Penn National Gaming and Mohegan Tribal Gaming Authority Amend Purchase Agreement.

WYOMISSING, Pa. -- MTGA Agrees to Waive Substantially All Rights under Agreement, Including Right to Put Property Back to Penn National, in Return for $30 Million over Five Years

Penn National Gaming, Inc. (Nasdaq: PENN) announced today that it has agreed with the Mohegan Tribal Gaming Authority (MTGA) to amend its October 14, 2004 Purchase Agreement (Purchase Agreement), under which the MTGA will irrevocably waive any post-closing termination rights under the Purchase Agreement and will release Penn National from substantially all liability arising out of the Purchase Agreement (including ordinary course claims alleged by the MTGA after the sale). Pursuant to the amended agreement, Penn National will make payments to the MTGA totaling $30 million over a five-year period beginning with the one year anniversary of the commencement of slot operations at Pocono Downs.

Peter M. Carlino, Chief Executive Officer of Penn National commented, "The amended purchase agreement finalizes the Pocono Downs sale and eliminates potential disputes related to the transaction. We look forward to directing our full energies and resources in Pennsylvania to the development of Hollywood Casino at Penn National."

About Penn National Gaming

Penn National Gaming owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The Company presently operates sixteen facilities in thirteen jurisdictions including Colorado, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's facilities feature approximately 20,000 slot machines, nearly 400 table games, almost 1,200 hotel rooms and approximately 600,000 square feet of gaming floor space. The property statistics in this paragraph exclude the Company's Hollywood Casino Bay St. Louis, in Bay St. Louis, Mississippi, which is expected to re-open later this year following extensive damage incurred as a result of Hurricane Katrina.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from expectations. Penn 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, 2005.

Meaningful factors which could cause actual results to differ from expectations described in this press release include, but are not limited to, our ability to receive regulatory approvals for our new businesses (including without limitation an operators' license in Pennsylvania); delays in the process of finalizing gaming regulations and the establishment of related governmental infrastructure in Pennsylvania; 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.