921738--3/15/2006--PENN_NATIONAL_GAMING

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{debt, indebtedness, cash}

{cost, operation, labor}

{capital, credit, financial}

{regulation, change, law}

{operation, natural, condition}

{cost, regulation, environmental}

{investment, property, distribution}

{cost, contract, operation}

{financial, litigation, operation}

{operation, international, foreign}

{personnel, key, retain}

{stock, price, operating}

{competitive, industry, competition}

Risks Related to Our Business A substantial portion of our revenues and income from operations is derived from our Charles Town, West Virginia and Argosy Casino Lawrenceburg, Indiana facilities. We may face disruption in integrating and managing the Argosy operations and any facilities we may acquire in the future. We face risks related to the development and expansion of our current properties. We face a number of challenges prior to opening new gaming facilities. We face significant competition from other gaming operations and racing operations. We are or may become involved in legal proceedings that, if adversely adjudicated or settled, could impact our financial condition. We face extensive regulation from gaming and other regulatory authorities. We depend on our key personnel. Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses and compliance risks. Inclement weather and other conditions could seriously disrupt our business and have a material adverse effect on our financial condition and results of operations. The extent to which we can recover under our insurance policies for damages sustained at Casino Magic Bay St. Louis and Boomtown Biloxi during Hurricane Katrina as well as changes in the local gaming market as a result of the hurricane could adversely affect our business. We are subject to environmental laws and potential exposure to environmental liabilities. The concentration and evolution of the slot machine manufacturing industry could impose additional costs on us. We depend on agreements with our horsemen and pari-mutuel clerks. Work stoppages and other labor problems could negatively impact our future profits. Energy and fuel price increases may adversely affect our costs of operations and our revenues. Risks Related to Our Capital Structure Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our debt. The availability and cost of financing could have an adverse effect on business. Our indebtedness imposes restrictive covenants on us. To service our indebtedness, we will require a significant amount of cash, which depends on many factors beyond our control. The price of our common stock may fluctuate significantly.

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921738--3/15/2006--PENN_NATIONAL_GAMING_INC