eligible for a one-time $400,000 transition award to be paid Jan. 1, the company said.

In February, Penn hired former Duane Morris partner Christopher Soriano to be its new compliance chief, a move followed in September by the company bringing on Morgan, Lewis & Bockius associate Kevin Dermody in Philadelphia as corporate counsel for mergers and acquisitions and securities.

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com