Penn National Gaming Reports Second Quarter Diluted EPS of $0.42 and EBITDA of $164.2 Million

Conference Call: Today, July 24, 2008 at 11:00 a.m. ET Dial-in numbers: 212/271-4592 or 415/904-7385 Webcast: www.pngaming.com Replay information provided below

Summary of Second Quarter Results

Three Months Ended (in millions, except per share data) June 30, ---------------------------------------------------------------------- 2008 2008 Guidance (2) 2007 ---------------------------------------------------------------------- Net revenues $620.6 $621.8 $625.2 ---------------------------------------------------------------------- EBITDA (1) 164.2 161.8 172.8 ---------------------------------------------------------------------- Less depreciation and amortization, gain/loss on disposal of assets, interest expense - net, income taxes, charge for stock compensation and other expenses (127.2) N/A (134.5) ---------------------------------------------------------------------- Net income $37.0 N/A $38.3 ---------------------------------------------------------------------- Diluted earnings per share $0.42 N/A $0.43 ----------------------------------------------------------------------

(1) EBITDA is income from operations, excluding charges for stock compensation, depreciation and amortization, and gain or loss on disposal of assets, and is inclusive of earnings from joint venture. A reconciliation of net income per accounting principles generally accepted in the United States of America ("GAAP") to EBITDA, as well as income from operations per GAAP to EBITDA, is included in the accompanying financial schedules. (2) The EBITDA guidance for the three months ended June 30, 2008, initiated on July 3, 2008, anticipated a one-time charge at corporate of $4 million. This charge, which is now anticipated to be approximately $3.2 million, is expected to be recorded in the third quarter of 2008, and is reflected in the updated third quarter guidance provided herein.

Review of Second Quarter 2008 Results vs. Second Quarter 2007 Results

2008 2008 Guidance 2007 ---------------------------------------------------------------------- Diluted earnings per share $0.42 N/A $0.43 ---------------------------------------------------------------------- Pre-opening charges 0.01 N/A 0.01 ---------------------------------------------------------------------- Merger-related costs - N/A 0.03 ---------------------------------------------------------------------- Currency translation loss - N/A 0.03 ---------------------------------------------------------------------- Diluted earnings per share before pre-opening charges, merger-related costs and currency translation loss $0.43 N/A $0.50 ----------------------------------------------------------------------

Commenting on the quarterly results, Peter M. Carlino, Chairman and Chief Executive Officer of Penn National Gaming said, "Overall, it continues to be a challenging environment for the gaming industry. Second quarter results were impacted by smoking bans in Illinois and Colorado and ongoing competitive pressures at our Alton and Joliet facilities. Taking into consideration the difficult economic conditions, we are generally pleased with our general managers' success in controlling margins.

"Penn National's second quarter results reflect our focus on diversifying our portfolio and consistent success in growing the Company through accretive acquisitions and prudent investments in existing facilities which yield strong returns. In this regard, quarterly results benefited from the first full quarter contribution from Hollywood Casino at Penn National Race Course, improving results at Argosy Casino Riverside related to last year's hotel opening and the April 2007 acquisition of Black Gold Casino at Zia Park, which continues to perform ahead of expectations.

"Penn National is well positioned for the second half of 2008 and the future, as our strong management team has been bolstered by the recent addition of President and Chief Operating Officer, Tim Wilmott, who was formerly Chief Operating Officer for Harrah's Entertainment. Furthermore, upcoming results will reflect significant, newly opened gaming and racing facilities in Pennsylvania and Maine; the certainty of retaining Empress Casino Joliet; a new parking structure in Lawrenceburg; and the hotel at Charles Town, which is opening in the third quarter.

"After almost three years of operating from a temporary facility, Hollywood Slots Hotel and Raceway in Bangor, Maine, opened earlier this month with approximately 9,000 patrons attending the grand opening events. With 1,000 slot machines, an attached parking garage, and excellent dining offerings, the new property is generating impressive revenue. We believe this property and Hollywood Casino at Penn National Race Course, which opened in the first quarter, clearly highlight Penn National's ability to develop state-of-the-art integrated racing, entertainment and gaming facilities in new jurisdictions. These properties benefit local communities and economies, while generating attractive returns and value for our shareholders. While both new properties are recording healthy levels of win-per-day, further upside will come as we fine tune the slot floor mix, player marketing efforts, and food and beverage and entertainment offerings to build EBITDA margins.

"Both the Maine and Pennsylvania properties have been authorized for significant additions to their slot floors, and both facilities were constructed with ample room to accommodate such expansions. We are opening the 152-room hotel in Bangor this quarter, and have commenced an expansion at Penn National to be completed by the end of the year that will include a buffet and 237 additional slot machines, with a specialty restaurant being added thereafter. With modest investments, hotels are also being added at Charles Town and Zia Park, as both properties can benefit from a lodging component that will extend current patrons' time at these facilities and attract additional visitation.

"Penn National also plans to invest $50 million to improve Empress Casino Joliet's competitive position, as the Illinois Gaming Board ruled earlier this year that Penn National can retain this facility. We are in the design phase for these improvements and expect to begin facility enhancement capital expenditures at this property in late 2008 with gaming vessel, food, beverage and VIP amenity upgrades expected to be completed in the second half of 2009. The second half of next year should also benefit from the completion of construction of the new Argosy Casino Lawrenceburg riverboat, which will feature 1,500 additional gaming positions, enhanced amenities and a floor layout that better facilitates customer flow.

"In addition to recent facility openings, expansions and planned development, Penn National has assembled a pipeline of potential growth opportunities and options in Atlantic City, Kansas, Maryland and several other regions. If successful, these opportunities will extend our long-term track record of successful property development."

Termination of Merger Agreement and Receipt of Funds

On July 3, 2008, Penn National entered into an agreement with certain affiliates of Fortress Investment Group LLC (NYSE: FIG) ("Fortress") and Centerbridge Partners, L.P. ("Centerbridge"), terminating the merger pursuant to which Penn National was to be acquired for $67.00 per share. In connection with the termination of the merger agreement, Penn National Gaming agreed to receive a total of $1.475 billion, consisting of a $225 million cash termination fee and a $1.25 billion, zero coupon, preferred equity investment.

Pursuant to the terms of the preferred equity investment purchase agreement, the purchasers made a $475 million payment to Penn National on July 3, 2008, in addition to the payment of the $225 million cash termination fee. Under the terms of the purchase agreement, the purchasers have subsequently deposited the remaining preferred equity investment purchase consideration with the escrow agent, First American Title Insurance Company. The funds will be released from escrow upon the issuance of the preferred stock, which is subject to the receipt of required regulatory approvals and the satisfaction of certain other conditions. Penn National is in the process of seeking the required regulatory approvals and expects to satisfy all conditions to funding by the fourth quarter of 2008.

Penn National intends to use the net proceeds from the investment and the after tax proceeds from the termination fee to repay existing debt, to acquire or develop pari-mutuel and gaming facilities and for such other uses as may be authorized from time to time by the Board of Directors, including repurchases of its common stock.

On July 9, 2008 Penn National filed a Current Report on Form 8-K with the Securities and Exchange Commission containing additional required information related to the termination of the merger agreement and the related preferred equity instrument. This filing may be accessed at http://sec.gov/Archives/edgar/data/921738/000089882208000750/ pennnational8k.htm. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

Development and Expansion Projects

The table below outlines Penn National Gaming's current pipeline of new or expanded facilities:

Amount Expended New Planned through Expected Gaming Total June 30, Opening Project/Scope Positions Budget 2008 Date ---------------------------------------------------------------------- (in millions) ---------------------------------------------------------------------- Hollywood Casino at Penn National Race Course (PA) - An integrated racing and gaming facility. Budget included a $50 million license fee and the purchase of an initial 2,000 slot machines (with the building size sufficient to add 1,000 additional machines), a 2,500 space parking garage and Opened February several restaurants. 2,000 $ 310 $ 313 2008 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Hollywood Slots Hotel and Raceway (ME) - A permanent facility featuring a 1,500 slot facility (1,000 slot Gaming facility machines at opening), a - Opened July 152-room hotel, 1,500 2008 space parking garage and Hotel - 3rd several restaurants. 525 $ 139 $ 122 Quarter 2008 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Charles Town (WV) - A 153- room, on-site, hotel - $ 21 $ 14 3rd Quarter 2008 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Slot machines Hollywood Casino at Penn and buffet - National Race Course (PA) 4th Quarter - Expansion of property, 2008 consisting of a buffet, Specialty specialty restaurant and restaurant - 237 slot machines. 237 $ 16 $ 2 TBD ---------------------------------------------------------------------- ---------------------------------------------------------------------- Argosy Casino Lawrenceburg (IN) - New two-level 270,000 square foot gaming barge, an additional 1,500 space parking garage and road and infrastructure improvements. The gaming barge will allow 4,000 positions on one level, and another 400 positions Parking facility will be added to the - Opened May second level, along with 2008 restaurants and other Gaming facility amenities on the gaming - 2nd Quarter barge. 1,600 $ 328 $ 149 2009 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Empress Casino Hotel (IL) - Upgrades to gaming vessel, food and beverage offerings and VIP amenities. - $ 50 $ - 3rd Quarter 2009 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Black Gold Casino at Zia Park (NM) - A 153-room, attached, hotel - $ 30 $ - 3rd Quarter 2010 ----------------------------------------------------------------------

Financial Guidance

The following table sets forth current guidance targets for financial results for the 2008 third quarter and full year, based on the following assumptions:

-- The 3% horse racing tax surcharge in Illinois that expired May 25, 2007 will not be renewed;

-- No slot revenue impact at Hollywood Casino at Penn National Race Course from the Pennsylvania smoking ban which initially restricts smoking to no more than 25% of the gaming floor but allows for increases for up to 50% of the gaming floor to be non-smoking. The smoking ban is anticipated to go into effect on September 11, 2008;

-- The agreement with regard to the increased admission tax at Hollywood Casino Baton Rouge does not take effect until January 1, 2009 and will result in an approximate $2 million of annual incremental expense;

-- The Hollywood Slots Hotel and Raceway hotel, in Bangor, is opening in phases during the third quarter;

-- Pre-opening costs at Hollywood Casino at Penn National Race Course of $4.6 million for 2008, with the full cost incurred in the first quarter of 2008. In 2007, the Company recorded $6.8 million of pre-opening costs related to Hollywood Casino at Penn National Race Course, with $0.2 million incurred in the first quarter, $0.5 million incurred in the second quarter, $1.0 million incurred in the third quarter and $5.1 million incurred in the fourth quarter;

-- Pre-opening costs at Hollywood Slots Hotel and Raceway, in Bangor, of $2.5 million for 2008, with $0.3 million of the cost incurred in the first quarter of 2008, $1.9 million of the cost incurred in the second quarter of 2008, and $0.3 million of the cost to be incurred in the third quarter of 2008. There were no pre-opening costs incurred for Hollywood Slots Hotel and Raceway in 2007;

-- Pre-opening expenses are included in the EBITDA guidance in the table below;

-- Depreciation and amortization charges in 2008 of $178.2 million, with $46.1 million projected to be incurred in the third quarter of 2008. The increases over 2007 levels are primarily attributable to the permanent Hollywood Casino at Penn National Race Course facility, which opened in the first quarter of 2008, the Hollywood Slots Hotel and Raceway, and a full-year of Black Gold Casino at Zia Park;

-- A loss on disposal of assets of $1.3 million in 2008, with $0.2 million of the cost incurred in the third quarter of 2008. In 2007, the Company recorded a loss on disposal of assets of $1.6 million with $0.9 million of the cost incurred in the first quarter of 2007, $0.1 million of the cost incurred in the second quarter of 2007 and $0.3 million of the cost incurred in the third quarter of 2007;

-- Estimated non-cash stock compensation expenses of $25.3 million for 2008, with $9.4 million incurred in the third quarter of 2008 (including a $3.0 million one-time, noncash charge). In 2007, the Company recorded non-cash stock compensation expenses of $25.5 million with $6.6 million of the cost incurred in the first quarter of 2007, $6.3 million of the cost incurred in the second quarter of 2007 and $6.3 million of the cost incurred in the third quarter of 2007;

-- Includes a $3.2 million one-time charge at corporate in the third quarter of 2008 (this charge was originally anticipated to amount to $4.0 million and was expected to be recorded in the second quarter of 2008);

-- The $225 million merger termination fee and related expenses are not included in income guidance;

-- Proceeds received on July 3, 2008 from the termination of the Merger Agreement and the preferred equity investment purchase agreement were used to repay the revolving credit facility;

-- Assumes the Company will repurchase its common stock in the open market in quantities sufficient to offset employee stock option grants;

-- Assumes preferred equity issuance on October 1, 2008 will result in an increase to the diluted share calculation of 27,778,000 shares while Penn National Gaming common stock shares trade below $45; and

-- There will be no material changes in economic conditions, applicable legislation or regulation, world events, weather, or other circumstances beyond our control that may adversely affect the Company's results of operations.

Three Months Ended Full Year Ended September 30, December 31, ------------------------------------ (in millions, except per share 2008 2007 2008 2007 data) Guidance Actual Guidance Actual ---------------------------------------------------------------------- Net revenues $657.5 $629.5 $2,537.6 $2,436.8 ---------------------------------------------------------------------- EBITDA (1) 178.6 177.6 682.4 672.7 ---------------------------------------------------------------------- Less depreciation and amortization, gain/loss on disposal of assets, interest expense - net, income taxes, charge for stock compensation and other expenses (131.2) (131.0) (509.6) (512.6) ---------------------------------------------------------------------- Net income GAAP $47.4 $46.6 $172.8 $160.1 ---------------------------------------------------------------------- Diluted earnings per share $0.53 $0.52 $1.81 $1.81 ----------------------------------------------------------------------

(1) EBITDA is income from continuing operations excluding charges for stock compensation, depreciation and amortization, gain or loss on disposal of assets, and is inclusive of earnings from joint venture.

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information - Operations (in thousands) (unaudited) NET REVENUES EBITDA (1) Three Months Ended June 30, Three Months Ended June 30, 2008 2007 2008 2007 ------------- ------------- ------------- ------------- Charles Town Entertainment Complex $ 122,073 $ 129,140 $ 35,297 $ 37,767 Argosy Casino Lawrenceburg 111,404 121,236 35,586 40,820 Hollywood Casino Aurora 50,497 64,052 14,312 20,593 Empress Casino Hotel 44,659 58,493 12,578 14,132 Argosy Casino Riverside 46,146 43,117 15,642 14,072 Hollywood Casino Baton Rouge 33,110 34,041 14,009 14,347 Argosy Casino Alton 21,731 30,366 5,713 8,627 Hollywood Casino Tunica 22,109 26,375 5,502 6,217 Hollywood Casino Bay St. Louis 25,851 25,466 5,761 5,222 Argosy Casino Sioux City 14,050 13,835 5,042 4,671 Boomtown Biloxi 18,958 22,671 5,124 7,265 Hollywood Slots Hotel and Raceway (2) 12,078 11,985 2,107 3,622 Bullwhackers 5,759 7,483 107 976 Black Gold Casino at Zia Park (3) 21,491 16,913 8,158 6,490 Casino Rama management service contract 4,694 4,341 4,272 3,984 Hollywood Casino at Penn National Race Course (4) 61,628 13,530 10,690 79 Raceway Park 2,343 2,200 (248) (195) Sanford- Orlando Kennel Club (5) 2,005 - 97 - Earnings from Pennwood Racing, Inc. - - (152) 325 Corporate overhead - - (15,348) (16,256) ------------- ------------- ------------- ------------- Total $ 620,586 $ 625,244 $ 164,249 $ 172,758 ============= ============= ============= ============= NET REVENUES EBITDA (1) Six Months Ended June 30, Six Months Ended June 30, 2008 2007 2008 2007 ------------- ------------- ------------- ------------- Charles Town Entertainment Complex $ 244,585 $ 248,736 $ 70,698 $ 74,552 Argosy Casino Lawrenceburg 229,648 243,094 74,858 82,526 Hollywood Casino Aurora 104,123 128,552 30,370 41,264 Empress Casino Hotel 89,303 118,106 22,125 27,378 Argosy Casino Riverside 92,947 84,832 31,805 27,138 Hollywood Casino Baton Rouge 67,876 68,922 28,252 28,978 Argosy Casino Alton 44,428 61,229 10,860 17,417 Hollywood Casino Tunica 46,671 52,971 11,855 13,025 Hollywood Casino Bay St. Louis 51,292 48,950 11,200 9,648 Argosy Casino Sioux City 28,321 27,952 9,894 9,300 Boomtown Biloxi 39,606 46,738 11,939 15,347 Hollywood Slots Hotel and Raceway (2) 22,778 22,961 5,031 6,731 Bullwhackers 11,503 14,614 165 1,761 Black Gold Casino at Zia Park (3) 43,406 16,913 16,533 6,490 Casino Rama management service contract 8,679 7,815 7,867 7,172 Hollywood Casino at Penn National Race Course (4) 101,077 25,384 12,285 (349) Raceway Park 3,930 3,733 (461) (373) Sanford- Orlando Kennel Club (5) 3,907 - 235 - Earnings from Pennwood Racing, Inc. - - (911) 365 Corporate overhead - - (28,502) (27,913) ------------- ------------- ------------- ------------- Total $ 1,234,080 $ 1,221,502 $ 326,098 $ 340,457 ============= ============= ============= =============

(1) EBITDA is income from operations, excluding charges for stock compensation, depreciation and amortization, and gain or loss on disposal of assets, and is inclusive of earnings from joint venture. A reconciliation of net income per accounting principles generally accepted in the United States of America ("GAAP") to EBITDA, as well as income from operations per GAAP to EBITDA, is included in the accompanying financial schedules. (2) On July 1, 2008, the permanent Hollywood Slots at Bangor facility, which is called the Hollywood Slots Hotel and Raceway, was opened. (3) Results for the three and six months ended June 30, 2007 reflect the April 16, 2007 acquisition effective date. (4) Hollywood Casino at Penn National Race Course includes the results of our Pennsylvania casino that opened on February 12, 2008, as well as the Penn National Race Course and four off-track wagering facilities. (5) The acquisition effective date was October 17, 2007.

Reconciliation of EBITDA to Net Income (GAAP) PENN NATIONAL GAMING, INC. AND SUBSIDIARIES (in thousands) (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 --------- --------- --------- --------- EBITDA $164,249 $172,758 $326,098 $340,457 Loss (earnings) from joint venture 152 (325) 911 (365) Depreciation and amortization (45,182) (37,622) (84,974) (72,980) Charge for stock compensation (5,383) (6,256) (9,528) (12,854) Loss on disposal of assets (245) (135) (357) (1,058) --------- --------- --------- --------- Income from operations $113,591 $128,420 $232,150 $253,200 Interest expense (44,536) (51,302) (91,751) (99,649) Interest income 553 1,289 1,236 2,165 (Loss) earnings from joint venture (152) 325 (911) 365 Other (574) (5,476) 884 (5,704) Taxes on income (31,859) (34,957) (63,849) (69,137) --------- --------- --------- --------- Net income $ 37,023 $ 38,299 $ 77,759 $ 81,240 ========= ========= ========= =========

Reconciliation of Income from Operations (GAAP) to EBITDA PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information Including Corporate Overhead (in thousands) (unaudited) Three Months Ended June 30, 2008 Income (loss) Charge for Depreciation from stock and operations compensation amortization -------------------------------------- Charles Town Entertainment Complex $ 29,314 $ - $ 5,946 Argosy Casino Lawrenceburg 31,244 - 4,321 Hollywood Casino Aurora 12,367 - 1,942 Empress Casino Hotel 9,826 - 2,666 Argosy Casino Riverside 11,817 - 3,825 Hollywood Casino Baton Rouge 11,661 - 2,348 Argosy Casino Alton 4,147 - 1,566 Hollywood Casino Tunica 3,640 - 1,815 Hollywood Casino Bay St. Louis 982 - 4,791 Argosy Casino Sioux City 3,938 - 1,110 Boomtown Biloxi 2,276 - 2,790 Hollywood Slots Hotel and Raceway (1) 1,239 - 868 Bullwhackers (392) - 501 Black Gold Casino at Zia Park 6,925 - 1,233 Casino Rama management service contract 4,272 - - Hollywood Casino at Penn National Race Course (2) 3,596 - 7,082 Raceway Park (341) - 93 Sanford-Orlando Kennel Club (225) - 322 Earnings from Pennwood Racing, Inc. - - - Corporate overhead (22,695) 5,383 1,963 -------------------------------------- Total $113,591 $5,383 $45,182 ====================================== Three Months Ended June 30, 2008 Loss Loss (gain) from on disposal of joint assets venture EBITDA ----------------------------------- Charles Town Entertainment Complex $ 37 $ - $ 35,297 Argosy Casino Lawrenceburg 21 - 35,586 Hollywood Casino Aurora 3 - 14,312 Empress Casino Hotel 86 - 12,578 Argosy Casino Riverside - - 15,642 Hollywood Casino Baton Rouge - - 14,009 Argosy Casino Alton - - 5,713 Hollywood Casino Tunica 47 - 5,502 Hollywood Casino Bay St. Louis (12) - 5,761 Argosy Casino Sioux City (6) - 5,042 Boomtown Biloxi 58 - 5,124 Hollywood Slots Hotel and Raceway (1) - - 2,107 Bullwhackers (2) - 107 Black Gold Casino at Zia Park - - 8,158 Casino Rama management service contract - - 4,272 Hollywood Casino at Penn National Race Course (2) 12 - 10,690 Raceway Park - - (248) Sanford-Orlando Kennel Club - - 97 Earnings from Pennwood Racing, Inc. - (152) (152) Corporate overhead 1 - (15,348) ----------------------------------- Total $ 245 $ (152) $164,249 =================================== Three Months Ended June 30, 2007 Income (loss) Charge for Depreciation from stock and operations compensation amortization -------------------------------------- Charles Town Entertainment Complex $ 31,295 $ - $ 6,472 Argosy Casino Lawrenceburg 36,549 - 4,292 Hollywood Casino Aurora 18,409 - 2,184 Empress Casino Hotel 11,083 - 3,049 Argosy Casino Riverside 10,388 - 3,684 Hollywood Casino Baton Rouge 12,164 - 2,120 Argosy Casino Alton 6,538 - 2,089 Hollywood Casino Tunica 4,363 - 1,868 Hollywood Casino Bay St. Louis 2,024 - 3,198 Argosy Casino Sioux City 3,556 - 1,115 Boomtown Biloxi 4,570 - 2,722 Hollywood Slots Hotel and Raceway (1) 2,556 - 1,066 Bullwhackers 448 - 528 Black Gold Casino at Zia Park (3) 5,460 - 1,030 Casino Rama management service contract 3,984 - - Hollywood Casino at Penn National Race Course (2) (357) - 408 Raceway Park (274) - 79 Earnings from Pennwood Racing, Inc. - - - Corporate overhead (24,336) 6,256 1,718 -------------------------------------- Total $ 128,420 $ 6,256 $ 37,622 ====================================== Three Months Ended June 30, 2007 Earnings (Gain) loss from on disposal of joint assets venture EBITDA ------------------------------------ Charles Town Entertainment Complex $ - $ - $ 37,767 Argosy Casino Lawrenceburg (21) - 40,820 Hollywood Casino Aurora - - 20,593 Empress Casino Hotel - - 14,132 Argosy Casino Riverside - - 14,072 Hollywood Casino Baton Rouge 63 - 14,347 Argosy Casino Alton - - 8,627 Hollywood Casino Tunica (14) - 6,217 Hollywood Casino Bay St. Louis - - 5,222 Argosy Casino Sioux City - - 4,671 Boomtown Biloxi (27) - 7,265 Hollywood Slots Hotel and Raceway (1) - - 3,622 Bullwhackers - - 976 Black Gold Casino at Zia Park (3) - - 6,490 Casino Rama management service contract - - 3,984 Hollywood Casino at Penn National Race Course (2) 28 - 79 Raceway Park - - (195) Earnings from Pennwood Racing, Inc. - 325 325 Corporate overhead 106 - (16,256) ------------------------------------ Total $ 135 $325 $172,758 ====================================

(1) On July 1, 2008, the permanent Hollywood Slots at Bangor facility, which is called the Hollywood Slots Hotel and Raceway, was opened. (2) Hollywood Casino at Penn National Race Course includes the results of our Pennsylvania casino that opened on February 12, 2008, as well as the Penn National Race Course and four off-track wagering facilities. (3) Results for the three and six months ended June 30, 2007 reflect the April 16, 2007 acquisition effective date.

Reconciliation of Income from Operations (GAAP) to EBITDA PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information Including Corporate Overhead (in thousands) (unaudited) Six Months Ended June 30, 2008 Income (loss) Charge for Depreciation from stock and operations compensation amortization ---------- ------------- ------------- Charles Town Entertainment Complex $ 58,959 $ - $11,702 Argosy Casino Lawrenceburg 66,133 - 8,675 Hollywood Casino Aurora 26,439 - 3,928 Empress Casino Hotel 16,206 - 5,877 Argosy Casino Riverside 24,170 - 7,635 Hollywood Casino Baton Rouge 23,647 - 4,605 Argosy Casino Alton 7,754 - 3,086 Hollywood Casino Tunica 8,196 - 3,614 Hollywood Casino Bay St. Louis 3,143 - 8,047 Argosy Casino Sioux City 7,674 - 2,226 Boomtown Biloxi 6,366 - 5,448 Hollywood Slots Hotel and Raceway (1) 3,013 - 2,018 Bullwhackers (851) - 1,018 Black Gold Casino at Zia Park 14,054 - 2,479 Casino Rama management service contract 7,867 - - Hollywood Casino at Penn National Race Course (2) 2,217 - 10,052 Raceway Park (644) - 183 Sanford-Orlando Kennel Club (134) - 369 Earnings from Pennwood Racing, Inc. - - - Corporate overhead (42,059) 9,528 4,012 ---------- ------------- ------------- Total $232,150 $9,528 $84,974 ========== ============= ============= Six Months Ended June 30, 2008 Loss Loss (gain) from on disposal of joint assets venture EBITDA --------------- ------- --------- Charles Town Entertainment Complex $ 37 $ - $ 70,698 Argosy Casino Lawrenceburg 50 - 74,858 Hollywood Casino Aurora 3 - 30,370 Empress Casino Hotel 42 - 22,125 Argosy Casino Riverside - - 31,805 Hollywood Casino Baton Rouge - - 28,252 Argosy Casino Alton 20 - 10,860 Hollywood Casino Tunica 45 - 11,855 Hollywood Casino Bay St. Louis 10 - 11,200 Argosy Casino Sioux City (6) - 9,894 Boomtown Biloxi 125 - 11,939 Hollywood Slots Hotel and Raceway (1) - - 5,031 Bullwhackers (2) - 165 Black Gold Casino at Zia Park - - 16,533 Casino Rama management service contract - - 7,867 Hollywood Casino at Penn National Race Course (2) 16 - 12,285 Raceway Park - - (461) Sanford-Orlando Kennel Club - - 235 Earnings from Pennwood Racing, Inc. - (911) (911) Corporate overhead 17 - (28,502) --------------- ------- --------- Total $ 357 $ (911) $326,098 =============== ======= ========= Six Months Ended June 30, 2007 Income (loss) Charge for Depreciation from stock and operations compensation amortization ---------- ------------- ------------- Charles Town Entertainment Complex $ 62,018 $ - $ 12,534 Argosy Casino Lawrenceburg 73,963 - 8,584 Hollywood Casino Aurora 36,741 - 4,523 Empress Casino Hotel 21,684 - 6,081 Argosy Casino Riverside 20,395 - 6,817 Hollywood Casino Baton Rouge 24,751 - 4,176 Argosy Casino Alton 13,294 - 4,122 Hollywood Casino Tunica 9,367 - 3,692 Hollywood Casino Bay St. Louis 3,263 - 6,348 Argosy Casino Sioux City 7,078 - 2,222 Boomtown Biloxi 10,128 - 5,246 Hollywood Slots Hotel and Raceway (1) 4,614 - 2,117 Bullwhackers 584 - 1,159 Black Gold Casino at Zia Park (3) 5,460 - 1,030 Casino Rama management service contract 7,172 - - Hollywood Casino at Penn National Race Course (2) (2,472) - 775 Raceway Park (521) - 150 Earnings from Pennwood Racing, Inc. - - - Corporate overhead (44,319) 12,854 3,404 ---------- ------------- ------------- Total $253,200 $ 12,854 $ 72,980 ========== ============= ============= Six Months Ended June 30, 2007 Earnings (Gain) loss from on disposal of joint assets venture EBITDA --------------- -------- --------- Charles Town Entertainment Complex $ - $ - $ 74,552 Argosy Casino Lawrenceburg (21) - 82,526 Hollywood Casino Aurora - - 41,264 Empress Casino Hotel (387) - 27,378 Argosy Casino Riverside (74) - 27,138 Hollywood Casino Baton Rouge 51 - 28,978 Argosy Casino Alton 1 - 17,417 Hollywood Casino Tunica (34) - 13,025 Hollywood Casino Bay St. Louis 37 - 9,648 Argosy Casino Sioux City - - 9,300 Boomtown Biloxi (27) - 15,347 Hollywood Slots Hotel and Raceway (1) - - 6,731 Bullwhackers 18 - 1,761 Black Gold Casino at Zia Park (3) - - 6,490 Casino Rama management service contract - - 7,172 Hollywood Casino at Penn National Race Course (2) 1,348 - (349) Raceway Park (2) - (373) Earnings from Pennwood Racing, Inc. - 365 365 Corporate overhead 148 - (27,913) --------------- -------- --------- Total $ 1,058 $365 $340,457 =============== ======== =========

(1) On July 1, 2008, the permanent Hollywood Slots at Bangor facility, which is called the Hollywood Slots Hotel and Raceway, was opened. (2) Hollywood Casino at Penn National Race Course includes the results of our Pennsylvania casino that opened on February 12, 2008, as well as the Penn National Race Course and four off-track wagering facilities. (3) Results for the three and six months ended June 30, 2007 reflect the April 16, 2007 acquisition effective date.

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Consolidated Statements of Income (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended June June 30, 30, 2008 2007 2008 2007 --------- --------- ----------- ----------- Revenues Gaming $566,395 $570,281 $1,127,031 $1,119,374 Management service fee 4,694 4,341 8,679 7,815 Food, beverage and other 81,845 82,894 163,370 156,664 --------- --------- ----------- ----------- Gross revenues 652,934 657,516 1,299,080 1,283,853 Less promotional allowances (32,348) (32,272) (65,000) (62,351) --------- --------- ----------- ----------- Net revenues 620,586 625,244 1,234,080 1,221,502 --------- --------- ----------- ----------- Operating expenses Gaming 296,195 297,086 589,442 581,377 Food, beverage and other 67,515 63,123 131,519 121,453 General and administrative 98,103 98,993 195,995 192,492 Depreciation and amortization 45,182 37,622 84,974 72,980 --------- --------- ----------- ----------- Total operating expenses 506,995 496,824 1,001,930 968,302 --------- --------- ----------- ----------- Income from operations 113,591 128,420 232,150 253,200 --------- --------- ----------- ----------- Other income (expenses) Interest expense (44,536) (51,302) (91,751) (99,649) Interest income 553 1,289 1,236 2,165 (Loss) earnings from joint venture (152) 325 (911) 365 Other (574) (5,476) 884 (5,704) --------- --------- ----------- ----------- Total other expenses (44,709) (55,164) (90,542) (102,823) --------- --------- ----------- ----------- Income from operations before income taxes 68,882 73,256 141,608 150,377 Taxes on income 31,859 34,957 63,849 69,137 --------- --------- ----------- ----------- Net income $ 37,023 $ 38,299 $ 77,759 $ 81,240 ========= ========= =========== =========== Basic earnings per share $ 0.43 $ 0.45 $ 0.90 $ 0.96 Diluted earnings per share $ 0.42 $ 0.43 $ 0.88 $ 0.93 Weighted average shares outstanding Basic 86,560 85,176 86,541 85,034 Diluted 88,619 88,069 88,715 87,784

Reconciliation of Non-GAAP Measures to GAAP

EBITDA, or earnings before interest, taxes, charges for stock compensation, depreciation and amortization, and gain or loss on disposal of assets, and inclusive of earnings from joint venture, is not a measure of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). EBITDA information is presented as a supplemental disclosure, as management believes that it is a widely used measure of performance in the gaming industry. In addition, management uses EBITDA as the primary measure of the operating performance of its properties, including the evaluation of operating personnel. EBITDA should not be construed as an alternative to operating income, as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities, as a measure of liquidity, or as any other measure of performance determined in accordance with GAAP. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. It should also be noted that other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company. EBITDA is presented as a supplemental disclosure, as management believes that it is a principal basis for the valuation of gaming companies, as this measure is considered by many to be a better indicator of the Company's operating results than diluted net income per share per GAAP. A reconciliation of the Company's EBITDA to net income per GAAP, as well as the Company's EBITDA to income from operations per GAAP, is included in the accompanying financial schedules.

A reconciliation of each property's EBITDA to income from operations is included in the financial schedules herein. On a property level, EBITDA is reconciled to income from operations per GAAP, rather than net income per GAAP due to, among other things, the impracticability of allocating interest expense, interest income, income taxes and certain other items to the Company's various properties on a property-by-property basis. Management believes that this presentation is more meaningful to investors in evaluating the performance of the Company's individual properties and is consistent with the reporting of other gaming companies.

Conference Call, Webcast and Replay Details

Penn National is hosting a conference call and simultaneous webcast at 11:00 am ET today, both of which are open to the general public. The conference call number is 212/271-4592 or 415/904-7385; please call five minutes in advance to ensure that you are connected prior to the presentation. Questions will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.pngaming.com; allow 15 minutes to register and download and install any necessary software.

Following its completion, a replay of the call can be accessed until August 7, 2008 by dialing 800/633-8284 or 402/977-9140 (international callers). The access code for the replay is 21388880. A replay of the call can also be accessed for thirty days on the Internet at www.pngaming.com.

This press release, which includes financial information to be discussed by management during the conference call and disclosure and reconciliation of non-GAAP financial measures, is available on the Company's web site, www.pngaming.com in the "News" section (select link for "Press Releases").

About Penn National Gaming

Penn National Gaming owns and operates gaming and racing facilities with a focus on slot machine entertainment. The Company presently operates nineteen facilities in fifteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's operated facilities feature over 25,400 slot machines, approximately 400 table games, over 1,880 hotel rooms and more than 930,000 square feet of gaming floor space.

Forward-looking Statements

This press release contains forward-looking statements, including statements addressing 2008 guidance and the use of the termination fee and investment proceeds, within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from expectations. Penn National Gaming describes certain of these risks and uncertainties in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2007. Meaningful factors which could cause actual results to differ from expectations described in this press release include, but are not limited to, the passage of state, federal or local legislation that would expand, restrict, further tax or prevent gaming operations in the jurisdictions in which we do business; the activities of our competitors; increases in our effective rate of taxation at any of our properties or at the corporate level; delays or changes to, or cancellations of, planned capital projects at our gaming and pari-mutuel facilities or an inability to achieve the expected returns from such projects; the existence of attractive acquisition candidates and the costs and risks involved in the pursuit of those acquisitions; our ability to maintain regulatory approvals for our existing businesses and to receive regulatory approvals for our new businesses; the maintenance of agreements with our horsemen, pari-mutuel clerks and other organized labor groups; our dependence on key personnel; that the conditions to closing the preferred stock purchase agreement are not satisfied or the issuance of the preferred stock otherwise fails to close; the outcome of any legal proceedings that may be instituted against the Company; the effects of local and national economic, credit and capital market and energy conditions on the economy in general, and on the gaming and lodging industries in particular; construction factors, including delays, increased costs for labor and materials; changes in accounting standards, third-party relations and approvals; the impact of terrorism and other international hostilities and the availability and cost of financing and other factors as discussed in the Company's filings with the United States Securities and Exchange Commission. Furthermore, the Company does not intend to update publicly any forward-looking statements except as required by law. The cautionary advice in this paragraph is permitted by the Private Securities Litigation Reform Act of 1995.

SOURCE: Penn National Gaming, Inc.

Penn National Gaming, Inc. William J. Clifford, 610-373-2400 Chief Financial Officer or Jaffoni & Collins Incorporated Joseph N. Jaffoni / Richard Land, 212-835-8500 penn@jcir.com