UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the

Securities Exchange Act of 1934

Date of Report – February 14, 2006

(Date of earliest event reported)

PENN NATIONAL GAMING, INC.

(Exact name of registrant as specified in its charter)

Area Code (610) 373-2400

(Registrant’s telephone number)

Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 to Form 8-K):

Item 2.02                   Results of Operations and Financial Condition.

On February 15, 2006, Penn National Gaming, Inc. (the “Company”) issued a press release announcing financial results for the three months and fiscal year ended December 31, 2005 and conducted a conference call to discuss such financial results.  The full text of the press release is attached as Exhibit 99.1 and incorporated herein by reference.

The information in Item 2.02 of this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 8.01                   Other Events.

On February 14, 2006, the Company announced that it has called for redemption all $175 million in aggregate principal amount of its outstanding 8-7/8% Senior Subordinated Notes due March 15, 2010.  The redemption price is $1,044.38 per $1,000 principal amount, plus accrued and unpaid interest to the scheduled redemption date, which is March 15, 2006.  The full text of the press release is attached as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference.

Item 9.01                   Financial Statements and Exhibits.

(c)                 Exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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EXHIBIT INDEX

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Exhibit 99.1

FOR IMMEDIATE RELEASE

PENN NATIONAL GAMING REPORTS FOURTH QUARTER DILUTED EPS OF
$0.44 INCLUSIVE OF $0.03 PER SHARE IN CHARGES FOR HURRICANE AND
EARLY DEBT EXTINGUISHMENT AND $0.02 PER SHARE GAIN FROM
DISCONTINUED OPERATIONS

- EBITDA Rises 114% to $143.9 Million Exclusive of $2.0 Million of Hurricane Expense -

- Establishes 2006 First Quarter and Full Year Guidance - -

Wyomissing, Penn., (February 15, 2006) — Penn National Gaming, Inc. (PENN: Nasdaq) today reported fourth quarter operating results for the period ended December 31, 2005 as summarized below:

Summary of Q4 and Full Year Results

-more-

(1)          EBITDA is income from operations excluding charges for depreciation and amortization, hurricane expenses, settlement charges, and gain/loss on disposals of assets, and is inclusive of earnings from joint venture. A reconciliation of net income (GAAP) to EBITDA as well as income from operations (GAAP) to EBITDA, is included in the financial schedules accompanying this release.

(2)          All per share results have been adjusted to reflect the March 2005 two-for-one stock split.

(3)          The figures in this column present the guidance Penn National Gaming provided on October 27, 2005 for the fourth quarter ended December 31, 2005.

In the period ended December 31, 2005 Penn National Gaming recorded several items that reduced both diluted earnings per share from continuing operations and diluted earnings per share by $0.03 in the fourth quarter and $0.53 in the fiscal year. The tables below summarize these items:

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Commenting on the results, Peter M. Carlino, Chief Executive Officer of Penn National said, “Penn National’s significant fourth quarter 2005 gains in EBITDA, net income and other financial metrics are noteworthy for several reasons. First, the fourth quarter represents the first full quarter of results inclusive of the Argosy Casino properties, which contributed approximately 50% of our total fourth quarter EBITDA. Second, the Company’s diluted earnings per share from continuing operations of $0.42 in the fourth quarter 2005 exceeded our guidance of $0.41 primarily as a result of the significant year-over-year gains being achieved at Casino Rouge in Baton Rouge which offset $2 million of hurricane related items that were not considered in our guidance. Without the impact of charges for early extinguishment of debt and hurricane expenses, diluted earnings per share were $0.45 versus our guidance of $0.42.

“In addition to Penn National’s extensive pipeline of expansion opportunities, we are working aggressively on planning the re-birth of both Casino Magic - Bay St. Louis and Boomtown Biloxi. We are in regular dialogue with insurance adjusters to determine the full amount of insurance proceeds due Penn National and we believe that the insurance proceeds will be sufficient to fund returning the properties to operation. At Casino Magic, we intend to open an approximate 30,000 square foot temporary casino in the former hotel lobby during the fourth quarter of 2006, which will be replaced with a permanent land-based casino to be completed in the future. We will also rebuild the damaged areas of the existing hotel tower that in aggregate includes 290 total rooms. The Boomtown Biloxi barge was extensively damaged in the storm and the barge is currently in route to dry dock for repairs, with the goal of returning it to operation during the fourth quarter of 2006. We are anxious to move forward with these re-development projects and inviting our displaced employees to return to work at these facilities upon completion.

“Our continued focus on delivering long-term financial growth through the development of regionally diverse gaming properties remains on track. In early November, we opened the Hollywood Slots-Bangor temporary facility and recorded pre-opening costs of $758,000 in the fourth quarter. Patronage and play of the approximately 475 slot machines has been consistent with our expectations and the facility generated EBITDA of approximately $287,000 in December, its first full month of operation. We plan to soon announce details of the permanent facility that will initially include approximately 1,000 slots with capacity for 1,500.

“The Argosy acquisition brought to Penn National several expansion and development projects, including expanded parking at the Riverside property which was also completed in November and added approximately 650 incremental spaces. Argosy-Riverside is also adding a 258-room hotel that will open mid-2007. Argosy-Lawrenceburg is moving forward with its project that will put all gaming positions on one level and expand the nation’s highest revenue generating riverboat to accommodate up to 4,000 positions from the current 2,800. Environmental and archeological studies are currently being conducted at the site and we continue to expect the parking facility to open in mid-2007, about a year ahead of the expanded casino floor.

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“During the fourth quarter of 2005, we filed our Category 1 license application with the Pennsylvania Gaming Control Board related to our planned Hollywood CasinoÒ integrated racing and gaming facility at the Penn National Race Course. The Hollywood Casino at Penn National Race Course will be a 365,000 square foot facility and will be sized for 3,000 slot machines with 2,000 positions planned at opening. The initial phase of the project will include a food court with three restaurants, a fine dining restaurant, a sports bar, track side dining and various concessions to serve the racing area, entertainment, bar and lounge areas on the gaming level, and a five-story parking garage and valet service parking. We have budgeted $262 million for this project inclusive of $212 million for construction, purchase of an initial 2,000 gaming devices, and the $50 million license fee. The timing of issuing Category 1 licenses remains subject to the resolution of several remaining issues in the implementation of the slot law. During the fourth quarter, we incurred a $2.8 million after tax charge for the grandstand impairment related to the planned demolition. At present, the expectation is that Penn National will be licensed in the second half of this year and we intend to raze the existing racing facilities at Penn National Race Course in the second quarter and commence construction of the new integrated racing and gaming facility immediately upon obtaining our slots license with the opening coming approximately 13 months thereafter.

“Through phased expansions, we continue to build and develop Charles Town Races. Fourth quarter 2005 results reflect the temporary removal of about 300 slot machines to accommodate the current expansion of the property which includes a 400-seat buffet and a doubling of the parking garage to 5,000 spaces, both of which are on schedule for completion in the third quarter this year and the first quarter of 2007, respectively. We will commence, later this year, with the 65,000 square foot expansion of the gaming floor, which will enable us to initially add 800 more slots with capacity for an additional 1,000 positions thereafter. The expanded gaming floor is expected to be completed next year at this time.

“Included in our fourth quarter results were revenue of $90.0 million, EBITDA of $21.1 million and EPS of $0.06, in aggregate, from Argosy Casino-Alton and the Empress Casino Joliet. Yesterday, we asked the Illinois Gaming Board to consider our request to extend from December 31, 2006 until December 31, 2008, the time limit by which Penn National is required to reach definitive sales agreements for Argosy Casino-Alton and the Empress Casino Joliet. Based on the comments of the Illinois Gaming Board members at the February 14 hearing, we anticipate a response to our request for an extension at the March 6, 2006 hearing.

“Consistent with our careful management of our capital structure, this week we called for the redemption of the $175 million of Penn National’s outstanding 8 -7/8% Senior Subordinated Notes. We intend to fund the note redemption from available cash and borrowings under our revolving credit facility, which we expect to result in lower levels of debt service going forward.

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“With the benefit of the recently integrated Argosy Gaming properties, a broad slate of multi-year, multi-jurisdictional growth opportunities, proven local property management focused on delivering quality entertainment to customers and generating EBITDA for shareholders, a capital structure well suited to fund expansion projects while providing the flexibility to allow for interim debt reduction, and plans to rebuild our gulf coast properties with insurance proceeds, Penn National’s future prospects are the strongest in the Company’s history.”

Development and Expansion Projects

The table below outlines Penn National’s current pipeline of new or expanded facilities:

(1)          Amount Expended through 12/31/05 includes all amounts for the project whether spent by Argosy or Penn National. Penn National spent approximately $3.0 million for Riverside and $10.0 million for Lawrenceburg.

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Financial Guidance

The following table sets forth current guidance targets for continuing operations for the first quarter and full year 2006 based on the following:

•                  Guidance excludes the gain on the sale of Pocono Downs which was completed in 2005. No gain will be recorded until all conditions of the sale agreement have been satisfied;

•                  Casino Magic - Bay St. Louis and Boomtown Biloxi will re-open during the fourth quarter of 2006, although there is no EBITDA contributions from these properties included in our guidance;

•                  Although Penn National Gaming expects to receive business interruption insurance proceeds resulting from the hurricane damage incurred at Casino Magic - Bay St. Louis and Boomtown Biloxi, the Company can not presently determine the amount or the timing of such payments and as such these proceeds are excluded from guidance;

•                  The repair of Casino Magic - Bay St. Louis and Boomtown Biloxi are assumed to be completely funded through insurance recoveries;

•                  The results of Argosy Casino-Alton and the Empress Casino Joliet are included in continuing operations as the accounting standards for treating properties as “assets held for sale” will not be met in the first quarter of 2006 and as such are included in our full year guidance. We expect these properties in aggregate to contribute $93.9 million in revenue, $23.7 million in EBITDA and $0.07 in EPS during the first quarter and $378 million in revenue, $97.9 million in EBITDA and $0.32 in EPS for the full year;

•                  Casino Rouge results have improved significantly as a result of the after effects of Hurricane Katrina and although we can project first quarter 2006 results based on current information and trends, the remaining quarters in 2006 are less predictable given the planned opening of other properties in nearby markets. As such, our guidance assumes results for the full year of 2006 will approximate those of 2005 (which benefited in the third and fourth quarters from the increase in population in Baton Rouge following the hurricane);

•                  Anticipated 2006 results include the Company’s adoption of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation,” (Revised 2004) (“SFAS 123R”) beginning January 1, 2006. The estimated after tax impact is a charge of $3.2 million, or $0.04 per share, in the first quarter of 2006 and $12.1 million, or $0.14, for the full year;

•                  The Company will have approximately 88 million diluted shares outstanding as of December 31, 2006;

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•                  The effective tax rate for federal, state and local income taxes for the full year 2006 will be 39.5%; and,

•                  There will be no material changes in economic conditions, applicable legislation or regulation, world events or other circumstances beyond our control that may adversely affect the Company’s results of operations.

(1)          EBITDA is income from operations excluding charges for depreciation and amortization, hurricane expenses, settlement charges, gain/loss on disposal of assets, and option expense in 2006, and is inclusive of earnings from joint venture. A reconciliation of net income (GAAP) to EBITDA as well as income from operations (GAAP) to EBITDA, is included in the financial schedules accompanying this release.

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PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

Property Information - Continuing Operations

(In thousands) (unaudited)

(1)          EBITDA is income from operations excluding charges for depreciation and amortization, hurricane expenses and gain/loss on disposal of assets, and is inclusive of earnings from joint venture. A reconciliation of net income (GAAP) to EBITDA as well as income from operations (GAAP) to EBITDA, is included in the financial schedules accompanying this release.

(2)          Casino Magic - Bay St. Louis and Boomtown Biloxi were closed effective August 28, 2005 due to hurricane damage.

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(1)          EBITDA is income from operations excluding charges for depreciation and amortization, hurricane expenses, settlement charges and gain/loss on disposal of assets, and is inclusive of earnings from joint venture. A reconciliation of net income (GAAP) to EBITDA as well as income from operations (GAAP) to EBITDA, is included in the financial schedules accompanying this release.

(2)          Casino Magic - Bay St. Louis and Boomtown Biloxi were closed effective August 28, 2005 due to hurricane damage.

-reconciliations follow-

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Reconciliation of EBITDA to Net Income (GAAP)

-reconciliations follow-

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Reconciliation of Income From Operations (GAAP) To EBITDA

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

Property Information Including Corporate Overhead

(In thousands) (unaudited)

Three Months Ended December 31, 2005

(1)          Income from continuing operations and EBITDA for the three month period ended December 31, 2005 reflects the closure of Casino Magic - Bay St. Louis and Boomtown Biloxi which incurred extensive hurricane damage. In the three months ended December 31, 2005 Penn National Gaming recorded non-recurring pre-tax charges of $1.4 million and $0.6 million for hurricane expenses related to Casino Magic - - Bay St. Louis and Boomtown Biloxi, respectively.

-reconciliations follow-

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Reconciliation of Income From Operations (GAAP) To EBITDA

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

Property Information Including Corporate Overhead

(In thousands) (unaudited)

Three Months Ended December 31, 2004

-reconciliations follow-

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Reconciliation of Income From Operations (GAAP) To EBITDA

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

Property Information Including Corporate Overhead

(In thousands) (unaudited)

Twelve Months Ended December 31, 2005