Penn National Gaming employee traded $560,000 on inside information, feds say

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A Philadelphia-based online sports betting programmer is accused of betting on inside information. And it looks like he lost big.

David Roda, 36, from Philadelphia, employee of Penn National Gaming, was charged with criminal charges of insider trading on Monday over the stock of a public company. Market bets brought him more than $560,000 in profit.

Penn National, a publicly traded casino and racetrack company headquartered in Wyomissing, Pennsylvania, employed Roda at its subsidiary Penn Interactive as its director of back-end architecture. Roda wrote computer code for sports betting apps, a growing segment for the public company.

In March 2021, Penn National entered into discussions with Score Media & Gaming, of Toronto, regarding a potential acquisition and, in June, assigned several employees to perform due diligence. Roda was one such employee.

“David Roda allegedly traded non-public material information and posed as a bandit.”

Jacqueline Maguire, Special Agent in Charge of the Philadelphia Division of the FBI

Penn National Gaming operates gaming properties in more than 20 states and entered digital gaming by buying Canada’s Score Media & Gaming, operator of theScore app, for around $2 billion. The deal was based on Penn National’s stake in Barstool Sports Inc., a sports content and podcasting brand. Penn National has also launched a Barstool-branded betting app in the United States.

In a court filing, the US Attorney’s Office in Philadelphia alleged the following: On July 8, Roda was added to the Penn National and Penn Interactive team that conducted due diligence on the deal. Then, on July 22, Roda purchased 200 Score Media call option contracts for approximately $13,000.

A senior Penn Interactive executive told Roda in August that the acquisition would be announced within days, and Roda purchased another 300 Score Media call option contracts for $7,000.

A call option gives an investor the right, but not the obligation, to buy a stock at a set price, resulting in a gain if the stock price rises.

The next day, Penn National announced that it would acquire Score Media, whose stock price rose significantly.

Roda turned the $20,935 he spent on 500 call options into $581,697, realizing net profits of $560,762, federal officials said in U.S. District Court for the Eastern District of Pennsylvania, in Philadelphia.

Roda also informed a childhood friend, Andrew Larkin, of the transaction. Roda and Larkin were close friends who both grew up in Lancaster. The two socialized, played basketball together almost weekly and often discussed their personal and professional lives, according to a statement from the U.S. Attorney’s Office.

On July 11, Roda saw Larkin at a party at a mutual friend’s house and told Larkin that Penn National was in talks to acquire Score.

The next day, according to the government, Larkin texted Roda with questions about how call options worked. Larkin confirmed that he was “examining options for the stock [they] talk to [the friend’s party].” Later that day, Larkin discovered that he could not trade options in his brokerage account and instead purchased 375 common shares of Score Media.

Roda told Larkin to download an encrypted messaging app so they could “talk freely.”

On August 4, using the encrypted messaging app, Roda told Larkin, “Apparently we’re announcing the acquisition of Score tomorrow.”

Larkin turned $6,750 he spent on 375 SCR shares, into $12,352, for a profit of $5,602.

Roda sent Larkin a screenshot of the value of the options he bought.

When Larkin expressed his astonishment, Roda replied that he “should have gone harder”.

Larkin thought Roda could use the money he earned to buy a house on the beach. Roda replied, “ya if the SEC doesn’t come and take it and put me in jail.”

In a statement to The Inquirer, Penn National said, “The Company has taken this matter very seriously and has cooperated fully with the government investigations that led to the charges announced yesterday against this former employee. We maintain comprehensive policies and procedures and provide in-depth training to help prevent the trade in material, nonpublic information.

Roda is no longer employed at the company and faces additional civil charges filed by the Securities Exchange Commission. A criminal information, under which he has been charged, is usually a sign that a defendant has accepted a plea deal.

Larkin has settled civil charges from the SEC, pending court approval, and does not face criminal charges. Calls and emails for comment to Roda’s attorney, Sozi Tulante, of the law firm Dechert were not returned. Larkin’s attorney, Michael Engle, declined to comment.

Roda started working for Penn Interactive in 2019 as a programmer for its online sports betting application. In June 2021, he was promoted to manager and continued his work as a programmer while overseeing a group of other employees also working on the sports betting app.

“David Roda allegedly exchanged non-public material information and posed as a bandit,” said Jacqueline Maguire, special agent in charge of the FBI’s Philadelphia division.

The FBI declined to comment further, saying the case was ongoing.

In April, Penn National posted Roda’s former job as a current opening.

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