CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Report includes "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. Forward-looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information. When used in this document, the terms or phrases such as "anticipates," "believes," "projects," "plans," "intends," "estimates," "expects," "could," "would," "will likely continue," and variations of such words or similar expressions are intended to identify forward-looking statements. Although our expectations, beliefs and projections are expressed in good faith and with what we believe is a reasonable basis, there can be no assurance that these expectations, beliefs and projections will be realized.

There are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements which are included elsewhere in this report. Such risks, uncertainties and other important factors include, but are not limited to:

º (i)
º changes in, or failure to comply with, laws, regulations, the conditions of our West Virginia and Pennsylvania gaming licenses (or the failure to obtain renewals thereof), accounting standards or environmental laws (including adverse changes in regulation by various state gaming or racing authorities and the rates of taxation on gaming revenues) and delays in regulatory licensing processes;

º (ii)
º competitive and general economic conditions in our markets, including when the slot parlor licensed for downtown Pittsburgh, Pennsylvania completes construction and successfully opens, and whether the harness horseracing track recently licensed in Lawrence County, Pennsylvania obtains a slot machine license, is constructed and successfully opens, the impact of the April 2009 opening of the permanent facility and increase in the number of games at The Meadows Racetrack & Casino in Washington, Pennsylvania, and the legalization of new forms of gaming in states within our target markets;

º (iii)
º the success and growth of table gaming at Mountaineer Casino to distinguish itself from slots-only competitors and increase revenue and profitability of it's hotel, food and beverage, and other amenities;

º (iv)
º construction factors relating to maintenance and expansion of operations, including litigation, delays, zoning issues, environmental restrictions, site conditions, weather or other hazards;

º (v)
º volatility and disruption of the capital and credit markets and adverse changes in the global and U.S. economies, which may negatively impact our revenues and ability to access financing;

º (vi)
º dependence on Mountaineer Casino and Presque Isle Downs & Casino for the majority of our revenues and cash flows;

º (vii)
º dependence upon key personnel and the ability to attract new personnel;

º (viii)
º weather or road conditions limiting access to our properties; and

º (ix)
º the ability to refinance existing debt, or obtain additional financing, if and when needed, and the impact of leverage and debt service requirements.

Additional factors that could cause our actual performance to differ materially from that contemplated by such forward-looking statements are detailed in our Annual Report on Form 10-K for the year ended December 31, 2008, as well as other filings with the Securities and Exchange

Commission. We do not intend to publicly update any forward-looking statements, except as may be required by law.

OVERVIEW

We own and operate Mountaineer Casino, Racetrack & Resort in Chester, West Virginia; Presque Isle Downs & Casino in Erie, Pennsylvania; and Scioto Downs in Columbus, Ohio. We consider these three properties, which are located in contiguous states, to be our core assets. Scioto Downs, through its subsidiary RacelineBet, Inc., also operates Racelinebet.com, a national account wagering service that offers online and telephone wagering on horse races as a marketing affiliate of AmericaTab LTD.

Through our wholly-owned subsidiary, MTR-Harness, Inc., we own a 50% interest in North Metro Harness Initiative, LLC, which operates Running Aces Harness Park in Anoka County, Minnesota. On April 3, 2009, we received notification that North Metro's lender was seeking foreclosure of our equity interest in North Metro. Therefore, effective March 31, 2009, MTR-Harness, Inc. and its 50% interest in North Metro have been reflected as discontinued operations. Reclassifications have been made to the prior period presentation to reflect the assets, liabilities, operating results and cash flows of MTR-Harness as discontinued operations. See additional information as discussed below.

Through our wholly-owned subsidiary, Jackson Racing, Inc., we own a 90% interest in Jackson Trotting Association LLC, which operated Jackson Harness Raceway in Jackson, Michigan. On December 4, 2008, Jackson Trotting ceased the racing and simulcast wagering operations at Jackson Harness Raceway and surrendered its racing license to the Michigan Racing Commission.
Reclassifications have been made to the prior period presentation to reflect the assets, liabilities, operating results and cash flows of Jackson as discontinued operations.

Through March 7, 2008 and June 3, 2008, we owned and operated Binion's Gambling Hall & Hotel in Las Vegas, Nevada, and the Ramada Inn and Speedway Casino in North Las Vegas, Nevada, respectively. We sold Binion's on March 7, 2008, pursuant to a Stock Purchase Agreement executed between the Company and TLC Casino Enterprises, Inc., and on June 3, 2008, we completed the sale of the Speedway pursuant to the terms of an Asset Purchase and Sale Agreement executed between the Company and Lucky Lucy D, LLC. Reclassifications have been made to the prior period presentation to reflect the assets and liabilities of Binion's and Speedway as held for sale and the operating results and cash flows as discontinued operations.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2009 COMPARED TO THREE MONTHS ENDED MARCH 31, 2008

    The following tables set forth information concerning our results of
operations by property for continuing operations.

                                                       Three months ended
                                                           March 31,
                                                        2009        2008
                                                         (in thousands)
          Net revenues-Continuing operations:
            Mountaineer Casino, Racetrack & Resort    $  66,613   $  74,046
            Presque Isle Downs & Casino                  42,978      38,812
            Scioto Downs                                    109         126
            Corporate                                         -           3

          Consolidated net revenues                   $ 109,700   $ 112,987

                                                           Three months ended
                                                               March 31,
                                                            2009         2008
                                                             (in thousands)
      Operating income (loss)-Continuing operations:
         Mountaineer Casino, Racetrack & Resort           $    8,905   $ 10,332
         Presque Isle Downs & Casino                           5,471      2,985
         Scioto Downs                                           (713 )     (875 )
         Corporate                                            (1,492 )   (3,630 )

      Consolidated operating income                       $   12,171   $  8,812

Mountaineer's Operating Results:

During the three months ended March 31, 2009, Mountaineer's operating results were adversely affected by severe weather conditions in January and February and the continued effect of competition, primarily from slot operations in Pennsylvania. Net revenues decreased by $7.4 million, or 10.0%, compared to the three-month period of 2008 primarily due to a $6.4 million decrease in gaming revenues. Net revenues earned from food, beverage and lodging operations decreased by $0.8 million, and net revenues earned from other sources, including parimutuel commissions, remained consistent. Promotional allowances increased by $0.2 million. Mountaineer's operating margin decreased slightly to 13.4% in 2009 from 14.0% in 2008.

Significant factors contributing to Mountaineer's 2009 operating results were:

º •
º a decrease in gross profit from gaming operations (as discussed below);

º •
º an increase in marketing promotions and advertising costs of $1.1 million related to a shift in marketing strategies to an aggressive cash promotion campaign, which is designed to increase market share; offset by

º •
º an overall decrease in compensation and benefits costs of $2.0 million during 2009 and other cost containment initiatives.

A discussion of Mountaineer's key operations follows.

Gaming Operations. Revenues from gaming operations during the three months ended March 31, 2009 decreased by $6.4 million, or 9.6%, to $60.0 million compared to the same period of 2008, and gross profit decreased by $2.5 million, or 9.6%. The decrease in gaming revenues was primarily related to slot operations, which decreased by $6.0 million to $48.0 million in 2009 compared to $54.0 million in 2008. Poker and table games generated revenues of $1.9 million and $10.1 million, respectively, in 2009 compared to $2.2 million and $10.1 million, respectively, in 2008.

The following tables set forth statistical information concerning Mountaineer's gaming operations.

                                                       Three months ended
                                                            March 31,
                                                       2009           2008
        Slots:
          Average daily net win per slot machine   $        169   $        185
          Hold percentage                                   9.1 %          9.1 %
          Average number of slot machines                 3,156          3,184
        Tables:
          Total table drop                         $ 54,417,000   $ 54,274,000
          Average daily net win per table          $      2,040   $      2,079
          Hold percentage                                 18.56 %        18.59 %
          Average number of tables                           55             55
        Poker:
          Average daily poker rake per table       $        516   $        608
          Average number of tables                           40             40

Management attributes the decrease in slot revenue to severe weather conditions in January and February and the continuing impact on our market from gaming operations in Pennsylvania, with which Mountaineer shares some customer base in Ohio and Pennsylvania. In addition to the opening of Presque Isle Downs & Casino, The Meadows Racetrack & Casino, a harness racetrack in Washington, Pennsylvania, which is approximately 40 miles southeast of Mountaineer, opened its temporary slot casino with 1,825 machines in June 2007 and opened its permanent casino with over 3,700 slot machines and various food and beverage outlets on April 15, 2009.

On April 10, 2009, the West Virginia legislature passed SB575 which will allow for free play (i.e. promotional credits on slot machines) at all of West Virginia's racetracks. Promotional credits are not subject to taxes and assessments, and management believes that free play will allow Mountaineer to compete more effectively with gaming operations in Pennsylvania which already have free play. Mountaineer intends to implement free play during the second half of 2009.

We believe table games, and the implementation of free play, at Mountaineer will continue to enhance its competitive position by drawing new customers and driving increased play from our existing customers, which may contribute to Mountaineer's gaming revenue growth. Furthermore, table gaming at Mountaineer will also help distinguish our product from slot machines in local bars and clubs and slot machine operations in Pennsylvania. However, gaming operations at Mountaineer during 2009 may continue to be impacted by the adverse changes in the U.S. economy and by the opening of The Meadows' permanent casino on April 15, 2009 and the planned opening of the Rivers Casino in downtown Pittsburgh, Pennsylvania, approximately a one-hour drive from Mountaineer, which is expected to open in August 2009 with 3,000 slot machines and five food and beverage outlets.

Overall, the decrease in revenues from gaming operations during the three-month period of 2009 resulted in decreased gaming taxes and assessments in the amount of $3.4 million to $31.4 million compared to the same period of 2008. For the three month periods of 2009 and 2008, Mountaineer's gaming taxes and assessments approximated 55.4% of slot revenues and 40.2% of table/poker revenues. Additionally, gaming compensation and benefits costs decreased by $0.4 million during 2009 compared to 2008 principally as a result of cost containment efforts.

Parimutuel Commissions. Parimutuel commissions for Mountaineer, detailing gross handles less patron payouts and deductions, for the three months ended March 31 were as follows:

                                                       Three months ended
                                                           March 31,
                                                        2009         2008
                                                         (in thousands)
         Import simulcast racing parimutuel handle    $    3,495   $  4,799
         Live racing parimutuel handle                     1,118      1,061
         Less patrons' winning tickets                    (3,633 )   (4,614 )

                                                             980      1,246
         Revenues-export simulcast                         1,842      1,705

                                                           2,822      2,951
         Less:
         State and county parimutuel tax                     (92 )      (89 )
         Purses and Horsemen's Association                (1,212 )   (1,276 )

         Revenues-parimutuel commissions              $    1,518   $  1,586

Overall, Mountaineer's parimutuel commissions decreased by 4.3% during the three months ended March 31, 2009 compared to the same period of 2008, primarily due to a decrease in import simulcast handle. The decrease in import simulcast handle was primarily due to a decline in on-track wagering, which consistent with the national average decline in wagering of 9.3% during the first quarter of 2009 compared to 2008, as reported by Equibase Company. However, this decrease was offset partially by an increase in live racing handle and export simulcasting, which was due primarily to nine additional racing days in 2009 compared to 2008.

Live racing and import simulcast may continue to be impacted by the conversion of some live racing patrons to export simulcast patrons (whether through traditional off track wagering facilities or growth in the utilization of telephone and/or internet wagering) and increased competition from Pennsylvania's racetracks. Mountaineer currently simulcasts its live races to over 1,000 sites.

Food, beverage and lodging operations. Revenues from food, beverage and lodging operations during the three months ended March 31, 2009 were $5.4 million, which decreased by $0.8 million, or 13.2%, compared to the same period in 2008; however gross profit from these operations increased slightly by 2.3%. The decrease in revenues was reflective of the decline in patron traffic due to severe weather conditions in January and February and a shift in marketing strategies designed to reduce food and beverage offers to patrons and increase cash programs, while the slight increase in gross profit was reflective of aggressive cost containment efforts.

The average daily room rate for the Grande Hotel decreased to $52.59 during 2009 from $74.49 during 2008, and the average occupancy rate decreased to 74.2% from 75.1% during the same periods, respectively. The decrease in daily room rates primarily reflects a shift in marketing strategies to marketing the hotel as an amenity to gaming patrons, and the decrease in occupancy reflects the decline in patron traffic due to severe weather conditions in January and February.

Other operations. Other operating revenues were primarily derived from special events at The Harv and Convention Center; from the operations of the Spa, Fitness Center, retail outlets and golf course; from the sale of programs, admission fees, and lottery tickets; and from check cashing and ATM services. Mountaineer's earned revenues from other operations remained consistent during the three-month periods of 2009 and 2008. However, operating expenses for other operations decreased by $0.5 million, or 28.2%, primarily due to a decrease in entertainment costs and other cost containment efforts.

Presque Isle Downs' Operating Results:

During the three months ended March 31, 2009, Presque Isle Downs experienced improved operating results compared to the three months ended March 31, 2008. Net revenues increased by $4.2 million, or 10.7%, primarily due to a $4.0 million increase in slot revenues. Net revenues earned from food and beverage operations increased by $0.4 million, and net revenues earned from other sources, including parimutuel commissions, remained consistent. Promotional allowances increased by $0.2 million. Presque Isle Downs' operating margin increased to 12.7% in 2009 from 7.7% in 2008.

Significant factors contributing to Presque Isle Downs' 2009 operating results were:

º •
º an increase in gross profit from gaming operations, as well as food and beverage operations (as discussed above); and

º •
º an overall decrease in compensation and benefits costs of $0.6 million during 2009.

Gaming Operations. Revenues from gaming operations during the three months ended March 31, 2009 increased by $4.0 million, or 10.9%, to $40.6 million compared to the same period of 2008, and gross profit increased by $2.0 million, or 16.5%. The increase in gaming revenues was primarily attributable to milder winter weather conditions during the latter part of the three-month period of 2009.

The following tables set forth statistical information concerning Presque Isle Downs' gaming operations.

                                                       Three months ended
                                                           March 31,
                                                        2009         2008
          Slots:
            Average daily net win per slot machine    $     225     $   197
            Hold percentage                                 7.9 %       8.0 %
            Average number of slot machines               2,000       2,000

Overall, the increase in revenues from gaming operations during the three-month period of 2009 resulted in increased gaming taxes and assessments in the amount of $2.3 million to $24.6 million compared to the same period of 2008. For the three month periods of 2009 and 2008, Presque Isle Downs' gaming taxes and assessments approximated 60.5% and 60.9%, respectively, of slot revenues. Additionally, gaming compensation and benefits costs decreased by $0.2 million and slot machine lease expenses decreased by $0.2 million.

However, gaming operations at Presque Isle Downs for the remainder of 2009 may be impacted by the opening of The Meadows' permanent casino on April 15, 2009 and the planned opening of the Rivers Casino in downtown Pittsburgh, Pennsylvania, approximately a two-hour drive from Presque Isle Downs, which is expected to open in August 2009 with 3,000 slot machines and five food and beverage outlets.

Parimutuel Commissions. Overall, Presque Isle Downs' parimutuel commissions revenue remained consistent during the three-month period of 2009 compared to 2008. However, operating expenses decreased slightly by $0.1 million. Live racing at Presque Isle Downs commenced May 8, 2009.

The 2008 operating results related to parimutuel commissions were impacted by Presque Isle Downs' inability to send out its live racing signal to advance deposit wagering sites due to restrictions imposed by the horsemen. The Interstate Horse Racing Act requires horsemen's approval in order to send a live racing signal to these sites. In May 2009, the horsemen granted Presque Isle Downs approval to simulcast its live racing signal to advance deposit wagering sites. Currently, Presque Isle Downs simulcasts its live races to approximately 500 sites compared to approximately 300 sites in 2008.

Food and beverage operations. Revenues from food and beverage operations during the three months ended March 31, 2009 were $2.3 million, which increased by $0.4 million, or 19.0%, compared to the same period in 2008. However operating expenses decreased by $0.3 million to $2.1 million, primarily as a result of the property's cost containment efforts in the areas of salaries and food costs. The increase in revenues and decrease in operating expenses resulted in a gross profit of $0.2 million in 2009 compared to a loss of $0.5 million in 2008.

Scioto Downs' Operating Results:

Net revenues remained consistent during the three months ended March 31, 2009 compared to the same period of 2008; however operating expenses decreased by $0.2 million during the same periods. In order to reduce expenses and operating losses, Scioto Downs and Beulah Park, the other racetrack in Columbus, Ohio, have an agreement, which was approved by the Ohio Racing Commission, whereby Scioto operates its simulcasting only during its live race meet (generally May through September); and during the remaining periods, Scioto Downs' simulcasting is closed and Beulah Park operated its simulcasting. Similarly, when Scioto is open for live racing and simulcasting, Beulah Park is closed. The operating loss incurred by Scioto during 2009 was $0.2 million less than the loss incurred in 2008, primarily as a result of this agreement and a reduction in operating costs of Scioto's subsidiary, RacelineBet, Inc.

Corporate Operating Results:

During the three months ended March 31, 2009, corporate general and administrative expenses were $1.5 million compared to $3.5 million during the same period of 2008. Significant factors contributing to the decrease in general and administrative expenses in 2009 were:

º •
º a decrease in compensation and benefits costs of $0.8 million during 2009;

º •
º a decrease in deferred compensation costs of $0.4 million;

º •
º a decrease in stock-based employee compensation costs of $0.3 million;

º •
º a decrease in strategic development costs of $0.4 million, primarily related to the 2008 sales of the Ramada Inn and Speedway Casino and Binion's Gambling Hall & Hotel; and

º •
º other cost containment initiatives.

Depreciation Expense:

Depreciation expense decreased by $0.3 million to $7.3 million during the three-month period of 2009 compared to 2008, primarily due to decreased depreciation for Mountaineer.

Interest:

Interest expense, net of interest income, decreased by $0.7 million to $9.5 million during the three months ended March 31, 2009 compared to the same period of 2008. The decrease is attributable to:

º •
º a decrease of interest expense in the aggregate amount of $1.3 million related to borrowings under our credit facility (due to principal repayments of $41.5 million 2008) and equipment financing for Mountaineer and Presque Isle; offset by

º •
º additional interest expense of $0.6 million related to consent fees on our senior subordinated notes; and

º •
º increased amortization of deferred financing fees in the amount of $0.3 million.

Loss on Debt Modification:

As a result of an amendment to our senior secured credit agreement during the three months ended March 31, 2008, which modified certain aspects of the credit facility including a reduction of the borrowing commitment and term (see "Liquidity and Sources of Capital"), we were required to proportionately reduce the amount of existing deferred financing fees to reflect the reduction in borrowing capacity. In this regard, we incurred a loss on debt modification in the amount of $3.4 million during 2008 resulting from write-off of deferred financing fees.

Provision for Income Taxes:

The income tax provision for continuing operations during the three months ended March 31, 2009 was computed based on an effective income tax rate of 44.1% including interest expense related to uncertain tax positions in income tax expense. During 2009, we recognized approximately $4,000 of interest expense (net of tax) related to uncertain tax positions.

The income tax benefit for continuing operations during the three months ended March 31, 2008 was computed based on an effective income tax rate of 54.8% including interest expense related to uncertain tax positions of approximately $50,000 (net of tax).

The effective income tax rates for 2009 and 2008 are reflective of permanent non-deductible expenses for which we are not able to recognize a tax benefit.

Discontinued Operations:

North Metro (d/b/a Running Aces Harness Park) Operating Results:

In June 2004, our wholly-owned subsidiary, MTR-Harness, Inc., acquired a 50% interest in North Metro Harness Initiative, LLC (d/b/a Running Aces Harness Park), then a wholly-owned subsidiary of Southwest Casino Corporation. In early 2008, North Metro completed construction of a harness racetrack and card room on a 178.4-acre site approximately 30 miles northeast of Minneapolis, Minnesota. Running Aces commenced live racing and simulcast operations (import and export) with parimutuel wagering on April 11, 2008, and opened a 50-table card room offering "non-banked" games (those in which the players play only against each other instead of against the house) on June 30, 2008.

During the three months ended March 31, 2009 and 2008, we recorded equity losses in North Metro of approximately $0.8 million and $0.3 million, respectively. On October 19, 2008, Southwest Casino Corporation sold its 50% . . .