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 Item 3.02                Unregistered Sales of Equity Securities.

     As previously announced, on July 3, 2008, Penn National Gaming, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) among the Company, FIF V PFD LLC (“FIF,” an affiliate of Fortress Investment Group LLC (“Fortress”)), Centerbridge Capital Partners, L.P. (“Centerbridge Capital,” an affiliate of Centerbridge Partners, L.P. (“Centerbridge”)), Deutsche Bank Investment Partners, Inc. (“DBIP”) and Wachovia Investment Holdings, LLC (“WIH,” and, collectively with FIF, Centerbridge Capital and DBIP, the “Purchasers”), pursuant to which, among other things, the Company agreed to sell to the Purchasers 12,500 shares of Series B Redeemable Preferred Stock of the Company, par value $0.01 (the “Series B Preferred Stock”) for an aggregate purchase price of $1.25 billion. Pursuant t o the terms of the Purchase Agreement, simultaneously with the execution of the Purchase Agreement, the Purchasers made a payment (the “Deposit”) of $475 million to the Company.

     On October 30, 2008, the Company completed the sale of 12,500 shares of Series B Preferred Stock to the Purchasers for an aggregate purchase price of $1.25 billion (the “Purchase Price”), including the Deposit.

     The Company is offering the Series B Preferred Stock to the Purchasers in reliance on exemptions from registration provided under Section 4(2) of the Securities Act. The Company relied on this exemption from registration based in part on representations made by the Purchasers in the Purchase Agreement.

     The Series B Preferred Stock is redeemable, in full but not in part, on June 30, 2015 (the “Maturity Date”), or earlier upon consummation of certain change-in-control transactions in which all common shares of the Company, par value $0.01 per share (the “Common Stock”) receive consideration in the transaction. Upon consummation of such a change-in-control transaction, the Series B Preferred Stock will be entitled to cash and/or other consideration paid to the Common Stock in such transaction, in an amount equal to the net present value of the Purchase Price, subject to increase or decrease in the event that the value of the consideration paid to the Common Stock is greater than $67 per share or less than $45 per share, respectively, which thresholds are subject to adjustment in certain circumstances. On the Maturity Date, the Series B Preferred Stock is redeemable either for cash or Common Stock, at the sole option of the Company. In the event that the Company elects to issue an amount of Common Stock in excess of the amount that does not require shareholder approval pursuant to the rules of NASDAQ (or the rules of the exchange or market on which the Common Stock is then listed or quoted) and the Company has not obtained such required shareholder approval, and in certain other circumstances, the Company has agreed to conduct a public offering of such excess shares on behalf of the holders of Series B Preferred Stock. The payment to the holders of the Series B Preferred Stock upon redemption at the Maturity Date is subject to increase or decrease in the event that the average trading price of the Common Stock (measured over a 20 trading-day interval) is greater than $67 per share or less than $45 per share, respectively.

Item 5.02                 Departure of Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

     On October 30, 2008, the Company announced the appointment of Wesley R. Edens by the Board of Directors of the Company (the “Board”) to the Board. Mr. Edens was appointed pursuant to that certain Investor Rights Agreement, dated July 3, 2008, between the Company and the Purchasers, which, among other things, requires the Company to appoint Mr. Edens to the Board following the completion of the sale of Series B Preferred Stock to the

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 Purchasers.

     Mr. Edens is the founding principal, Chief Executive Officer and Chairman of the Board of Directors of Fortress.

Item 8.01                 Other Events.

     On October 30, 2008, the Company issued a press release announcing the completion of the sale of the Series B Preferred Stock. A copy of the press release is filed as Exhibit 99.1 hereto and is incorporated herein by reference. The foregoing description of the press release does not purport to be complete and is qualified in its entirety by reference to such exhibit.

Item 9.01                 Financial Statements and Exhibits.

(d)        Exhibits.

99.1      Press Release of Penn National Gaming, Inc., dated October 30, 2008.

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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 99.1

 

Wyomissing, Penn., (October 30, 2008) -- Penn National Gaming, Inc. (Nasdaq: PENN) (the “Company”) announced today that it has issued 12,500 shares of its Series B Redeemable Preferred Stock due 2015 for $1.25 billion. The shares were purchased by certain funds managed by affiliates of Fortress Investment Group LLC (NYSE: FIG) (“Fortress”) and Centerbridge Partners, L.P. (“Centerbridge”), affiliates of Wachovia and affiliates of Deutsche Bank (collectively “the Purchasers”). The Company issued the shares following the receipt of all required regulatory approvals and the satisfaction of all other closing conditions. Upon issuing the shares, the Company received the remaining $775 million, of the total $1.25 billion purchase price, which had been held in escrow.

On July 3, 2008, the Company entered into an agreement with certain affiliates of Fortress and Centerbridge to terminate the proposed merger whereby the Company was to be acquired for $67.00 per share. In connection with the termination of the merger agreement, the Company agreed to receive a total of $1.475 billion, consisting of a $225 million cash termination fee (which was delivered on July 3, 2008) and a $1.25 billion, zero coupon, preferred equity investment.

Pursuant to the terms of the Series B Redeemable Preferred Stock Purchase Agreement, the Purchasers made a $475 million payment to Penn National Gaming on July 3, 2008. Under the terms of the Purchase Agreement, the Purchasers deposited the remaining $775 million of the Redeemable Preferred Stock Purchase Price to the escrow agent, First American Title Insurance Company, and these funds have now been released to the Company in conjunction with the issuance of the Series B Redeemable Preferred Stock due 2015.

In accordance with the terms of the Purchase Agreement, Fortress Investment Group’s Chairman and Chief Executive Officer, Wesley Robert Edens, has joined Penn National Gaming’s Board of Directors, increasing the size of the Board to seven members.

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The foregoing summary is qualified in its entirety by definitive agreements among the parties that were filed by the Company with the Securities and Exchange Commission on Form 8-K on July 9, 2008.

About Penn National Gaming
Penn National Gaming owns and operates gaming and racing facilities with a focus on slot machine entertainment. The Company presently operates nineteen facilities in fifteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, Penn National’s operated facilities feature over 25,400 slot machines, approximately 400 table games, over 2,000 hotel rooms and more than 930,000 square feet of gaming floor space.

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