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 – July 24, 2008

(Date of earliest event reported)

PENN NATIONAL GAMING, INC.

 (Exact name of registrant as specified in its charter)

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):

On July 24, 2008, Penn National Gaming, Inc. (the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2008.  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.

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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 SECOND QUARTER

DILUTED EPS OF $0.42 AND EBITDA OF $164.2 MILLION

- Updates 2008 Third Quarter and Full Year Guidance -

Wyomissing, Penn., (July 24, 2008) – Penn National Gaming, Inc. (PENN: Nasdaq) today reported second quarter operating results for the period ended June 30, 2008, as summarized below.

Summary of Second Quarter Results

Review of Second Quarter 2008 Results vs. Second Quarter 2007 Results

Commenting on the quarterly results, Peter M. Carlino, Chairman and Chief Executive Officer of Penn National Gaming said, “Overall, it continues to be a challenging environment for the gaming industry.  Second quarter results were impacted by smoking bans in Illinois and Colorado and ongoing competitive pressures at our Alton and Joliet facilities.  Taking into consideration the difficult economic conditions, we are generally pleased with our general managers’ success in controlling margins.

“Penn National’s second quarter results reflect our focus on diversifying our portfolio and consistent success in growing the Company through accretive acquisitions and prudent investments in existing facilities which yield strong returns.  In this regard, quarterly results benefited from the first full quarter contribution from Hollywood Casino at Penn National Race Course, improving results at Argosy Casino Riverside related to last year’s hotel opening and the April 2007 acquisition of Black Gold Casino at Zia Park, which continues to perform ahead of expectations.

“Penn National is well positioned for the second half of 2008 and the future, as our strong management team has been bolstered by the recent addition of President and Chief Operating Officer, Tim Wilmott, who was formerly Chief Operating Officer for Harrah’s Entertainment. Furthermore, upcoming results will reflect significant, newly opened gaming and racing facilities in Pennsylvania and Maine; the certainty of retaining Empress Casino Joliet; a new parking structure in Lawrenceburg; and the hotel at Charles Town, which is opening in the third quarter.

“After almost three years of operating from a temporary facility, Hollywood Slots Hotel and Raceway in Bangor, Maine, opened earlier this month with approximately 9,000 patrons attending the grand opening events.  With 1,000 slot machines, an attached parking garage, and excellent dining offerings, the new property is generating impressive revenue.  We believe this property and Hollywood Casino at Penn National Race Course, which opened in the first quarter, clearly highlight Penn National’s ability to develop state-of-the-art integrated racing, entertainment and gaming facilities in new jurisdictions.  These properties benefit local communities and economies, while generating attractive returns and value for our shareholders.  While both new properties are recording healthy levels of win-per-day, further upside will come as we fine tune the slot floor mix, player marketing efforts, and food and beverage and entertainment offerings to build EBITDA margins.

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“Both the Maine and Pennsylvania properties have been authorized for significant additions to their slot floors, and both facilities were constructed with ample room to accommodate such expansions. We are opening the 152-room hotel in Bangor this quarter, and have commenced an expansion at Penn National to be completed by the end of the year that will include a buffet and 237 additional slot machines, with a specialty restaurant being added thereafter.  With modest investments, hotels are also being added at Charles Town and Zia Park, as both properties can benefit from a lodging component that will extend current patrons’ time at these facilities and attract additional visitation.

“Penn National also plans to invest $50 million to improve Empress Casino Joliet’s competitive position, as the Illinois Gaming Board ruled earlier this year that Penn National can retain this facility.  We are in the design phase for these improvements and expect to begin facility enhancement capital expenditures at this property in late 2008 with gaming vessel, food, beverage and VIP amenity upgrades expected to be completed in the second half of 2009.  The second half of next year should also benefit from the completion of construction of the new Argosy Casino Lawrenceburg riverboat, which will feature 1,500 additional gaming positions, enhanced amenities and a floor layout that better facilitates customer flow.

“In addition to recent facility openings, expansions and planned development, Penn National has assembled a pipeline of potential growth opportunities and options in Atlantic City, Kansas, Maryland and several other regions.  If successful, these opportunities will extend our long-term track record of successful property development.”

Termination of Merger Agreement and Receipt of Funds

On July 3, 2008, Penn National entered into an agreement with certain affiliates of Fortress Investment Group LLC (NYSE: FIG) (“Fortress”) and Centerbridge Partners, L.P. (“Centerbridge”), terminating the merger pursuant to which Penn National was to be acquired for $67.00 per share.  In connection with the termination of the merger agreement, Penn National Gaming agreed to receive a total of $1.475 billion, consisting of a $225 million cash termination fee and a $1.25 billion, zero coupon, preferred equity investment.

Pursuant to the terms of the preferred equity investment purchase agreement, the purchasers made a $475 million payment to Penn National on July 3, 2008, in addition to the payment of the $225 million cash termination fee.  Under the terms of the purchase agreement, the purchasers have subsequently deposited the remaining preferred equity investment purchase consideration with the escrow agent, First American Title Insurance Company.  The funds will be released from escrow upon the issuance of the preferred stock, which is subject to the receipt of required regulatory approvals and the satisfaction of certain other conditions.  Penn National is in the process of seeking the required regulatory approvals and expects to satisfy all conditions to funding by the fourth quarter of 2008.

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Penn National intends to use the net proceeds from the investment and the after tax proceeds from the termination fee to repay existing debt, to acquire or develop pari-mutuel and gaming facilities and for such other uses as may be authorized from time to time by the Board of Directors, including repurchases of its common stock.

On July 9, 2008 Penn National filed a Current Report on Form 8-K with the Securities and Exchange Commission containing additional required information related to the termination of the merger agreement and the related preferred equity instrument.  This filing may be accessed at http://sec.gov/Archives/edgar/data/921738/000089882208000750/pennnational8k.htm.

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Development and Expansion Projects

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

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Financial Guidance

The following table sets forth current guidance targets for financial results for the 2008 third quarter and full year, based on the following assumptions:

·                  The 3% horse racing tax surcharge in Illinois that expired May 25, 2007 will not be renewed;

·                  No slot revenue impact at Hollywood Casino at Penn National Race Course from the Pennsylvania smoking ban which initially restricts smoking to no more than 25% of the gaming floor but allows for increases for up to 50% of the gaming floor to be non-smoking. The smoking ban is anticipated to go into effect on September 11, 2008;

·                  The agreement with regard to the increased admission tax at Hollywood Casino Baton Rouge does not take effect until January 1, 2009 and will result in an approximate $2 million of annual incremental expense;

·                  The Hollywood Slots Hotel and Raceway hotel, in Bangor, is opening in phases during the third quarter;

·                  Pre-opening costs at Hollywood Casino at Penn National Race Course of $4.6 million for 2008, with the full cost incurred in the first quarter of 2008.  In 2007, the Company recorded $6.8 million of pre-opening costs related to Hollywood Casino at Penn National Race Course, with $0.2 million incurred in the first quarter, $0.5 million incurred in the second quarter, $1.0 million incurred in the third quarter and $5.1 million incurred in the fourth quarter;

·                  Pre-opening costs at Hollywood Slots Hotel and Raceway, in Bangor, of $2.5 million for 2008, with $0.3 million of the cost incurred in the first quarter of 2008, $1.9 million of the cost incurred in the second quarter of 2008, and $0.3 million of the cost to be incurred in the third quarter of 2008.  There were no pre-opening costs incurred for Hollywood Slots Hotel and Raceway in 2007;

·                  Pre-opening expenses are included in the EBITDA guidance in the table below;

·                  Depreciation and amortization charges in 2008 of $178.2 million, with $46.1 million projected to be incurred in the third quarter of 2008.  The increases over 2007 levels are primarily attributable to the permanent Hollywood Casino at Penn National Race Course facility, which opened in the first quarter of 2008, the Hollywood Slots Hotel and Raceway, and a full-year of Black Gold Casino at Zia Park;

·                  A loss on disposal of assets of $1.3 million in 2008, with $0.2 million of the cost incurred in the third quarter of 2008.  In 2007, the Company recorded a loss on disposal of assets of $1.6 million with $0.9 million of the cost incurred in the first quarter of 2007, $0.1 million of the cost incurred in the second quarter of 2007 and $0.3 million of the cost incurred in the third quarter of 2007;

·                  Estimated non-cash stock compensation expenses of $25.3 million for 2008, with $9.4 million incurred in the third quarter of 2008 (including a $3.0 million one-time, noncash charge).  In 2007, the Company recorded non-cash stock compensation expenses of $25.5 million with $6.6 million of the cost incurred in the first quarter of 2007, $6.3 million of the cost incurred in the second quarter of 2007 and $6.3 million of the cost incurred in the third quarter of 2007;

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·                  Includes a $3.2 million one-time charge at corporate in the third quarter of 2008 (this charge was originally anticipated to amount to $4.0 million and was expected to be recorded in the second quarter of 2008);

·                  The $225 million merger termination fee and related expenses are not included in income guidance;

·                  Proceeds received on July 3, 2008 from the termination of the Merger Agreement and the preferred equity investment purchase agreement were used to repay the revolving credit facility;

·                  Assumes the Company will repurchase its common stock in the open market in quantities sufficient to offset employee stock option grants;

·                  Assumes preferred equity issuance on October 1, 2008 will result in an increase to the diluted share calculation of 27,778,000 shares while Penn National Gaming common stock shares trade below $45; and

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

(1)   EBITDA is income from continuing operations excluding charges for stock compensation, depreciation and amortization, gain or loss on disposal of assets, and is inclusive of earnings from joint venture.

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PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

Property Information – Operations

(in thousands) (unaudited)

(1)          EBITDA is income from operations, excluding charges for stock compensation, depreciation and amortization, and gain or loss on disposal of assets, and is inclusive of earnings from joint venture.  A reconciliation of net income per accounting principles generally accepted in the United States of America (“GAAP”) to EBITDA, as well as income from operations per GAAP to EBITDA, is included in the accompanying financial schedules.

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Reconciliation of EBITDA to Net Income (GAAP)

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

(in thousands) (unaudited)

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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 June 30, 2008

Three Months Ended June 30, 2007

(1)          On July 1, 2008, the permanent Hollywood Slots at Bangor facility, which is called the Hollywood Slots Hotel and Raceway, was opened.

(2)          Hollywood Casino at Penn National Race Course includes the results of our Pennsylvania casino that opened on February 12, 2008, as well as the Penn National Race Course and four off-track wagering facilities.

(3)          Results for the three and six months ended June 30, 2007 reflect the April 16, 2007 acquisition effective date.

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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)

Six Months Ended June 30, 2008

Six Months Ended June 30, 2007