Penn National Gaming Q2 Results

25 July 2001

Revenues for the quarter rose 117.9% to $132,732,000, compared to $60,911,000 in the second quarter of 2000. The Company's Charles Town Entertainment Complex achieved a 40.1% increase in second quarter revenues as a result of significant increases in slot revenues attributable to a higher number of installed machines, higher daily win per machine, and a greater percentage of coin-out slot machines that are generating higher levels of play.

Second quarter 2001 revenues also reflect approximately $40,831,000 in revenues from two Mississippi casinos that were acquired in the third quarter of 2000 and a revenue contribution of approximately $18,034,000 from Casino Rouge and the management contract for Casino Rama, which were acquired on April 30, 2001.

The Company's Pennsylvania and New Jersey racing operations, comprised of Penn National Race Course, Pocono Downs and their eleven off-track wagering (OTW) sites and the Company's Pennwood Racing New Jersey joint venture, generated approximately $26,783,000 in revenues in the second quarter of 2001, a slight decline from the second quarter 2000 levels.

Second quarter 2001 EBITDA (earnings before interest, taxes, depreciation and amortization), rose 116.8% to $30,067,000, from $13,869,000 in the second quarter of 2000. The second quarter 2001 EBITDA growth reflects a 45.4% rise in EBITDA at the Charles Town Entertainment Complex related to higher slot wagering, $8,708,000 in EBITDA from the Mississippi casinos, a partial quarter EBITDA contribution of $5,860,000 from Casino Rouge and the management contract for Casino Rama, which were acquired in the 2001 second quarter and a $4,459,000 EBITDA contribution from the Company's Pennsylvania and New Jersey racing and OTW operations, which is approximately 24% below the EBITDA levels from these operations in the second quarter of 2000 as a result of lower revenues which decreased the operating leverage derived from these assets.

Net income in the second quarter of 2001 (which reflects additional after-tax net interest expense of approximately $583,000 or $0.04 per diluted share related to the delay the Company endured in completing the CRC acquisition) rose to $6,484,000, or $0.41 per diluted share, compared to net income of $6,224,000, or $0.40 per diluted share, in the second quarter of 2000. Per share results are based on a weighted average number of diluted shares outstanding of 15,895,000 and 15,431,000 for the second quarters of 2001 and 2000, respectively.

Revenues for the six month period ended June 30, 2001 increased 110.5% to $237,891,000, from $113,035,000 during the first six months of 2000. EBITDA rose 119.2% to $52,380,000, from $23,894,000 in the first half of 2000.

Net income in the first six months of 2001 (which reflects additional after-tax net interest expense of approximately $906,000 or $0.06 per diluted share related to the delay in completing the CRC acquisition and approximately $570,000 of pre-tax costs, or $0.02 per diluted share after tax, related to the costs of replacing non-coin machines with coin-out machines at the Company's Charles Town operations) was $11,100,000, or $0.71 per diluted share, compared to net income of $9,846,000, or $0.64 per diluted share, in the first half of 2000. Per share results are based on a weighted average number of diluted shares outstanding of 15,729,000 and 15,338,000 for the 2001 and 2000 periods, respectively.

Commenting on the results, Peter M. Carlino, Chief Executive Officer of Penn National said, ``Through a combination of internal growth and acquisitions, Penn National generated another period of record operating results. Penn National's record second quarter results reflect continued strong gains at Charles Town Races, solid contributions from our Mississippi properties, about two months of results from the recently completed acquisition of Casino Rouge and the Casino Rama management contract and the results of our Pennsylvania and New Jersey pari-mutel operations. On a consolidated basis our broadened portfolio of gaming properties -- again reflecting just a partial quarter contribution from Casino Rouge and Casino Rama, delivered record levels of wagering, driving a 117% EBITDA gain. Charles Town's third quarter results to date suggest a continuation of these positive trends as slot machine revenues through July 22, 2001 are approximately 42% ahead of the same period last year. Importantly, while Charles Town continues to lead year-over-year and quarterly sequential EBITDA gains for Penn National, our gaming portfolio is now far more diversified with the inclusion of the Mississippi, Louisiana and Canadian operations.

``Of equal importance, each of our properties has bright prospects for growth. At Charles Town increased bet limits coming next month will augment the growth that we are delivering from the operation through slot operation upgrades and facility expansions and enhancements. In Mississippi, our capital plans for Casino Magic Bay St. Louis, operating efficiencies and cost savings derived at Boomtown Biloxi, and a more moderate competitive environment point to greater earnings potential. We are on schedule with the Casino Magic Bay St. Louis property expansion which broke ground in the second quarter, and have progressed without any disruption to ongoing operations. In Louisiana, we expect dockside gaming to have a positive impact on operations, and in Canada we expect to derive improvements from the opening, on July 18, of the 5,000 seat entertainment center and the completion of the 300 room all suite hotel in the spring of 2002. Additionally, we expect to extract further cost, management and marketing efficiencies as a result of our overall broader base of gaming operations. On the pari-mutuel front, the New Jersey legislation, which would permit off-track and telephone wagering for the first time in the state, has passed and we expect the Governor to sign it next month. Provided we secure the Governor's approval, we will move forward, finalizing details and our plans.

``Finally, as evidenced by our second quarter joint venture with Playboy Enterprises whereby Playboy subscribers and Playboy's 4.4 million monthly online visitors will have access to Penn National's pari-mutuel wagering offerings, as allowed by law, our pari-mutuel operations have great value and are held in high regard by leading organizations seeking to offer online pari-mutuel wagering. The joint venture began a soft launch of the wagering site on July 1, 2001.''

Penn National is hosting a conference call and simultaneous webcast at 10:00 am EDT today, both of which are open to the general public. The conference call number is 212/346-7496 or 415/247-8523; please call five minutes in advance to ensure that you are connected prior to the presentation. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at http://webcast.themeetingson.com/webcast.jsp?reservation=19345750 (reservation #19345750); allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for 30 days on the Internet via www.themeetingson.com (reservation #19345750).

Penn National Gaming owns and operates the Casino Rouge, a riverboat gaming facility in Baton Rouge, Louisiana; Charles Town Races in Charles Town, West Virginia, which presently features 2,000 gaming machines; and two Mississippi casinos, the Casino Magic hotel, casino, golf resort and marina in Bay St. Louis, and the Boomtown Biloxi casino in Biloxi. Penn National also owns two racetracks and eleven off-track wagering facilities in Pennsylvania and one racetrack at Charles Town Races in West Virginia and has the management contract for Casino Rama, a large, successful gaming facility located approximately 90 miles north of Toronto. For more information visit www.pngaming.com