Gaming News

Penn National Gaming, Scarborough Downs Enter Agreement

SCARBOROUGH, Maine -- (Press Release) -- Penn National Gaming, Inc. (PENN: Nasdaq) announced today that it has entered into an agreement with Davric Maine Corporation (d/b/a Scarborough Downs) which grants Penn National Gaming an economic interest in and the exclusive rights to develop and operate any gaming facilities that Scarborough Downs ("Scarborough"), subject to local and regulatory approvals, may be entitled to develop.

Under the terms of the agreement, Penn National Gaming agreed to provide funding and to work with Scarborough to obtain the local and other approvals necessary to operate a racing and gaming facility in Southern Maine, to obtain a site for such facility and to pay for certain other costs. In addition, provided the necessary approvals have been granted to develop and operate the proposed racing and gaming facility, Penn National has agreed to fund the construction costs for the facility. Scarborough Downs will operate and receive 100% of the economics of the racing facility. Subject to licensing requirements, Penn National will operate and receive 100% of the economics of the proposed gaming operation subject to a net gaming revenue sharing arrangement with Scarborough Downs that varies depending on the gaming taxes, horseman purses and other statutory payments.

In November 2003, Maine voters approved the placement of slot machines at existing racetracks subject to the passage of a local referendum by December 31, 2003. The new law permits the holder of a racing license to operate a racing and gaming facility within a five-mile radius of the racetrack's location in 2002. While residents of Scarborough voted against having the gaming facility in Scarborough, the nearby cities of Westbrook and Saco have scheduled local votes on the matter for December 30.

Sharon Terry, President of Scarborough Downs, said, "We are pleased to be associated with Penn National Gaming, a company that brings a rich racing heritage as well as a proven track record of success managing gaming facilities. This agreement is an important milestone for harness racing in the state of Maine. It assures our fans, employees, horsemen and the local communities that, if our southern Maine racing and gaming facility is approved, we will have the financial and other resources required to build and operate a first class facility. We look forward to working with Penn National to provide Scarborough Downs' patrons with new and exciting entertainment experiences."

Peter M. Carlino, Chief Executive Officer of Penn National commented, "Penn National and Scarborough will work with state and local development officials and the horsemen to enhance Scarborough Downs' position as an outstanding harness race track facility, a quality entertainment center and an economic contributor to the region.

"We believe Scarborough Downs represents an ideal opportunity to add value by applying our proven property development and management skills while delivering our financial resources. Of course our ability to proceed depends on the passage of a referendum by which local voters approve the operation of a gaming facility at the track. However, we believe that saving the track, pari-mutuel revenues and jobs in the state, while providing an economic incentive for the joint venture, makes great sense, and we are committed to working with all involved parties to achieve this goal."

Penn National Gaming owns and operates: Penn National Race Course, a thoroughbred racing facility in Pennsylvania; Pocono Downs, a harness racing facility in Pennsylvania; Charles Town Races, a thoroughbred racing facility in West Virginia which also offers slots; an interest in the Pennwood Racing Inc. joint venture which owns and operates Freehold Raceway in New Jersey; and, various casino properties throughout the United States.

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