Penn National Completes Sale of Pocono Downs

WYOMISSING, Pennsylvania -- (PRESS RELEASE) -- Penn National Gaming, Inc. (PENN: Nasdaq) announced today that it has completed the previously announced sale of The Downs Racing and its subsidiaries to the Mohegan Tribal Gaming Authority (MTGA) for approximately $280 million. Reflecting taxes, post closing adjustments, fees and other expenses, Penn National realized net proceeds of approximately $175 million, which the Company intends to apply to a combination of debt reduction and previously announced development projects.

Under the terms of the agreement, MTGA acquired The Downs Racing and its subsidiaries including Pocono Downs (a standardbred horse racing facility located on 400 acres in Wilkes-Barre, Pennsylvania) and five Pennsylvania off-track wagering (OTW) facilities located in Carbondale, East Stroudsburg, Erie, Hazleton and the Lehigh Valley (Allentown).

Bear, Stearns & Co. Inc. acted as advisor to Penn National Gaming and SG Americas Securities, LLC served as advisor to Mohegan Tribal Gaming Authority in the transaction. As previously announced, the sale agreement between Penn National and MTGA provides MTGA with certain post-closing termination rights in the event of certain materially adverse legislative or regulatory events.

Penn National Gaming owns and operates: Hollywood Casino in Aurora, Illinois; Charles Town Races & Slots(TM) in Charles Town, West Virginia; the Casino Rouge in Baton Rouge, Louisiana; the Bullwhackers casino properties in Black Hawk, Colorado, and three Mississippi casinos: Hollywood Casino in Tunica, Casino Magic in Bay St. Louis and the Boomtown Biloxi casino in Biloxi. Penn National also owns and operates Penn National Race Course in Grantville, Pennsylvania and its six affiliated off-track wagering facilities; the racetrack at Bangor Raceway in Bangor, Maine; a 50% interest in the Pennwood Racing Inc. joint venture, which owns and operates Freehold Raceway in New Jersey; and the Company operates Casino Rama, a gaming facility located approximately 90 miles north of Toronto, Canada, pursuant to a management contract. As previously announced, Penn National is currently in the process of effecting the disposition of the Hollywood Casino in Shreveport, Louisiana. In November 2004, Penn National entered into a definitive merger agreement under which Penn National will acquire all of the outstanding shares of Argosy Gaming Company.