Acquisitions & Hotel Openings

Penn National Gaming Purchases M Resort Debt

October 11, 2010 - Penn National Gaming, Inc. (Nasdaq: PENN) announced today that it has purchased all of The M Resort LLC bank debt, plus $160 million of subordinated debt formerly held by MGM Resorts International, which represents all of the outstanding debt of M Resort, from Bank of Scotland plc, a unit of Lloyds Banking Group, for $230.5 million.

Peter M. Carlino, Chief Executive Officer of Penn National commented, "This transaction represents a great opportunity for Penn National, M Resort, its customers and employees as we address the financial uncertainty and debt burden which has created an overhang on M Resort's operations. The M Resort is a beautiful, fresh, upscale locals and destination-oriented casino resort which provides an excellent customer experience. M Resort is located ten miles from the Las Vegas Strip with access to I-15 and in close proximity to several master-planned communities.

"M Resort is a unique, differentiated property that we expect will continue to improve its operating results even without the benefit of a rebound in the local Las Vegas economy. Longer-term, the core attributes which contributed to the growth of Las Vegas into one of the world's pre-eminent entertainment destinations including its favorable climate and low taxes, combined with Penn National's growing database of 12 million regional gaming customers, many of whom already visit Las Vegas, will further benefit M Resort and the local economy."

Opened in March 2009, the M Resort Spa Casino is situated on over 90 acres on the southeast corner of Las Vegas Boulevard and St. Rose Parkway. The resort features over 92,000 square feet of gaming space including 1,900 slot machines, 64 table games, 14 poker tables and a race and sports book. M Resort also offers 390 guest rooms and suites, nine restaurants and five destination bars, more than 60,000 square feet of meeting and conference space, a 4,700 space parking facility, a state-of-the-art spa and fitness center and a 100,000 square foot events piazza. M Resort's master plan includes the potential to develop up to one million square feet of retail and a multi-screen digital movie entertainment complex.

Wachtell, Lipton, Rosen & Katz acted as legal advisor, and Miller Buckfire & Co., LLC acted as financial advisor, to Penn National Gaming in connection with the transaction. Katten Muchin Rosenman LLP acted as legal advisor, and The Blackstone Group acted as financial advisor, to Bank of Scotland plc in connection with the transaction.

About Penn National Gaming
Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment. The Company presently operates twenty-three facilities in sixteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National's operated facilities feature over 27,500 gaming machines, over 500 table games, over 2,000 hotel rooms and over one million square feet of gaming floor space.

Penn National Gaming recently opened Maryland's first casino and added table games to its facilities in West Virginia and Pennsylvania. Through a joint venture, Penn National is developing a full casino at Kansas Speedway in Kansas City, which is anticipated to open in the first half of 2012, and is also developing casinos in Toledo and Columbus, Ohio, with openings targeted for 2012. The Company recently agreed to establish a joint venture (subject to final approval by the Texas Racing Commission and the satisfaction of certain other closing conditions) to own and operate pari-mutuel operations in Texas, including the Sam Houston Race Park in Houston, Texas, the Valley Race Park in Harlingen, Texas and a planned racetrack in Laredo, Texas.

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Mobile Technology: The Game Has Changed Forever
Consider these astounding numbers - it is forecast that in 2016 there will be 196 million smart phone users in North America alone. Worldwide the number of users is expected to surpass 2 Billion. According to hotel internet marketing firm HeBs Digital, currently more than 21% of online bookings and nearly 19% of room nights are generated from mobile devices (smart phones and tablets), while 45% of web visitors and nearly 40% of page views originate from them as well. Consumers are also increasingly using their smart phones for search queries, with more Google searches taking place on mobile devices than on computers in 10 countries, including the U.S. and Japan. Advances in mobile technology have changed the game forever and for hotels, that means having a mobile strategy is now as critical and necessary as having an Internet presence. Hotels must engage guests/travelers on their mobile devices and to add value to their experience. Mobile check-in, mobile payment options and mobile SmartKeys are quickly becoming commonplace features, as is the capacity for guests to place requests for all hotel services directly from their mobile device from anywhere on the property. In addition, some larger chains are creating their own apps which serve to enhance other facets of their operations - marketing, branding, cross-selling and impulse buying - all of which contribute to increased revenue and guest satisfaction. Still other companies are experimenting with the potential uses of wearable technology and the possibilities of geo-targeting promotions. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in this mobile space, and will report on the solutions that are proving to be most beneficial for both companies and their guests.