Penn National Gaming Completes Acquisition of Argosy Gaming Company

Penn National Gaming, Inc. (NASDAQ:PENN) announced todaythat it has completed the acquisition of Argosy Gaming Company (NYSE:AGY). As previously announced, Argosy stockholders are receiving$47.00 per share in cash for each share of common stock. Theacquisition is valued at approximately $2.2 billion, includingapproximately $791.3 million of long-term debt of Argosy and itssubsidiaries. The acquisition is expected to be immediately accretiveto Penn National's earnings per share. Separately, Penn Nationalannounced today the closing of a $2.725 billion senior secured creditfacility to fund the acquisition and to provide additional workingcapital.

Penn National acquired six Argosy casino entertainment facilities,although the Company has agreed to divest three of those properties toexpedite the receipt of the regulatory approvals required to completethe merger. The Company has already entered into a definitive mergeragreement to sell the Argosy Casino-Baton Rouge to Columbia Sussex for$150 million before working capital adjustments and the Company hasuntil December 31, 2006 to enter into definitive sale agreements forthe Alton and Joliet, Illinois properties.

Reflecting the planned divestitures, the combined companygenerates revenues in excess of $2 billion and its properties featureover 17,500 slot machines and approximately 575,000 square feet ofcasino space. With the completion of the transaction, Penn Nationalhas broadened its asset base to include ten gaming facilities, fivepari-mutuel horse racing facilities (including two with slots soon tobe added and a joint venture), six off-track wagering sites and theCompany holds a Canadian casino management contract. Penn National nowowns or operates gaming or pari-mutuel properties in thirteen NorthAmerican jurisdictions.

Commenting on the closing of the acquisition, Peter M. Carlino,Chief Executive Officer of Penn National, said, "With this accretivetransaction we further diversify the Company's sources of revenue andcash flow as we gain entree into Missouri, Iowa and Indiana withcasinos, and operate an Ohio pari-mutuel facility. Penn National alsoadds two compelling growth opportunities to our existing slate ofexpansion initiatives while further building the critical mass of ourgaming operations and broadening our gaming management resources.

"Penn National is very well positioned to continue generatingstrong earnings growth over the next several years based on theintegration of the Argosy assets, the commencement of slot operationsat our Maine and Pennsylvania facilitates, further propertydevelopment at Charles Town Races and the completion of the ArgosyCasino-Riverside and Argosy Casino-Lawrenceburg expansion projects.Our near-term focus is on a successful integration of the acquiredproperties and achieving the anticipated $20 million in corporate costsavings and synergies. Longer-term, after applying the proceeds fromthe divestiture of the three Argosy properties to reduce our debt, andwith the expected earnings power of the combined entity and newsources of revenue and cash flow, we expect to generate significantfree cash flow to further reduce debt, invest in our portfolio ofproperties and explore other areas to continue growing Penn National.We expect to provide revised 2005 guidance when we issue third quarterearnings results later this month.

"Finally, we welcome the Argosy operating management and employeesto Penn National. As a diversified, industry leading gaming company,we believe we can offer employees significant opportunities for growthand career advancement."

Goldman, Sachs & Co., Bear, Stearns & Co. Inc. and Lehman Brothersacted as financial advisor and Skadden, Arps, Slate, Meagher & FlomLLP acted as legal advisor to Penn National Gaming. Morgan Stanleyacted as financial advisor and Davis Polk & Wardwell acted as legaladvisor to Argosy Gaming Company.

Sale of Argosy's Louisiana and Illinois Assets

Penn National also reported today that following the closing ofthe Argosy acquisition, Argosy, Columbia Sussex Corporation and asubsidiary of Columbia Sussex executed the previously announcedsecurities purchase agreement pursuant to which the Columbia Sussexsubsidiary will purchase the Argosy Casino-Baton Rouge (Louisiana)casino property from Argosy Gaming Company (now a wholly ownedsubsidiary of Penn National) for a purchase price of $150 million incash, subject to a post closing working capital adjustment. The saleof the Argosy Casino-Baton Rouge is not conditioned on the receipt offinancing by Columbia Sussex, however, it is subject to regulatoryapprovals and other customary closing conditions. The parties aretargeting a close of the transaction in late 2005 subject toregulatory approval.

The Illinois Gaming Board has determined that Penn National mustenter into definitive sale agreements for Argosy's Alton and Joliet,Illinois properties by December 31, 2006.

About Penn National Gaming

Reflecting the addition of three Argosy properties (and theanticipated divestitures described above), Penn National Gaming ownsand operates casino and horse racing facilities with a focus on slotmachine entertainment. The Company presently operates fifteenfacilities in thirteen jurisdictions including Colorado, Illinois,Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey,Ohio, Pennsylvania, West Virginia, and Ontario. In aggregate, PennNational's facilities feature over 17,500 slot machines, over 400table games, over 2,000 hotel rooms and approximately 575,000 squarefeet of gaming floor space. Although the Company's Casino Magic - BaySt. Louis, in Bay St. Louis, Mississippi and the Boomtown Biloxicasino in Biloxi, Mississippi remain closed following extensive damageincurred as a result of Hurricane Katrina all property statistics inthis announcement are inclusive of these properties.

This press release contains forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995.Actual results may vary materially from expectations. Penn describescertain of these risks and uncertainties in its filings with theSecurities and Exchange Commission, including its Annual Report onForm 10-K for the year ended December 31, 2004. Meaningful factorswhich could cause actual results to differ from expectations describedin this press release include, but are not limited to, the opportunityto assess more fully the hurricane damage recently incurred at twoproperties and the ability of the Company to recover losses under itsinsurance policies for that damage; the passage of state, federal orlocal legislation that would expand, restrict, further tax or preventgaming operations in the jurisdictions in which we do business; ourability to successfully integrate the operations of Argosy GamingCompany; the activities of our competitors; increases in our effectiverate of taxation at any of our properties or at the corporate level;successful completion of capital projects at our gaming andpari-mutuel facilities; the existence of attractive acquisitioncandidates and the costs and risks involved in the pursuit of thoseacquisitions; our ability to maintain regulatory approvals for ourexisting businesses and to receive regulatory approvals for our newbusinesses (including without limitation an operators' license inPennsylvania); delays in the process of finalizing gaming regulationsand the establishment of related governmental infrastructure inPennsylvania and Maine; the maintenance of agreements with ourhorsemen and pari-mutuel clerks; our dependence on key personnel; theimpact of terrorism and other international hostilities and theavailability and cost of financing and other factors as discussed inthe Company's filings with the United States Securities and ExchangeCommission. Furthermore, the Company does not intend to updatepublicly any forward-looking statements except as required by law. Thecautionary advice in this paragraph is permitted by the PrivateSecurities Litigation Reform Act of 1995.