Penn National Gaming employee made $560,000 trading on insider information, feds say

An online sports betting programmer based in Philadelphia is accused of gambling on inside information. And it appears that he lost big-time.

Penn National Gaming employee David Roda, 36, of Philadelphia, was charged by criminal information with insider trading charges Monday on a public company’s stock. The market bets netted him more than $560,000 in profits.

Penn National, a publicly traded casino and race-track company with headquarters in Wyomissing, Pa., employed Roda at its Penn Interactive subsidiary as director of back-end architecture. Roda wrote computer code for sports betting applications, a fast-growing segment for the public company.

In March 2021, Penn National began discussions with Score Media & Gaming, of Toronto, regarding a potential acquisition, and in June, assigned several employees to conduct due diligence. Roda was one of those employees.

“David Roda allegedly traded on material, non-public information and made out like a bandit.”

Penn National Gaming operates gambling properties in more than 20 states and pushed into digital gaming by buying Canada’s Score Media & Gaming, operator of theScore app, for about $2 billion. The deal built 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 U.S. Attorney’s Office in Philadelphia alleged the following: On July 8, Roda was added to the team at Penn National and Penn Interactive that conducted due diligence on the deal. Then, on July 22, Roda purchased 200 Score Media call option contracts for about $13,000.

A senior officer at Penn Interactive told Roda in August the acquisition would be announced within days, and Roda purchased 300 more 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, leading to a gain if share prices rise.

The following day, Penn National announced it would acquire Score Media, whose stock price rose dramatically.

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

Roda also tipped off a childhood friend, Andrew Larkin, about the transaction. Roda and Larkin were close friends who both grew up in Lancaster. The two socialized, played basketball together nearly every week, and often discussed their personal and professional lives, according to a release 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, the government says, Larkin texted Roda with questions about how call options work. Larkin confirmed that he was “looking at options for the stock [they] talked about at [the friend’s party].” Later that day, Larkin found out he he couldn’t trade options in his brokerage account, and instead he bought 375 shares of Score Media common stock.

Roda told Larkin to download an encrypted messaging application so that they could “speak freely.”

On Aug. 4, using the encrypted messaging app, Roda told Larkin, “apparently we are announcing the Score acquisition tomorrow.”

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

Roda sent Larkin a screen shot of the value of the options he purchased.

When Larkin expressed amazement, Roda responded that he “should’ve gone harder.”

Larkin mused that Roda could use the money he had made to purchase a beach house. Roda responded, “ya if the SEC doesn’t come take it and put me in jail.”

In a statement to The Inquirer, Penn National said: ”The company took this matter very seriously and 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 extensive training to help prevent trading on 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 was charged, typically is a sign that a defendant has agreed to a plea deal.

Larkin has settled the SEC’s civil charges, pending court approval, and doesn’t face criminal charges. Calls and emails for comment to Roda’s lawyer Sozi Tulante at the Dechert law firm weren’t returned. Larkin’s lawyer Michael Engle declined to comment.

Roda began working for Penn Interactive in 2019 as a programmer for its online sportsbook application. In June 2021, he was promoted to the director position, and continued his work as a programmer while overseeing a group of other employees also working on the sportsbook application.

“David Roda allegedly traded on material, non-public information and made out like 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 past job as a current opening.