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National Gaming Reports Record Fourth Quarter

2/12/2003

WYOMISSING, Pa.--Feb. 12, 2003--Penn National Gaming, Inc. (PENN:

WYOMISSING, Pa.--Feb. 12, 2003--Penn National Gaming, Inc. (PENN:
Nasdaq):

Net Income Rises 54.3% to $7.6 Million or $0.19 Per Diluted Share

EBITDA Rises 21.3% to $33.6 Million

Conference Call: Today, February 12, 2003 at 10:00 a.m. EST
Dial-in numbers: 212/896-6108 or 415/537-1868
Webcast: www.companyboardroom.com

Replay information provided below

Penn National Gaming, Inc. (PENN: Nasdaq) today reported record fourth quarter results for the period ended December 31, 2002.
The 2002 fourth quarter operating results are in line with the guidance issued by the Company on October 23, 2002.

Revenues for the quarter rose 20.7% to $163.6 million, compared to $135.5 million in the fourth quarter of 2001. Net income in the fourth quarter of 2002 rose 54.3% to $7.6 million, or $0.19 per diluted share, compared to net income of $4.9 million, or $0.15 per diluted share, in the fourth quarter of 2001. Fourth quarter 2002 EBITDA (earnings before interest, taxes, depreciation and amortization), rose 21.3% to $33.6 million, from $27.7 million in the fourth quarter of 2001. Per share results are based on 40.3 million and 32.3 million diluted weighted average shares outstanding for the 2002 and 2001 periods, respectively, and have been adjusted to reflect the June 2002 two-for-one stock split.

Commenting on the record results, Peter M. Carlino, Chief Executive Officer of Penn National said, "With a 21% revenue gain and nearly 55% rise in net income, Penn National delivered on the revenue, earnings and EBITDA growth targets which we outlined in October. The

Company's record fourth quarter operating results were largely driven by double digit EBITDA gains of 57%, 16% and 12% at our three largest properties, Charles Town Races, Casino Rouge and Casino Magic Bay St. Louis, respectively. These EBITDA gains reflect the benefits we are generating from acquired properties based on the combination of facility expansion and enhancement programs, marketing initiatives, and the appointment of strong local management. Additionally, several of our properties including Charles Town, Casino Rouge and Boomtown Biloxi continued to outperform their respective markets which we believe reflects the growing attractiveness of Penn National's regional slot-driven entertainment product. Our fourth quarter EBITDA improvement overcame a 33% decline in EBITDA from Pennsylvania and New Jersey racing operations that were impacted by several days of inclement weather and closures.

"Our success with acquired properties highlights the potential of our anticipated accretive acquisition of Hollywood Casino Corporation.
Given the potential to close the transaction in the first quarter, as well as the actions we are taking to ready the Company for a significantly larger operating base, we will provide quarterly and full year 2003 guidance once the acquisition is complete. Of course, we believe Penn National is very well positioned to continue generating strong earnings growth over the next several years based on the integration of the Hollywood assets, our strong and growing regional presence and focus on slot revenues, and the potential for slots at our Pennsylvania racetracks."

Penn National is hosting a conference call and simultaneous webcast at 10:00 am EST today, both of which are open to the general public. The conference call number is 212/896-6108 or 415/537-1868; 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 www.companyboardroom.com; allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed until February 26, by dialing 800/633-8284 or 402/977-9140 (international callers). The access code for the replay is 21104848. A replay of the call can also be accessed for thirty days on the Internet via www.companyboardroom.com.

EBITDA or earnings before interest, taxes, depreciation and amortization, loss on change in fair value of interest rate swaps and gain/loss on sale of assets and inclusive of earnings from joint venture, is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles. EBITDA information is presented solely as a supplemental disclosure because management believes that it is a widely used measure of operating performance in the gaming industry. EBITDA should not be construed as an alternative to operating income, as an indicator of the Company's operating performance, or as an alternative to cash flows from operating activities, as a measure of liquidity, or as any other measure of performance determined in accordance with generally accepted accounting principles. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. It should also be noted that other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company.

Penn National Gaming owns and operates Charles Town Races in Charles Town, West Virginia, which presently features 2,715 gaming machines (with approval to offer 3,500 machines); two Mississippi casinos, the Casino Magic hotel, casino, golf resort and marina in Bay St. Louis and the Boomtown Biloxi casino in Biloxi; the Casino Rouge, a riverboat gaming facility in Baton Rouge, Louisiana and the Bullwhackers properties in Black Hawk, Colorado. Penn National also owns two racetracks and eleven off-track wagering facilities in Pennsylvania; the racetrack at Charles Town Races in West Virginia; a 50% interest in the Pennwood Racing Inc. joint venture that owns and operates Freehold Raceway; and operates Casino Rama, a gaming facility located approximately 90 miles north of Toronto, Canada, pursuant to a management contract. Penn National has agreed, subject to regulatory approvals, to acquire Hollywood Casino Corporation (AMEX: HWD), the owner and operator of Hollywood-themed casino entertainment facilities under the service mark Hollywood Casino(R) in Aurora, Illinois, Tunica, Mississippi and Shreveport, Louisiana.

In addition to historical facts or statements of current condition, this press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some of these statements include those regarding our pending acquisition of Hollywood Casino Corporation, our expectations of favorable regulatory developments in certain jurisdictions in which we operate, our prospects for future growth and our optimism in light of current economic conditions. These statements are subject to a number of risks and uncertainties that could cause the statements made to be incorrect and the actual results to differ materially. The Company 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, 2001. Some of these risks include those relating to the ability of the Company to integrate and manage facilities it acquires, risks relating to the development and expansion of properties, risks of increased competition and risks relating to the fact that we are heavily regulated by gaming authorities. 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.

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information (In thousands) (unaudited) REVENUES EBITDA (1) Three Months Ended December 31, 2002 2001 2002 2001Charles Town Races $ 66,946 $ 50,341 $ 17,693 $ 11,282Casino Magic - Bay St. Louis 23,734 19,590 4,213 3,749Boomtown Biloxi - Biloxi 16,720 16,865 2,854 2,847Casino Rouge 26,410 23,046 7,039 6,091Casino Rama Management Contract 2,966 2,817 2,764 2,579Bullwhackers (3) 4,513 - (166) -Pennsylvania Racing/OTWs 22,671 23,270 2,236 3,102Earnings from Pennwood Racing, Inc. (New Jersey) - - 203 511Corporate eliminations (2) (358) (426) - -Corporate overhead 5 16 (3,246) (2,466)Total $163,607 $135,519 $ 33,590 $ 27,692 REVENUES EBITDA (1) Year Ended December 31, 2002 2001 2002 2001Charles Town Races $254,431 $193,624 $ 67,242 $ 50,251Casino Magic - Bay St. Louis 95,756 86,146 18,980 18,658Boomtown Biloxi - Biloxi 73,225 69,761 14,450 13,546Casino Rouge (4) 105,034 61,980 27,685 15,442Casino Rama Management Contract (4) 11,479 8,297 10,608 7,662Bullwhackers (3) 16,843 - 1,427 -Pennsylvania Racing/OTWs 102,516 98,713 13,148 14,685Earnings from Pennwood Racing, Inc. (New Jersey) - - 1,965 2,531Corporate eliminations (2) (1,779) (1,775) - -Corporate overhead 41 391 (14,146) (10,463)Total $657,546 $517,137 $141,359 $112,312 (1) Property level EBITDA is defined as earnings before interest, taxes, depreciation and amortization, loss on change in fair value of interest rate swaps and gain/loss on sale of assets and inclusive of earnings from joint venture. EBITDA does not represent net income or cash flows from operations as those terms are defined by generally accepted accounting principles. EBITDA does not necessarily indicate whether cash flows will be sufficient to fund cash needs. (2) For intracompany transactions related to import/export simulcasting. (3) Bullwhackers was acquired by Penn National Gaming on April 25,2002. (4) Casino Rouge and Casino Rama Management contract were acquired by Penn National Gaming on April 27, 2001. PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Consolidated Statement Of Income (In thousands, except per share data)(unaudited) Three Months Ended Year Ended December 31, December 31, 2002 2001 2002 2001Total revenues $163,607 $135,519 $657,546 $517,137Earnings from joint venture 203 511 1,965 2,531Total operating expenses 130,220 108,338 518,152 407,356Earnings before interest, taxes, depreciation and amortization (EBITDA) (1) 33,590 27,692 141,359 112,312Depreciation and amortization 10,732 8,791 36,456 32,094Loss on change in fair value of interest rate swaps (2) (408) - (5,819) -Total other expenses (10,431) (11,554) (41,366) (43,852)Income before income taxes 12,019 7,347 57,718 36,366Taxes on income 4,394 2,404 21,704 12,608Income before extraordinary item 7,625 4,943 36,014 23,758Extraordinary item (3) - - 5,151 -Net Income (2) $ 7,625 $ 4,943 $ 30,863 $ 23,758Per share data (2) (4)Basic income before extraordinary item $ 0.19 $ 0.16 $ 0.95 $ 0.78Extraordinary item - - 0.14 -Basic net income $ 0.19 $ 0.16 $ 0.82 $ 0.78Diluted income before extraordinary item $ 0.19 $ 0.15 $ 0.92 $ 0.75Extraordinary item - - 0.13 -Diluted net income $ 0.19 $ 0.15 $ 0.79 $ 0.75Shares outstanding:Basic 39,168 30,984 37,775 30,653Diluted 40,316 32,294 39,094 31,837 The fourth quarter and full year 2002 reflect the adoption of FAS142 on January 1, 2002, regarding treatment of goodwill and other\ intangible assets, resulting in Penn National ceasing to amortize goodwill. (1) Consolidated EBITDA is defined as earnings before interest, taxes, depreciation and amortization, loss on change in fair value of interest rate swaps and gain/loss on sale of assets and inclusive of earnings from joint venture. EBITDA does not represent net income or cash flows from operations as those terms are defined by generally accepted accounting principles. EBITDA does not necessarily indicate whether cash flows will be sufficient to fund \cash needs. (2) The fourth quarter and year ended December 31, 2002 reflect a charge of $408 pre-tax ($0.01 per diluted share after-tax) and $5,819 pre-tax ($0.09 per diluted share after-tax), respectively for the change in the fair value of interest rate swaps. Both the fourth quarter and year ended December 31, 2001 reflect a charge of $1,000 pre-tax ($0.02 per diluted share after-tax) for settlement of litigation with Showboat Development Company. (3) Extraordinary item of $5,151 net of taxes in the year endedDecember 31, 2002, reflects the write-off of deferred finance fees and pre-payment fees associated with bank debt that was repaid with the proceeds of financings completed in the first quarter of 2002.Effective January 1, 2003, pursuant to FAS 145, the effects of the early extinguishment of debt will be included in "other expenses." (4) All share and per share amounts have been adjusted to reflect the June 2002 two-for-one stock split. CONTACT: Penn National Gaming, Inc. William J. Clifford, 610/373-2400 or Jaffoni & Collins Incorporated Joseph N. Jaffoni, 212/835-8500 penn@jcir.com

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