The hedge fund, which has an economic stake of 18%, including derivatives, according to a December regulatory filing, wrote to Penn Entertainment last week about the problem with the size of its director classes and to insist on a remedy. The letter was made public in a filing on Tuesday.

Penn's board members stand for election every three years. Two directors who will be up for re-election this year have served on the board for more than 20 years.

"The current structure of the Board is legally improper and disenfranchises shareholders by artificially constricting the number of directors who may stand for re-election at the Company's 2024 annual meeting," the letter said. "We expect the Company to remedy this violation promptly," the letter continued.

HG Vora, which oversees roughly $7 billion in assets, has expressed concerns about the company's stock performance and how management allocates capital and has been in talks to place directors on the company's 9 member board. The company's stock price dropped 31% in the last 52 weeks.

Should the hedge fund remain unhappy with moves at the company, it could decide to launch a proxy contest and nominate its own candidates for all shareholders to vote on at the 2024 annual meeting.

A Penn Entertainment representative was not immediately available for comment. An HG Vora spokesman declined to comment beyond the filing.

(Reporting by Svea Herbst-Bayliss; Editing by David Gregorio)

By Svea Herbst-Bayliss