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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K







|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended September 30, 2008

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from                  to

Commission file number 033-80655





MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Connecticut                                                    |  | 06-1436334                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. employer Identification No.)
|                                                               | 
|One Mohegan Sun Boulevard, Uncasville, CT                      |  | 06382                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

(860) 862-8000

(Registrants telephone number, including area code)

Securities registered pursuant to
Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange On Which Registered
|NONE                |  | NONE                                     

Securities registered pursuant to Section 12(g) of the Act:

Title of Class

NONE





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act:    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act:    Yes  x    No   ̈

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days:    Yes  x    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K:  x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ̈        Accelerated filer   ̈        Non-accelerated filer  x        Smaller reporting company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act):    Yes   ̈    No  x









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MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-K



|                                                           |  |                                                                                                              |  |           
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----------
|                                                           |  |                                                                                                              |  | PageNumber
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS       |  | 1                                                                                                           
|                                                           | 
|PART I                                                     |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 1.                                                    |  | Business                                                                                                     |  | 2         
|                                                           |  |                                                                                                             
|Item 1A.                                                   |  | Risk Factors                                                                                                 |  | 34        
|                                                           |  |                                                                                                             
|Item 1B.                                                   |  | Unresolved Staff Comments                                                                                    |  | 45        
|                                                           |  |                                                                                                             
|Item 2.                                                    |  | Properties                                                                                                   |  | 45        
|                                                           |  |                                                                                                             
|Item 3.                                                    |  | Legal Proceedings                                                                                            |  | 46        
|                                                           |  |                                                                                                             
|Item 4.                                                    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 46        
|                                                           | 
|PART II                                                    |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 5.                                                    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 47        
|                                                           |  |                                                                                                             
|Item 6.                                                    |  | Selected Financial Data                                                                                      |  | 47        
|                                                           |  |                                                                                                             
|Item 7.                                                    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 48        
|                                                           |  |                                                                                                             
|Item 7A.                                                   |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |  | 83        
|                                                           |  |                                                                                                             
|Item 8.                                                    |  | Financial Statements and Supplementary Data                                                                  |  | 83        
|                                                           |  |                                                                                                             
|Item 9.                                                    |  | Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure                          |  | 84        
|                                                           |  |                                                                                                             
|Item 9A(T).                                                |  | Controls and Procedures                                                                                      |  | 84        
|                                                           |  |                                                                                                             
|Item 9B.                                                   |  | Other Information                                                                                            |  | 85        
|                                                           | 
|PART III                                                   |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 10.                                                   |  | Directors, Executive Officers and Corporate Governance                                                       |  | 86        
|                                                           |  |                                                                                                             
|Item 11.                                                   |  | Executive Compensation                                                                                       |  | 89        
|                                                           |  |                                                                                                             
|Item 12.                                                   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 100       
|                                                           |  |                                                                                                             
|Item 13.                                                   |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 101       
|                                                           |  |                                                                                                             
|Item 14.                                                   |  | Principal Accountant Fees and Services                                                                       |  | 104       
|                                                           | 
|PART IV                                                    |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 15.                                                   |  | Exhibits and Financial Statement Schedules                                                                   |  | 105       
|                                                           | 
|Signatures                                                 |  | 106                                                                                                         
|                                                           | 
|Supplemental Information                                   |  | 106                                                                                                         
|                                                           | 
|Index to Consolidated Financial Statements                 |  | F-1                                                                                                         
|                                                           | 
|Schedule IIValuation and Qualifying Accounts and Reserves |  | S-1                                                                                                         



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References in this Form 10-K to the Authority and the Tribe are to the Mohegan
Tribal Gaming Authority and the Mohegan Tribe of Indians of Connecticut, respectively. The terms we, us and our refer to the Authority.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K contains statements about future events, including, without limitation, information relating to business development activities, as well as capital spending, financing sources, the effects of regulation (including gaming and
tax regulation) and increased competition. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These statements sometimes can be identified by our use of forward-looking words such as may, will, anticipate, estimate, expect, or intend
and similar expressions. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any
forward-looking statements made by us or on our behalf. You should review carefully all of the information in this Form 10-K, including the consolidated financial statements.

In addition to the risk factors described under Part I. Item 1A. Risk Factors, the following important factors, among others, could
affect our future financial condition or results of operations, causing actual results to differ materially from those expressed in the forward-looking statements:



| |  |  | increased competition (including the legalization or expansion of gaming in New England, New York, New Jersey, Maryland or Pennsylvania);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the financial performance of Mohegan Sun and Mohegan Sun at Pocono Downs and the off-track wagering facilities;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | our ability to integrate new amenities from our Project Horizon expansion into Mohegan Suns current operations and manage the expanded resort;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to successfully operate and integrate the new amenities from Project Sunrise at Mohegan Sun at Pocono Downs;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | our suspension of the hotel, retail and parking garage elements of the Earth Expansion of Project Horizon;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | our ability to implement successfully our diversification strategy;
| | - |  | -------------------------------------------------------------------



| |  |  | our dependence on existing management;
| | - |  | --------------------------------------



| |  |  | the local, regional, national or global economic climate;
| | - |  | ---------------------------------------------------------



| |  |  | an act of terrorism in the United States of America;
| | - |  | ----------------------------------------------------



| |  |  | our leverage and ability to meet our debt service obligations;
| | - |  | --------------------------------------------------------------



| |  |  | changes in federal or state tax laws or the administration of such laws;
| | - |  | ------------------------------------------------------------------------



| |  |  | changes in gaming laws or regulations (including the limitation, denial or suspension of licenses required under gaming laws and regulations); and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the continued availability of financing.
| | - |  | ----------------------------------------

These factors and the other risk factors discussed in this Form 10-K are not necessarily all of the important factors that could cause our actual results to differ materially from those expressed in any of the forward-looking statements.
Other unknown or unpredictable factors also could have material adverse effects on our future results. The forward-looking statements included in this Form 10-K are made only as of the date of this Form 10-K. We cannot assure you that any projected
results or events will be achieved. We do not have and do not undertake any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.



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PART I

Item 1. Business

Overview

The Tribe and the Authority

The Mohegan Tribe of Indians of Connecticut, or the Mohegan Tribe or the Tribe, is a federally recognized Indian tribe with an approximately 507-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut.
Under the Indian Gaming Regulatory Act of 1988, or IGRA, federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a gaming compact with the
state in which they operate. The Tribe and the State of Connecticut have entered into such a compact, the Mohegan Compact, which has been approved by the United States Secretary of the Interior. We were established as an instrumentality of the
Tribe, with the exclusive power to conduct and regulate gaming activities on tribal lands and the non-exclusive authority to conduct such activities elsewhere. Our gaming operation at Mohegan Sun is one of only two legally authorized gaming
operations in New England offering traditional slot machines and table games. Through our subsidiary, Downs Racing, L.P., or Downs Racing, we also own the Pocono Downs entities, or Pocono Downs, which operate a gaming and entertainment facility
offering slot machines and harness racing in Plains Township, Pennsylvania, and several off-track wagering, or OTW, facilities located elsewhere in Pennsylvania. We are governed by a nine-member Management Board, whose members also comprise the
Mohegan Tribal Council, the governing body of the Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

Our mailing address is One Mohegan Sun Boulevard, Uncasville, CT 06382 and our telephone number is (860) 862-8000. Our website is located at
www.mtga.com. Through our website, we make available, free of charge, our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) under the Securities Exchange Act of 1934. These reports are available as soon as reasonably practicable after we electronically file these materials with, or furnish them to, the Securities and Exchange Commission.

Mohegan Sun

In
October 1996, we opened a gaming and entertainment complex known as Mohegan Sun. Mohegan Sun is located on a 185-acre site on the Tribes reservation overlooking the Thames River with direct access from Interstate 395 and Connecticut Route 2A.
Mohegan Sun is approximately 125 miles from New York City, New York and approximately 100 miles from Boston, Massachusetts. In fiscal 2002, we completed a major expansion of Mohegan Sun known as Project Sunburst, which included increased gaming,
restaurant and retail space, an entertainment arena, an approximately 1,200-room luxury Sky Hotel Tower and approximately 100,000 square feet of convention space. In August 2007 and August 2008, we completed the Sunrise Square and Casino of the Wind
components of Project Horizon, respectively.

Mohegan Sun operates in an approximately 3.1 million square-foot facility, which
includes the following:

Casino of the Earth

As of September 30, 2008, the Casino of the Earth had approximately 188,000 square feet of gaming space and offered:



| |  |  | approximately 3,700 slot machines and 200 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including the Birches Bar & Grill, a 315-seat full-service restaurant and bar, three full-service themed fine dining
restaurants, with a fourth area featuring cuisine from all three
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | adjacent restaurant themes, a 630-seat buffet, the Hong Kong Street food outlet offering authentic Southeast Asian cuisine and multiple service
bars, all operated by us, for a current total of approximately 1,700 restaurant seats;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an approximately 10,000 square-foot, 410-seat lounge featuring live entertainment seven days a week;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | an approximately 11,000 square-foot simulcasting race book facility;
| | - |  | --------------------------------------------------------------------



| |  |  | four retail shops providing shopping opportunities ranging from Mohegan Sun logo souvenirs to cigars; and
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Sunrise Square, an 8,500 square-foot Asian-themed gaming area offering 46 table games.
| | - |  | --------------------------------------------------------------------------------------

Casino of the Sky

As of
September 30, 2008, the Casino of the Sky had approximately 119,000 square feet of gaming space and offered:



| |  |  | approximately 2,300 slot machines and 120 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including two full-service restaurants, a 24-hour coffee shop, a 330-seat buffet and five lounges and bars, all operated by us, as well
as four full-service restaurants, three quick-service restaurants and a multi-station food court operated by third parties, for a total of approximately 2,500 restaurant seats;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mohegan After Dark, consisting of a nightclub, lounge and pub, operated by a third party;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | the Mohegan Sun Arena with seating for up to 10,000;
| | - |  | ----------------------------------------------------



| |  |  | a 350-seat Cabaret;
| | - |  | -------------------



| |  |  | The Shops at Mohegan Sun containing 30 different retail shops, seven of which we own;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | an approximately 1,200-room luxury Sky Hotel Tower with a private high limit table games suite on the 36th floor;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | an approximately 20,000 square-foot spa operated by a third party;
| | - |  | ------------------------------------------------------------------



| |  |  | approximately 100,000 square feet of convention space; and
| | - |  | ----------------------------------------------------------



| |  |  | a child care facility and an arcade style entertainment area operated by a third party.
| | - |  | ---------------------------------------------------------------------------------------

Casino of the Wind

As of
September 30, 2008, the Casino of the Wind had approximately 45,000 square feet of gaming space and offered:



| |  |  | approximately 660 slot machines, 28 table games and a 42-table themed poker room; and
| | - |  | -------------------------------------------------------------------------------------



| |  |  | 20,000 square feet of new dining and retail amenities, including a two-level, 16,000-square-foot Jimmy Buffetts Margaritaville Restaurant and Chiefs
Deli, a casual dining restaurant operated by us.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Mohegan Sun has parking spaces for approximately 12,000 guests and
3,100 employees. In addition, we operate a gasoline and convenience center, an approximately 4,000 square-foot, 20-pump facility located adjacent to Mohegan Sun.

Project Horizon

Project Horizon, Mohegan Suns second major expansion, initially was
planned to include four major components: Sunrise Square, Casino of the Wind, Property Infrastructure and the Earth Expansion. As of September 30, 2008, two of the components, Sunrise Square and Casino of the Wind, had been completed.



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Sunrise Square was completed in August 2007 at a cost of approximately $16.7 million. Sunrise Square
includes 8,500 square feet of gaming space offering 46 table games such as Mini-Baccarat, Sic Bo and Pai Gow Poker, a 5,000-square-foot bus lobby and a 4,000-square-foot Hong Kong Street food outlet.

Casino of the Wind was completed in August 2008 at a cost of approximately $113.3 million. Casino of the Wind added approximately 45,000 square feet of
gaming space, approximately 660 slot machines, 28 table games and a 42-table themed poker room, as well as approximately 20,000 square feet of new dining and retail amenities.

As of September 30, 2008, we had incurred approximately $24.8 million for Property Infrastructure costs relating to additional surface parking lots,
site development and road improvements on or adjacent to the property. We currently anticipate incurring an additional $14.3 million to complete the Property Infrastructure component. This component is anticipated to be completed in the third
quarter of fiscal 2009.

On September 22, 2008, we announced the suspension of the hotel, retail and parking garage elements of the
Earth Expansion component of Project Horizon as a result of the ongoing national economic recession. We intend to re-evaluate the feasibility of the suspended elements in approximately 12 months. As of September 30, 2008, we had incurred
approximately $58.0 million for the Earth Expansion relating to excavation and foundation work for the planned podium and hotel tower, as well as professional fees for design and architectural work. We currently anticipate incurring an additional
$69.5 million in connection with the Earth Expansion relating to the construction of the Earth guest connector and the retail podium, which will connect the Winter Parking Garage to the Casino of the Earth. The Earth Expansion also will incorporate
renovated food and beverage facilities, including a burger restaurant, a family-style sit down pizzeria and a four-station quick-serve dining area, as well as 7,000 square feet of new retail space.

In addition, the construction of a 1,500-space parking garage that was anticipated to be built adjacent to the Earth Expansion was suspended. As of
September 30, 2008, we had incurred approximately $3.8 million relating to the parking garage, and anticipate incurring an additional $1.2 million to complete improvements to the parking garage.

The revised costs for Project Horizon are currently estimated to be approximately $301.6 million, excluding capitalized interest. Revised costs include
previous investments in the Property Infrastructure, Parking Garage and Earth Expansion. A breakdown of the costs is as follows:



| |  |  | $16.7 million for Sunrise Square
| | - |  | --------------------------------



| |  |  | $113.3 million for Casino of the Wind
| | - |  | -------------------------------------



| |  |  | $39.1 million for Property Infrastructure
| | - |  | -----------------------------------------



| |  |  | $5.0 million for restoration of the Winter Parking Garage
| | - |  | ---------------------------------------------------------



| |  |  | $127.5 million for the Earth Expansion
| | - |  | --------------------------------------

As of September 30, 2008, costs incurred for Project Horizon, excluding capitalized interest, totaled approximately $216.6 million. Remaining project costs are estimated to total approximately $85.0 million and are anticipated to be
incurred in fiscal 2009.

Mohegan Basketball Club

In January 2003, we formed a wholly owned subsidiary, the Mohegan Basketball Club, LLC, or MBC, for the purpose of owning and operating a professional
basketball team in the Womens National Basketball Association, or WNBA. MBC entered into a membership agreement with the WNBA permitting it to operate the Connecticut Sun basketball team. The team plays its home games in the Mohegan Sun Arena.



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Mohegan Golf

In November 2006, we formed a wholly owned subsidiary, Mohegan Golf, LLC, or Mohegan Golf, to purchase and operate a golf course in southeastern Connecticut. In May 2007, Mohegan Golf acquired substantially all of the
assets of Pautipaug Country Club Inc., or PCC, which included a golf course located in Sprague and Franklin, Connecticut. The golf course was renamed Mohegan Sun Country Club at Pautipaug and first opened under the ownership of Mohegan Golf in June
2007.

Pocono Downs

Through Downs Racing, we own and operate the slot machine and harness racing facility known as Mohegan Sun at Pocono Downs located on approximately 400 acres in Plains Township, Pennsylvania, as well as several Pennsylvania OTWs located in
Carbondale, East Stroudsburg, Hazleton and Lehigh Valley (Allentown). Harness racing has been conducted at Pocono Downs since 1965. The Lehigh Valley (Allentown) OTW is a 28,000 square-foot facility and is the largest OTW in the Commonwealth of
Pennsylvania.

Downs Racing completed the 2008 harness racing season at Pocono Downs in September 2008 and will continue its harness racing
activities when the 2009 racing season begins in the spring of 2009. Year round simulcast pari-mutuel racing activities also are conducted at Pocono Downs and the OTW facilities. A state of the art, pari-mutuel simulcast facility at Pocono Downs
opened in March 2006. Construction of a new paddock adjacent to the racetrack is currently underway and is expected to be completed for the 2009 racing season.

In August 2006, we entered into an amendment of the Pocono Downs purchase agreement with the seller, a subsidiary of Penn National Gaming, Inc. Pursuant to the amendment, in exchange for our agreement to modify
certain provisions of the purchase agreement, including the elimination of our post-closing termination rights, we will receive an aggregate refund of $30.0 million of the original purchase price for the Pocono Downs entities, payable in five annual
installments of $7.0 million, $7.0 million, $6.5 million, $6.0 million and $3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. We have received the $7.0 million installments due in November 2007 and 2008.

In September 2006, Downs Racing secured a permanent Category One slot machine license, which permits the installation and operation of up to 3,000 slot
machines at Pocono Downs. Under certain conditions, Downs Racing may be permitted to install up to a total of 5,000 slot machines.

Pocono
Downs became the first location to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of its gaming and entertainment facility opened in November 2006. The total cost incurred for development of the Phase I facility was
approximately $70.0 million.

Pocono Downs opened Project Sunrise, Phase II of its gaming and entertainment facility, on July 17,
2008. The combined facility now includes approximately 2,500 slot machines, several dining options, including a 300-seat buffet and a quick-serve dining area, six retail outlets, three bars/lounges, additional parking and bus amenities. In addition,
the food court that previously operated in the Phase I facility has been renovated as a 275-seat banquet and meeting venue, which opened in October 2008. Construction also is currently underway to renovate additional areas of the Phase I facility.
When completed, the renovated facility is anticipated to serve as a multi-purpose venue. The final cost of Project Sunrise, including the Phase I renovation, is anticipated to be approximately $199.0 million, excluding capitalized interest.

Other Diversification Projects

The Tribe has determined that it is in its long-term best interest to pursue diversification of its business interests, both directly and through us. As a result, from time to time, we and the Tribe receive and
evaluate various business opportunities. These opportunities primarily include the development and management of,



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investment in, or ownership of other gaming enterprises through direct investments, acquisitions, joint venture arrangements and loan transactions. In
addition to the developments described below, we and the Tribe are currently exploring other opportunities, although there is no assurance that we or the Tribe will continue to pursue any of these opportunities or that any of them will be
consummated.

Cowlitz Project

In July 2004, we formed Mohegan Ventures-Northwest, LLC, or Mohegan Ventures-NW, one of three members in Salishan-Mohegan, LLC, or Salishan-Mohegan. Salishan-Mohegan was formed to participate in the proposed
development and management of a casino to be located in Clark County, Washington, or the Cowlitz Project, and owned by the Cowlitz Indian Tribe, or the Cowlitz Tribe. Mohegan Ventures-NW holds a 49.15% membership interest, the Mohegan Tribe holds a
7.85% membership interest and Salishan Company, LLC, or Salishan Company, holds a 43.00% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Mohegan Tribe each hold one of four seats on the Board of Managers of Salishan-Mohegan.

In September 2004, Salishan-Mohegan entered into development and management agreements with the Cowlitz Tribe regarding the Cowlitz
Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing, development, construction and furnishing, and provides assistance with the financing, of the Cowlitz Project. The development
agreement provides for certain development fees of 3.0% of total Project Costs, as defined in the development agreement, which are to be distributed to Mohegan VenturesNW and the Mohegan Tribe pursuant to the Salishan-Mohegan operating
agreement. As of April 2006, Salishan-Mohegan purchased the land to be used as the site for the proposed casino, which will be transferred to the Cowlitz Tribe or the United States under certain conditions in the development agreement. The
management agreement is for a period of seven years commencing with the opening of the proposed casino, during which Salishan-Mohegan will manage, operate and maintain the proposed casino. The management agreement provides for a management fee of
24.0% of Net Revenues, as defined in the management agreement, which approximates net income from the Cowlitz Project. Pursuant to the operating agreement, management fees will be allocated to the members of Salishan-Mohegan based on their
respective membership percentages. Development of the Cowlitz Project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of Washington and the United States
Department of the Interior accepting land into trust on behalf of the Cowlitz Tribe. The management agreement is subject to approval by the National Indian Gaming Commission, or the NIGC.

In May 2008, the Bureau of Indian Affairs, or BIA, published a final rule relating to gaming on trust lands acquired after October 17, 1988. The new
rule addresses, among other things, the process used by the BIA to determine what lands should be taken into trust for an initial reservation or restored lands for a tribe, such as the Cowlitz Tribe, seeking its initial or restored reservation. The
new rule also expressly provides that a tribe may rely on earlier final agency decisions, including decisions of the NIGC. In November 2005, the Cowlitz Tribe received an opinion from the NIGC determining that if the BIA takes the Cowlitz Project
site into trust, the land will constitute restored lands of the Cowlitz Tribe. As a result of this opinion by the NIGC, the additional analysis called for under the new rule is not expected to apply to the BIAs decision for the Cowlitz Tribe.
In May 2008, the BIA published a Final Environmental Impact Statement for the Cowlitz Project site.

Menominee Project

In October 2004, we entered into a management agreement with the Menominee Indian Tribe of Wisconsin, or the Menominee Tribe, and
the Menominee Kenosha Gaming Authority, or MKGA. The terms of the management agreement grant us the exclusive right and obligation to manage, operate and maintain a proposed casino and destination resort to be located in Kenosha, Wisconsin, or the
Menominee Project, for a period of seven years commencing with the opening of the proposed casino, in consideration of a management fee of 13.4% of Net Revenues, as defined in the management agreement, which approximates net income earned from the
Menominee Project. The management agreement is subject to approval by the NIGC.



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In March 2007, Wisconsin Tribal Gaming, LLC, or WTG, was formed to participate in the development of the
proposed casino to be owned by the Menominee Tribe. WTG consists of two members, our wholly-owned subsidiary, Mohegan Ventures Wisconsin, LLC, or MVW, which holds an 85.40% membership interest in WTG, and a wholly-owned subsidiary of the Mohegan
Tribe, Mohegan Ventures, LLC, or MV, which holds the remaining 14.60% membership interest. Following formation in March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed certain
liabilities from Kenesah Gaming Development, LLC for consideration of $6.4 million. As a result of the purchase, we and the Mohegan Tribe, through MVW and MV, respectively, will receive development fees payable to WTG of 13.4% of Available Revenue
Flow, as defined in the development agreement with the Menominee Tribe and MKGA, which approximates net income from the Menominee Project over a period of seven years following the opening of the casino. Development of the Menominee Project is
subject to certain governmental and regulatory approvals, including but not limited to, the United States Department of the Interior accepting new land into trust for gaming at the project site in Kenosha, Wisconsin.

In January 2008, the BIA rejected 11 applications from tribes with existing reservations to take new off-reservation land into trust in connection with
gaming projects. The BIA also advised 11 other tribes that their applications were incomplete and would not be considered further. While no decision has been issued on the Menominee application, the BIA also issued a memorandum addressing its policy
on applications for off-reservation gaming projects in January 2008, which stated that the greater the distance between a proposed project and the tribes existing reservation, the greater the scrutiny that would be applied to the application,
weighing the potential benefits to the tribe against concern for the commuting distance from the existing reservation, among other factors. In November 2008, the United States Department of the Interior rejected the Menominee Tribes request to
suspend review of the Menominee Tribes application to take off-reservation land into trust in connection with the Menominee Project and a federal court subsequently refused to issue a temporary restraining order to prevent the United States
Department of the Interior from taking further action on the application. While we expect to continue to support and pursue the Menominee Project, we believe, these actions decreased the probability that the Menominee Tribe will obtain the necessary
regulatory approvals in order to proceed with the Menominee Project. As a result of these developments, we have fully reserved the WTG receivables pertaining to reimbursable development costs and expenses in connection with the Menominee Project and
have written-off the remaining related development rights intangible asset.

Notwithstanding the new rule published by the BIA relating to
gaming on trust lands acquired after October 17, 1988, as discussed above, the standard for the Secretary of the Interiors determination to take new lands into trust for the Menominee Project remains whether the gaming establishment would
be in the best interest of the Menominee Tribe and its members and would not be detrimental to the surrounding community. The Governor of Wisconsin must also concur with the action. The new rule clarifies, however, that only local governments and
nearby Indian tribes within 25 miles of the site are part of the formal consultation with the surrounding community.

Other Projects

In March 2008, we formed Mohegan Gaming & Hospitality, LLC, or MG&H, with the Tribe to evaluate and pursue new
business opportunities. Our wholly-owned subsidiary, MTGA Gaming, LLC, or MTGA Gaming, holds a 49.00% membership interest in MG&H and the Tribe holds the remaining 51.00% membership interest. MG&H has formed a wholly owned subsidiary,
Mohegan Resorts, LLC, or Mohegan Resorts. It is anticipated that certain of our and the Tribes future diversification efforts will be conducted, directly or indirectly, through MG&H and/or Mohegan Resorts. Mohegan Resorts is currently
evaluating potential gaming opportunities in the Commonwealth of Massachusetts, and a wholly-owned subsidiary of Mohegan Resorts has entered into a ground lease for approximately 152 acres of land located in Palmer, Massachusetts, which would serve
as a potential site for future gaming development, if legalized in Massachusetts. A wholly-owned subsidiary of Mohegan Resorts was also a partner in an unsuccessful effort, ended in September 2008, to secure a gaming license for the development of a
gaming facility to be located in the State of Kansas.



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Strategy

Our overall strategy is to profit from gaming in our core markets, as well as to diversify the Tribes business interests in the gaming industry outside of Mohegan Sun, as discussed above. Mohegan Suns success has resulted
primarily from patronage from guests residing within 100 miles of Mohegan Sun, which represents our primary market. We have also enjoyed additional patronage from guests residing within a 100 to 200 mile radius of Mohegan Sun, which represents our
secondary market. Based upon Mohegan Suns results and experience, we believe gaming in these markets continues to be strong, although in 2008 we have seen reduced profits as a result of current unfavorable economic conditions. With the
completion of Project Sunburst in 2002, we developed Mohegan Sun into a full-scale entertainment and destination resort, which has led to increases in the number of guests and lengthened the duration of their stays at our facility. We believe our
addition of Casino of the Wind and Sunrise Square enables us to further strengthen our position in the Northeast gaming market by capitalizing on the demand for gaming and non-gaming amenities and enhancing our premier destination resort to mitigate
impacts from future competition.

With the opening of the slot machine facility at Pocono Downs in November 2006, and with the completion
of Project Sunrise in July 2008, we have taken significant steps in our diversification efforts with what we believe to be another first class gaming and entertainment property enabling us to diversify our revenue sources from a new gaming market
outside of Mohegan Sun.

Market and Competition from Other Gaming Operations

Mohegan Sun and Foxwoods Resort Casino, or Foxwoods, are the only two legally authorized gaming operations offering both traditional slot machines and
table games in New England. Foxwoods, operated by the Mashantucket Pequot Tribe under procedures approved by the United States Department of the Interior, is located approximately 10 miles from Mohegan Sun and is currently the largest gaming
facility in the United States in terms of total gaming positions. Based on the size and success of Foxwoods and the growth of Mohegan Sun, we believe that the gaming market in New England and our remaining market area remains underserved.

Since the completion of Project Sunburst in 2002, we have broadened Mohegan Suns target market beyond day-trip customers to include
guests making overnight stays at the resort. Consequently, Mohegan Sun also now competes directly for customers with resort casinos in Atlantic City, New Jersey. Some of these casinos have greater resources, operating experience and name recognition
than Mohegan Sun.

Under current law, outside of Atlantic City, New Jersey, full-scale commercial casino gaming in the northeastern United
States may be conducted only by federally recognized Indian tribes operating under federal Indian gaming laws or on cruise ships in international waters. In recent years, there has been an increase in the number of Indian tribes seeking to engage in
commercial casino gaming, including full-scale commercial casinos, in the northeastern United States and in the number of individual groups seeking to obtain federal recognition as Indian tribes so that they may engage in commercial casino gaming in
the northeastern United States. Under federal law, after obtaining federal recognition and before gaming operations may commence, a tribe must, among other things, have land taken into trust by the federal government, negotiate a gaming compact with
the state in which they intend to engage in commercial casino gaming, adopt a tribal gaming ordinance and construct a facility. A tribe may also need to negotiate a gaming management agreement and obtain funding to construct a facility. As described
below, many Indian tribes and individual groups seeking to gain federal recognition as Indian tribes are pursuing commercial casino gaming in the northeastern United States.

A number of states, including Maine, Massachusetts, Rhode Island and New York, have considered legalizing one or more forms of commercial casino gaming
in one or more locations. We also face existing and future competition in the immediate Pennsylvania gaming market (refer to Mohegan Sun at Pocono Downs below). Based on internal analysis of the existing and potential gaming market in
our market areas, we believe that competition from other commercial casino gaming operations will continue to increase in the future.



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We are unable to predict whether any of the efforts by other federally recognized Indian tribes or
individual groups attempting to gain federal recognition as Indian tribes or legalization of commercial casino gaming by non-Indians will lead to the establishment of additional commercial casino gaming operations in the northeastern United States.
If established, we are uncertain of the impact such commercial casino gaming operations will have on our operations and our ability to meet our financial obligations.

Mohegan Sun

The following is an assessment of recent developments involving competition and
potential competition in Connecticut and the northeastern United States affecting Mohegan Sun:

Connecticut

Currently, only the Tribe and the Mashantucket Pequot Tribe are authorized to conduct commercial casino gaming in Connecticut. As required by their
individual Memorandum of Understanding, or MOU, with the State of Connecticut, the Tribe and the Mashantucket Pequot Tribe make monthly payments to the State of Connecticut based on a portion of the revenues from their slot machines. Pursuant to the
terms of an exclusivity clause in each MOU, the payments will terminate if there is any change in state law that permits operation of slot machines or other commercial casino games or if any other person lawfully operates slot machines or other
commercial casino games within the State of Connecticut, except those consented to by the Tribe and the Mashantucket Pequot Tribe.

In May
2008, the Mashantucket Pequot Tribe and MGM Mirage, Inc., or MGM Mirage, completed and opened the MGM Grand at Foxwoods, a new hotel and casino adjacent to the existing Foxwoods Resort Casino, reportedly adding 825 hotel rooms, 1,444 slot machines,
53 table games, and additional retail, entertainment, parking, meeting and convention facilities to Foxwoods, at a cost of approximately $700.0 million. The new hotel and casino is owned and operated by the Mashantucket Pequot Tribe, with marketing
and other services available under license from MGM Mirage.

Rhode Island

Commercial casino gaming does not exist in Rhode Island, although the states two pari-mutuel facilities, Twin River and Newport Grand, together
offer more than 6,200 video lottery terminals, or VLTs, and have recently added virtual blackjack and virtual roulette.

A subsidiary of
BLB Investors, LLC, UTGR, Inc., operates the Twin River VLT facility in Lincoln, formerly known as Lincoln Park, and features more than 4,750 VLTs, themed bars, a restaurant, a 350-seat buffet and a 2,000-seat entertainment venue following a $220
million expansion which opened in September 2007. In March 2008, the owner of Twin River fell behind in debt payments and its corporate debt has been downgraded in a series of moves, most recently in September 2008. According to subsequent
announcements, the owner has entered into a forbearance agreement with creditors which has been extended to January 29, 2009 and has entered into a court-approved consent order with various contractors who provided services for the expansion.

In September 2008, Newport Grand featured the addition of 500 VLTs, six virtual blackjack tables and three new food venues in the opening
of its $28 million expansion. Newport Grand now offers 1,500 VLTs. In May 2008, the Rhode Island State Legislature overrode the Governors veto of a bill to expand gaming hours at Twin River and Newport Grand to 24 hours per day on weekends and
holidays, and to 3 a.m. on weekdays. The expanded hours have been adopted at each of the two facilities; however, neither property currently offers hotel rooms on-site.

The Narragansett Indian Tribe of Rhode Island, with a reservation in Charlestown, is the only federally recognized Indian tribe in Rhode Island. However, under specific terms of the Narragansett Land Claims



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Settlement Act passed by Congress in 1983, the Narragansett Indian Tribe is prohibited from opening a gaming facility under IGRA on its settlement lands. The
Narragansett Indian Tribe has indicated in published reports that it may continue to pursue the development of a $50.0 million to $100.0 million casino on its tribal lands in Charlestown. In July 2007, the U.S. Court of Appeals for the First Circuit
ruled that the federal government could take an additional 31 acres of land in Charlestown into trust for the Narragansett Indian Tribe. On November 3, 2008, the U.S. Supreme Court heard oral arguments in the State of Rhode Islands appeal
of that court decision, and the final ruling is expected in 2009. The tribe has stated the purpose of the land is for housing of elderly tribal members; however, published reports indicate that the Narragansett Indian Tribe may attempt to use this
land or future parcels for gaming.

There are several pending federal recognition petitions from other Rhode Island Indian groups. It is
not clear if, or when, federal recognition for these groups will be achieved.

New York

Mohegan Sun also currently faces competition from several casinos and gaming facilities located on Indian tribal lands in the State of New York, and from
racetracks in the state that operate, or are planning to operate, VLTs. The State of New York has six federally recognized Indian tribes located in the central, northern and western parts of the state. Three of these tribes, the Oneida Nation of New
York, the Seneca Nation and the St. Regis Mohawk Tribe of New York, currently engage in casino gaming. In addition to these three tribes, other Indian tribes have been pursuing potential casino projects, which if completed, will add significant
casino space and hotel rooms to the northeastern United States gaming market. In addition, racetracks located in Yonkers, Batavia, Hamburg, Nichols, Vernon, Monticello, Saratoga Springs and Farmington currently operate an aggregate of approximately
13,000 VLTs.

In October 2001, the New York State Legislature approved legislation that permitted as many as six gaming operations by
Indian tribes in the State of New York, in addition to the Oneida Nations Turning Stone Casino and St. Regis Akwesasne Mohawk Casino already in operation. This legislation approved the use of traditional slot machines, rather than VLTs, where
the possession and use of traditional slot machines is authorized pursuant to a tribal-state compact. Up to three of these additional casinos may be owned by the Seneca Nation and the three others may be located in either Ulster County or Sullivan
County in the Catskills region of the state. The Governor of New York reached tentative land claim settlements with various tribes and supported legislation for as many as five tribal casinos in the Catskills between 2001 and 2005. However, a 2005
United States Supreme Court decision regarding tribal jurisdiction over Indian tribal lands not held in trust by the United States and subsequent federal court decisions have dismissed certain of these land claims and stalled negotiations for casino
projects in the Catskills.

Summarized below is the status of current and potential gaming operations by federally recognized Indian tribes
in the State of New York:



| |  |  | Oneida NationCurrently, the Oneida Nation operates Turning Stone Casino Resort in Verona, approximately 270 miles from Mohegan Sun. Turning Stone Casino
Resort reportedly offers approximately 2,400 VLTs, 80 table games, 20 tables for live poker and more than 800 hotel rooms. Turning Stone Casino Resort currently draws customers primarily from the Syracuse gaming market. In June 2007, the Oneida
Nation announced that the U. S. Department of the Interior determined that it would not review the legality of the tribes gaming compact with the State of New York, following the New York State Courts decision to invalidate the Oneida
Nation gaming compact with the State of New York. After a U. S. Supreme Court decision ruled that the Oneida Nation-owned properties in the City of Sherill were subject to local taxes and regulations, the Oneida Nation applied to place approximately
35,000 acres of land into trust. In February 2008, the United States Department of the Interior recommended that 13,004 acres, including the Turning Stone Casino Resort property, be taken into trust. State and county tax actions have been rejected
at the federal district court level, but those actions continue. Six lawsuits, including one by the Governor on behalf of the state, have been filed to date challenging the U. S. Department of the Interiors decision to take the land into
trust.
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| |  |  | St. Regis Mohawk TribeIn November 2007, the St. Regis Mohawk Tribe filed suit against the U. S. Secretary of the Interior seeking to compel the Secretary to
take action on the tribes application to take 29 acres into trust in Monticello, New York in connection with the tribes proposed Catskill region gaming project with Empire Resorts, Inc., the owner of Monticello Raceway. In January 2008,
the BIA notified the St. Regis Mohawk Tribe of its rejection of the tribes application to take that parcel into trust. This decision followed the BIAs rejection of 10 other land-into-trust applications and the issuance of new guidance
regarding taking off-reservation land into trust for tribal gaming, which requires greater scrutiny of the perceived benefits to the tribe in such acquisitions the greater the distance between a proposed project and the tribes existing
reservation. In January 2008, the St. Regis Mohawk Tribe filed a suit in federal district court in New York to invalidate the BIAs decision. In February 2008, the St. Regis Mohawk Tribe reported that it would be ending its pursuit of a casino
at the Monticello Raceway and withdrawing its lawsuit challenging the BIAs decision.
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| |  |  | Seneca NationUnder the compact between the Seneca Nation and the State of New York and the 2001 authorizing legislation, the Seneca Nation is permitted to
operate three casinos in the western portion of the state. With the opening of a temporary casino in Buffalo in July 2007, joining the tribes first two casinos in Niagara Falls and Salamanca, the Seneca Nation now operates all three. The
Seneca Nation opened its first casino in Niagara Falls in December 2002. The $200.0 million casino and hotel features approximately 35,000 square feet of gaming space, 4,200 slot machines, 100 table games, 600 rooms, two restaurants, a bar and an
event center. This casino offers full-scale gaming similar to that offered at Mohegan Sun; however, we do not draw a significant number of customers from the Niagara Falls gaming market. A second, temporary facility opened on the Seneca
Nations reservation in Salamanca in May 2004. The permanent Seneca Allegany Casino & Hotel now has approximately 68,000 square feet of gaming space, 2,200 slot machines, 40 table games and 220 hotel rooms. In July 2007, the temporary
casino in downtown Buffalo was opened, featuring 119 slot machines and a snack bar. In July 2008, a federal judge vacated a decision of the NIGC which established the Seneca Nations right to conduct gaming on the 9-acre parcel in downtown
Buffalo; however, the temporary facility has remained open while the litigation remains pending. In August 2008, reportedly due to uncertain economic conditions, the Seneca Nation halted construction on a $333.0 million project to build a permanent
facility to replace the temporary casino in Buffalo, which had been expected to include 2,100 slot machines and 50 table games and a hotel expansion at Seneca Allegany Casino & Hotel in Salamanca, New York. The Seneca Nation has also
announced the pursuit of gaming development in Massachusetts in connection with the Aquinnah Wampanoag Tribe of Massachusetts (see Massachusetts below).
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| |  |  | Cayuga Indian Nation of New YorkThe Cayuga Indian Nation currently has a pending land-into-trust application for 125 acres in Cayuga and Seneca counties in
central New York.
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The Shinnecock Tribe, based on Long Island, is recognized by the State of New York, but its petition
to receive federal recognition is still pending before the BIA and in litigation in federal district court. Previously, the Shinnecock Tribe had announced intentions to construct an approximately 65,000-square-foot commercial casino gaming facility
adjacent to land it owns on Long Island and submitted an unsuccessful proposal to take over the Aqueduct Raceway in Queens in conjunction with Gateway Casino Resorts. In November 2005, a federal district court in New York ruled that the Shinnecock
Tribe met all the legal requirements to be considered a federally recognized Indian tribe. In January 2006, the BIA declared that it is not bound by that federal district court ruling. Accordingly, the Shinnecock Tribe is continuing its pursuit of
federal recognition. Following a September 30, 2008 federal judges ruling dismissing several counts by the tribe against the BIA but allowing one claim based on unreasonable delay to continue, according to published reports the
tribes recognition application was advanced to the top of the list of those under consideration with a decision expected in the next two years. On December 10, 2008, county legislators in Suffolk County, New York proposed county
legislation to form a task force to expedite the selection of a possible casino location for the tribe within 75 miles of the tribes land in Southampton.



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Other federally-recognized tribes based in other states, including tribes in Wisconsin and Oklahoma also
may be continuing earlier attempts to develop gaming projects in New York. In addition, there are several pending federal recognition petitions from other New York Indian groups, but we believe none are being actively considered by the BIA for
federal recognition. It is not clear if or when federal recognition for these groups will be achieved.

Empire City at Yonkers Raceway, in
Yonkers, opened its new gaming facility with 1,800 VLTs in October 2006. In March 2007, Empire City opened the Gotham Palace facility, which added 3,700 additional terminals, as well as a new restaurant, bar area and bandstand. Empire City
reportedly plans to increase its VLTs at Yonkers to 7,500 terminals as permitted under state law. Given its geographic proximity to New York City, the Yonkers facility may have distinct advantages over Mohegan Sun in competition for day-trip and
other customers from the New York metropolitan region.

According to published reports, in February 2008, Empire Resorts, Inc., owner of
Monticello Raceway, entered into an agreement with Concord Associates, L.P. for the development of a resort, harness racetrack and VLT facility at the Concord Hotel property in nearby Kiamesha Lake, to replace the current Monticello Raceway and
Mighty M VLT facility. Demolition of certain buildings at the Concord Hotel property commenced in April 2008. In July 2008, Governor David Patterson signed a bill that includes various incentives for the development of the Concord Hotel
property into a $1.0 billion casino and resort, including a reduction in VLT revenue-sharing payments to the state to 25.0%, significantly lower than the current rate paid by Empire Resorts, Inc. and other VLT operators in the state. The developers
have subsequently announced the receipt of partial financing and investments in the project and have estimated that construction will be completed by the end of 2010.

On February 13, 2008, the New York Racing Authority, or NYRA, and the State of New York reached a new agreement, allowing the NYRA to continue operating thoroughbred racing at the three NYRA tracks for a new term
of 25 years, and the NYRA was discharged from its Chapter 11 bankruptcy in September 2008. VLT rights at the NYRAs Aqueduct racetrack were awarded separately in October 2008 to Delaware North Companies and its partner, Saratoga Harness Racing,
Inc. MTGA Gaming, in conjunction with Capital Play, was one of six groups that submitted initial bids to operate VLTs at the Aqueduct racetrack and one of three groups that presented updated bids in April 2008. Delaware Norths plan calls
for the installation of about 4,500 VLTs in a 328,000-square-foot facility that will also include restaurants, a 60,000-square-foot center and about 300 hotel rooms. Delaware North has pledged to spend at least $250 million to create the gaming and
entertainment complex and expects to invest $170 million to maintain the facility. Construction is expected to take 12 to 14 months. No additional VLTs at the Saratoga thoroughbred racetrack are being considered due to the existence of VLTs at the
Saratoga harness racetrack. VLTs at Belmont would require additional state legislation which will reportedly be introduced by Republican legislators in 2009. In addition, one state senator has authored a bill to permit electronic or computerized
versions of virtually any casino game to be legalized at the states racinos, including blackjack, craps and roulette.

Currently,
there are no non-Indian casinos operating in the State of New York, and the establishment of non-Indian commercial casino operations would require the approval of two successive state legislatures, followed by the voters in a statewide referendum.
However, gambling boats began operating cruises to nowhere out of the New York City and Long Island areas in January 1998. To date, New York has not prohibited gambling boat operations and only a small number of operators have applied
for licenses for offshore gambling cruises. These cruises to nowhere, during which casino gaming activities are conducted on board once the boat is in international waters, are permitted under federal law unless prohibited by the state
from which they operate. Due to the difference in the gaming experience, we do not believe that the cruises to nowhere are significant competition to Mohegan Sun.

Massachusetts

In October
2007, Governor Deval Patrick filed legislation calling for the award of licenses for three major gaming facilities to be built in the western, southeastern and metropolitan Boston areas of the state. Various



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groups have expressed interest in constructing and operating these facilities, including the Authority, which has proposed plans to develop a facility on
leased land in Palmer, Massachusetts, in the western portion of the state. A partnership with a federally recognized, eligible Massachusetts tribe was identified as one of the criteria to be used to assess proposals. In March 2008, the Massachusetts
House of Representatives defeated Governor Patricks casino proposal bill by a vote of 108 to 46. It has been reported that similar proposals are expected to be introduced in the next legislative session, which begins in January 2009. In
November 2008, voters in Massachusetts passed a ban on all greyhound racing in the state, effective January 1, 2010.

The Aquinnah
Wampanoag Tribe of Gay Head, Massachusetts, located on the island of Marthas Vineyard, is one of two federally recognized Indian tribes in the State of Massachusetts. The Aquinnah Wampanoag Tribe is currently subject to certain restrictions
with respect to gaming, including gaming on its existing reservation on Marthas Vineyard, but has announced plans to consider gaming in the state. The tribe would have preference under the Governors state gaming proposal and has
announced a partnership with the Seneca Nation of New York to pursue gaming in the State of Massachusetts.

The Mashpee Wampanoag Tribe,
the other federally recognized Indian tribe in the State of Massachusetts, is proceeding with plans for a proposed $1.0 billion casino and 1,500-room hotel project on what would be a portion of the tribes initial reservation in Middleboro.
Plans for the Middleboro gaming facility include a 240,000 square-foot casino, three or four stories in height, with an adjoining 15 to 18 story-hotel, and a draft environmental impact study is reportedly close to being published for comment. In
September 2008, the tribe reportedly asked the Governor to commence formal compact negotiations to permit full casino gaming at the site, if taken into trust for the tribe by the United States.

A number of other petitions for federal recognition are pending in the State of Massachusetts, but even if these petitions are ultimately successful, we
believe final recognition would, at the earliest, be several years away.

New Jersey

In the State of New Jersey, Mohegan Sun primarily competes with casinos located in Atlantic City for overnight patrons. The Atlantic City gaming market
currently contains twelve casino properties, with a total of approximately 14,000 hotel rooms and 1.4 million square feet of gaming space, containing approximately 42,000 slot machines and 1,400 table games.

Several proposed developments and expansions of casino, hotel, retail and entertainment space have also commenced or have been completed in Atlantic City
while others have been suspended, delayed or cancelled in recent months due to adverse economic conditions. Some of these recent projects and status changes include:



| |  |  | The Borgata Hotel Casino & Spa, a casino resort complex completed in 2003, has expanded in two phases since its opening. The first phase of the Borgata
expansion was completed in June 2006 and featured several new restaurants, a food court, 500 slot machines, 45 table games, an 85-table poker room and a new nightclub. The second phase of the Borgata expansion was completed in June 2008 with the
opening of a new 43-story hotel tower, the Water Club. The combined Borgata facility reportedly now features approximately 2,800 rooms and suites, 161,000 square feet of gaming space, 4,100 slot machines and 200 table games.
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| |  |  | In July 2006, Morgan Stanley purchased a 20-acre site located on the Atlantic City Boardwalk for $74.0 million. Morgan Stanley subsequently hired Revel
Entertainment Group to build a $2.0 billion casino resort on this parcel to be adjacent to the Showboat, owned by Harrahs Entertainment, Inc. According to published reports, construction has been progressing at the site on a staggered
schedule, and the facility is expected to open in the summer of 2010.
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| |  |  | In September 2006, Wallace Barr, former Chief Executive Officer of Caesars Entertainment, Inc., and Curtis Bashaw, former Executive Director of the New Jersey
Casino Reinvestment Development
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| | Authority, began developing an 11-acre site on the southern edge of the Atlantic City Boardwalk for a $1.0 billion casino to be opened in 2012, tentatively
called the Gateway Project. Reports indicate construction has been postponed indefinitely.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In November 2006, the Sands Atlantic City Hotel and Casino, or Sands, was closed following the purchase of its owner by Pinnacle Entertainment, Inc. The facility
was subsequently demolished in October 2007. In February 2008, the owner announced a delay in plans for a new $2.0 billion resort on the site because of financing concerns.
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| |  |  | In October 2007, MGM Mirage, Inc., announced a $5.0 billion plan to build a three-tower, 3,000-room casino resort, MGM Grand Atlantic City, in a joint venture with
Boyd Gaming Corporation on a 72-acre site located next to the Borgata. Originally scheduled to open in 2012 with the largest casino floor in Atlantic City (approximately 5,000 slot machines, 200 table games and a poker room), additional development
work has been suspended indefinitely, according to published reports.
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| |  |  | In March 2008, Harrahs Entertainment, Inc. opened its new 44-story, 960-room Waterfront Tower, which represents the final phase of a $550.0 million expansion
at Harrahs Marina. It has been reported that the Waterfront Tower increases Harrahs Marina hotel room capacity by nearly 60.0%, to 2,590 guest rooms and suites.
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| |  |  | In April 2008, the city council in Atlantic City gave final approval to an extended ban on smoking that will prohibit smoking on all casino gaming floors effective
October 15, 2008. The ban was in effect for only one week in October before the city council suspended it, due to economic concerns, for at least one year.
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| |  |  | In May 2008, Trump Entertainment Resorts, Inc., announced the sale of one of its three Atlantic City properties, Trump Marina Hotel Casino, for $316.0 million to an
affiliate of Coastal Development, LLC, headed by Richard Fields, and the resolution of an unrelated four-year lawsuit involving development of properties with the Seminole Tribe of Florida. The property is expected to be re-branded as a
Margaritaville casino, which has an association with entertainer, Jimmy Buffett.
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| |  |  | Tropicana Entertainment, LLC, the parent company of the Tropicana Casino and Resort, filed for bankruptcy on May 5, 2008. In September 2008, state casino
regulators chose the Cordish Company as the recommended bidder to purchase the Tropicana Casino and Resort, whose former owners had their casino license revoked in December 2007. The Cordish Company is expected to invest an additional $100.0 million
for upgrades to the facility.
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| |  |  | In September 2008, the Trump Taj Mahal completed its $255.0 million hotel expansion with the addition of a 786-room tower dubbed the Chairmans Tower.
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There are no federally recognized Indian tribes in the State of New Jersey; however, at least one state tribe, the
Unalachtigo Band of the Nanticoke Lenni Lenape Nation, is reportedly seeking federal recognition and possible casino gaming. In addition, the New Jersey State Legislature has considered adding slot machines or VLTs at state racetracks.

Maine

Currently, no
full-scale casino gaming operations are allowed in the State of Maine other than one cruise boat, which operates out of Maine, but provides casino gaming off-shore. There are four federally recognized Indian tribes in the state, one of which, the
Penobscot Tribe, operates a high stakes bingo facility in Old Town, in east central Maine. The Penobscot Tribe and the Passamaquoddy Tribe are attempting to gain approval for full-scale casino operations at various locations in the state; however,
to date these efforts have been unsuccessful. In the 2008 legislative session, the state legislature approved a bill to allow 100 slot machines on the Penobscot Tribes reservation, but that bill was vetoed by the Governor. None of the other
federally recognized Indian tribes in the state have negotiated a tribal-state compact or taken any other significant steps towards developing casino operations.



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Penn National Gaming, Inc. operates 1,000 slot machines and a six-story hotel at the Hollywood Slots
Hotel and Raceway in Bangor.

In November 2007, Maine voters rejected a proposal by the Passamaquoddy Tribe to build a racetrack, high
stakes bingo parlor, hotel and casino on 700 acres in Calais, along the St. Croix River bordering New Brunswick, Canada. The facility reportedly would have offered 1,500 slot machines. In November 2008, state voters rejected a non-tribal development
proposed by Olympia Gaming for a $184 million casino with 1,500 slots, a 300-room hotel and conference center in the town of Oxford in Oxford County.

New Hampshire

Currently, no casinos are allowed in the State of New Hampshire nor are there
any significant initiatives currently underway to legalize full commercial casino gaming in the state. In past years, a number of legislative initiatives to expand legalized gambling activities in the State of New Hampshire have been defeated. The
owners of Rockingham Park in Salem and Millennium Gaming of Las Vegas, which owns an option to purchase the former thoroughbred and current harness racing and simulcasting facility, is expected to push for legislation in the next year to allow up to
3,000 VLTs at Rockingham Park, approximately one-hour north of Boston, and additional VLTs at greyhound tracks at Hinsdale, Seabrook and Belmont. There are no federally recognized Indian tribes in the state and no announced petitions for recognition
pending.

Vermont

Currently, no casinos are allowed in the State of Vermont nor are there any significant initiatives currently underway to legalize commercial casino gaming in the state. There are no federally recognized Indian tribes in the state. In June
2007, the BIA issued a final determination rejecting a petition for federal recognition from the St. Francis/Sokoki Band of Abenakis in Swanton. In October 2007, the BIA dismissed as untimely, the tribes request for reconsideration of that
final determination.

Pocono Downs

The following is an assessment of the competitive prospects in Pennsylvania and the northeastern United States affecting Pocono Downs:

In July 2004, Pennsylvania Governor Ed Rendell signed the Pennsylvania Race Horse Development and Gaming Act, or the Pennsylvania Gaming Act, permitting up to 61,000 slot machines at 14 locations throughout the state.
The Pennsylvania Gaming Act authorized slot machines at seven harness and thoroughbred racetracks, and five stand-alone slot facilities. Each of the facilities may initially install up to 3,000 slot machines and can be expanded to up to 5,000 slot
machines after six months of operation and upon gaining the approval of the Pennsylvania Gaming Control Board, or PGCB. In addition, the legislation authorized two resort facilities with up to 500 slot machines. The Pennsylvania Gaming Act also
includes prohibitions against locating facilities in close proximity to other operations, including, among other things, a prohibition against locating another harness or thoroughbred facility with slots or a stand-alone slot facility within 20
linear miles of Pocono Downs, and a prohibition against locating a resort facility within 15 linear miles of Pocono Downs.

Slot machine
licenses have been awarded to all owners of the six existing racetracks: Philadelphia Park located in Bensalem (approximately 115 miles southeast of Pocono Downs), Penn National Race Course in Grantville (located approximately 85 miles southwest of
Pocono Downs), Presque Isle Downs in Summit Township, near Erie (approximately 325 miles from Pocono Downs) and two harness racetracks, the Meadows, located in Meadow Lands, near Pittsburgh (approximately 300 miles from Pocono Downs), and
Harrahs Chester Casino and Racetrack, located in Chester (approximately 115 miles from Pocono Downs). In addition, it is expected that a slot machine license will be awarded to Centaur, Inc., which is currently building Valley View Downs in
Lawrence County, near Pittsburgh.



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The PGCB has awarded conditional Category Two slot machine licenses for five stand-alone slot facilities,
two of which are located in Philadelphia and one of which is located in Pittsburgh. The remaining two facilities selected, which are located closer to Pocono Downs and are more likely to have an impact on our Pocono Downs operations, are as follows:



| |  |  | Mount Airy, LLC, was approved for a conditional Category Two slot machine license to operate a slot machine parlor at the former Mount Airy Lodge in Mount Pocono,
which is approximately 40 miles from Pocono Downs. In October 2007, Mount Airy, LLC, opened its $412.0 million Mount Airy Resort and Casino, which includes approximately 2,300 slot machines. In November 2007, the facility introduced a 188-room
hotel. Due to economic conditions, in early 2008 Mount Airy, LLC announced that it will eliminate plans for the expansion of slot machines, hotel rooms, additional restaurants, conference space, spa, pools, retail shops and additional parking at the
facility.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sands Bethworks Gaming, a partnership between BethWorks and Las Vegas Sands, Inc., owner of the Venetian Resort and Casino in Las Vegas, was approved for a
conditional Category Two slot machine license to operate a gaming facility in Bethlehem, which is approximately 70 miles from Pocono Downs. The group had previously announced plans for a $630.0 million Phase I project that would offer 3,000 slot
machines, a 300-room hotel, retail shops and restaurants to the public by the spring of 2009 and a future expansion that would increase the total number of slot machines to 5,000 by late 2009. Plans for the hotel, retail shops and restaurants
affiliated with the casino facility have been suspended indefinitely by Sands Bethworks Gaming. Instead, Sands Bethworks Gaming has announced that it will proceed with only the casino portion of the project, with construction expected to be
completed by mid 2009.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the other slot facilities in Pennsylvania, including a proposed facility in
Philadelphia being developed by Foxwoods Development, Pocono Downs faces competition from a VLT gaming facility at Monticello Raceway in Monticello, New York and its intended replacement under construction in Kiamesha Lake in the Catskills, and also
from any full scale casino gaming operation that is ultimately developed by an Indian tribe in the Catskills region. The Catskills are approximately 90 miles from Pocono Downs. Pocono Downs also faces competition from Tioga Downs Racetrack in
Nichols, New York, approximately 100 miles from Pocono Downs, which features a racetrack and gaming floor with 750 VLTs. In November 2008, Maryland voters passed a referendum authorizing state-licensed slot operations in that state, expected in
2011.

Mohegan Tribe of Indians of Connecticut

General

The Tribe has lived in a cohesive community for hundreds of years in what is today southeastern Connecticut,
and became a federally recognized Indian tribe in 1994. The Tribe currently has approximately 1,700 members including 1,000 adult voting members. The Tribe historically has cooperated with the United States and is proud of the fact that members of
the Tribe have fought on the side of the United States in every war from the Revolutionary War to the War in Iraq. The Tribe believes that this philosophy of cooperation exemplifies its approach to developing Mohegan Sun and pursuing diversification
of its business interests.

Although the Tribe is a sovereign entity, it has sought to work with, and to gain the support of, local
communities in establishing Mohegan Sun. For example, the Tribe settled its claim to extensive tracts of land that had been guaranteed by various treaties in consideration for certain arrangements in the Mohegan Compact. As a result, local residents
and businesses whose property values had been clouded by this dispute were able to gain clear title to their property. In addition, the Tribe has been sensitive to the concerns of the local community in developing Mohegan Sun. This philosophy of
cooperation has enabled the Tribe to build a solid alliance among local, state and federal officials to achieve its goal of economic development through the success of Mohegan Sun and other projects.



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Governance of the Tribe

The Tribes Constitution provides for the governance of the Tribe by a Tribal Council consisting of nine members, and a Council of Elders consisting
of seven members. The registered voters of the Tribe elect all members of the Tribal Council and the Council of Elders. As the result of an amendment to the Tribes Constitution in September 2003, the members of both the Council of Elders and
the Tribal Council are elected on a staggered term basis. Effective with the elections for the Council of Elders held in October 2004 and 2006, members of the Council of Elders serve four-year terms. Accordingly, the terms for four members of the
Council of Elders expired in October 2008 and the remaining three members will expire in October 2010. Likewise, effective with the elections for the Tribal Council members held in August 2005 and 2007, members of the Tribal Council also serve
four-year terms. The terms for five members of the Tribal Council will expire in October 2009 and the remaining four members will expire in October 2011. Members of the Tribal Council must be at least 21 when elected, and members of the Council of
Elders must be at least 55 when elected. The members of the Tribal Council also serve as members on our Management Board.

The Tribes
Constitution vests all legislative and executive powers of the Tribe in the Tribal Council, with the exception of the enrollment of Tribal members and cultural duties, which are vested in the Council of Elders. The powers of the Tribal Council
include the power to establish an executive branch departmental structure with agencies and subdivisions and to delegate appropriate powers to such agencies and sub-divisions.

The Tribe may amend the provisions of its Constitution that established us and the Gaming Disputes Court, which is described below. Such an amendment
requires the approval of two-thirds of the members of the Tribal Council and must be ratified by a vote of a two-thirds majority of all votes cast, with at least 40% of the registered voters of the Tribe voting. In addition, the Tribes
Constitution currently prohibits the Tribe from enacting any law that would impair the obligations of contracts entered into in furtherance of the development, construction, operation and promotion of gaming on Tribal lands. An amendment to this
provision requires the affirmative vote of 75% of all registered voters of the Tribe. Prior to the enactment of any such amendment by the Tribal Council, any non-Tribal party would have the opportunity to seek a ruling from the Appellate Branch of
the Gaming Disputes Court that the proposed amendment would constitute an impermissible impairment of contract.

The Council of Elders acts
in the capacity of an appellate court of final review and may hear appeals of any case or controversy arising under the Tribes Constitution, except those matters related to Mohegan Sun, which are required to be submitted to the Gaming Disputes
Court.

Gaming Disputes Court

The Tribal Council has established the Gaming Disputes Court by Tribal ordinance and vested it with exclusive jurisdiction over all disputes related to gaming at Mohegan Sun and over appeals of certain final decisions
issued by the Tribes administrative agencies. The Gaming Disputes Court is composed of a Trial Division and an Appellate Branch. A single judge presides over cases at the trial level. Trial Division decisions can be appealed to the Appellate
Branch where cases are presided over by three judges, one of whom will be the Chief Judge, and none of whom will have presided at the Trial Division over the specific case being heard. Decisions of the Appellate Branch are final, and no further
appeal is available.

The Gaming Disputes Court has jurisdiction over all disputes or controversies related to gaming between any person or
entity and us or the Tribe. The Gaming Disputes Court also has jurisdiction over certain appeals arising out of tribal agency regulatory powers, including licensing actions. The Tribe has adopted the substantive law of the State of Connecticut as
the applicable law of the Gaming Disputes Court to the extent that such law is not in conflict with Mohegan Tribal Law. Also, the Tribe has adopted all of Connecticuts rules of civil and appellate procedure and professional and judicial
conduct to govern the Gaming Disputes Court.



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Judges of the Gaming Disputes Court are chosen by the Tribal Council from a publicly available list of
eligible retired federal judges and Connecticut Attorney Trial Referees, who are appointed by the Chief Justice of the Connecticut Supreme Court, each of whom must remain licensed to practice law in the State of Connecticut.

Judges are selected sequentially as cases are filed with the clerk of the Gaming Disputes Court. The Chief Judge of the Gaming Disputes Court, who serves
as the Gaming Disputes Courts administrative superintendent, is chosen by the Tribal Council from the list of eligible judges and serves a five-year term. The remaining judges may serve an unlimited term on the bench. Judges of the Gaming
Disputes Court are subject to discipline and removal for cause pursuant to the rules of the Gaming Disputes Court. The Chief Judge is vested with the sole authority to revise the rules of the Gaming Disputes Court. Judges are compensated by the
Tribe at an agreed rate of pay commensurate with their duties and responsibilities. Such rate cannot be diminished during a judges tenure.

Below is a description of certain information regarding judges currently serving on the Gaming Disputes Court:

Paul M.
Guernsey, Chief Judge. Age: 58. Judge Guernsey has served on the Gaming Disputes Court since 1996. He was appointed Acting Chief Judge in November 1999 and appointed as Chief Judge in January 2000. Judge Guernsey has also served as Fact Finder
for the New London Judicial District from 1990 to 1992 and as State of Connecticut Attorney Trial Referee, Judicial District of New London, since 1992.

F. Owen Eagan, Judge. Age: 78. Judge Eagan was appointed to the Gaming Disputes Court in 1996. He served as U.S. Magistrate Judge from 1975 to 1996 and was formerly Assistant U.S. Attorney for the District of
Connecticut and U.S. Attorney for the District of Connecticut. He is currently an adjunct law faculty member at Western New England School, a position he has held since 1978.

Frank A. Manfredi, Judge. Age: 57. Judge Manfredi was appointed to the Gaming Disputes Court in 2001. He has been a partner at Cotter, Greenfield,
Manfredi & Lanes, P.C., since 1983. Judge Manfredi has also served as State of Connecticut Attorney Trial Referee since 1993, State of Connecticut Attorney Fact Finder since 1992 and Town Attorney for the Town of Preston since 1988.

Thomas B. Wilson, Judge.Age:68. Judge Wilson was appointed to the Gaming Disputes Court in 1996. Judge Wilson served as a
partner and director at Suisman, Shapiro, Wool, Brennan & Gray, P.C. from 1967-2003. Judge Wilson has also served as State Attorney Trial Referee since 1988 and as Town Attorney for the Town of Ledyard from 1971 to 1979, 1983 to 1991 and
1995 to the present.

Workers Compensation Department

Effective September 1, 2004, the Tribal Council established a Workers Compensation Department that oversees a self-administered workers
compensation program for employees of the Tribe and us. Prior to the formation of this department, we participated in the State of Connecticut workers compensation program. Duties of the Workers Compensation Department, including
judgment on claims, are performed by two commissioners employed by the Tribe.

Below is a description of certain information regarding the
commissioners serving in the Workers Compensation Department:

Giancarlo Rossi, Chief Commissioner. Mr. Rossi was
appointed Chief Commissioner of the Tribes Workers Compensation Department in September 2004. Mr. Rossi is a practicing attorney with over 20 years of workers compensation experience in Connecticut.

Louis M. Pacelli, Commissioner. Mr. Pacelli was appointed Commissioner of the Tribes Workers Compensation Department in September
2004. Mr. Pacelli is a partner in the law firm of Grillo and Pacelli, LLC in East Haven, Connecticut and has practiced general law, including workers compensation matters, for over 20 years in Connecticut.



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Mohegan Tribal Gaming Authority

We were established by the Tribe in July 1995 with the exclusive power to conduct and regulate gaming activities on tribal lands for the Tribe and the non-exclusive authority to conduct such activities elsewhere. We
are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management
Board. See Mohegan Tribe of Indians of Connecticut and Part III. Item 10. Directors and Executive Officers of the Registrant.

We have three major functions. The first major function is to direct the operation, management and promotion of gaming enterprises on tribal lands and all related activities. The second major function is to regulate
gaming activities on tribal lands. Our Management Board has appointed an independent Director of Regulation to be responsible for the regulation of gaming activities at Mohegan Sun. The Director of Regulation serves at the will of the Management
Board and ensures the integrity of the gaming operation through the promulgation and enforcement of appropriate regulations. The Director of Regulation and his staff also are responsible for performing background investigations and licensing of
non-gaming employees as well as vendors seeking to provide non-gaming products or services within the casino. Pursuant to the Mohegan Compact, the State of Connecticut is responsible for performing background investigations and licensing of gaming
employees as well as gaming vendors seeking to provide gaming products or services within the casino. The third major function is to identify and evaluate various diversification opportunities in conjunction with the Tribe. These opportunities
primarily include the management and ownership of, or investments in, other gaming enterprises through direct investment, acquisition, joint venture arrangements and loan transactions.

Government Regulation

General

Our operations at Mohegan Sun are subject to certain federal, state and tribal laws applicable to both commercial relationships with Indians generally and
to Indian gaming and the management and financing of Indian casinos specifically. Our operations at Pocono Downs also are subject to Pennsylvania laws and regulations applicable to harness racing, simulcasting and slot machine gaming. The following
description of the regulatory environment in which gaming takes place and in which we operate is only a summary and not a complete recitation of all applicable law. Moreover, since this regulatory environment is susceptible to changes in public
policy considerations, it is impossible to predict how particular provisions will be interpreted from time to time or whether they will remain intact. Changes in such laws could have a material adverse impact on our operations. See Risk
Factors.

Tribal Law and Legal Systems

Applicability of State and Federal Law

Federally recognized Indian tribes are independent
governments, subordinate to the United States, with sovereign powers, except as those powers may have been limited by treaty or by the United States Congress. The power of Indian tribes to enact their own laws to regulate gaming derives from the
exercise of this tribal sovereignty. Indian tribes maintain their own governmental systems and often their own judicial systems. Indian tribes have the right to tax persons and enterprises conducting business on tribal lands, and also have the right
to require licenses and to impose other forms of regulations and regulatory fees on persons and businesses operating on their lands.

Absent the consent of the Tribe or action of the United States Congress, the laws of the State of Connecticut do not apply to us or the Tribe. Under the federal law that recognizes the Tribe, the Tribe consented to, among other things, the
extension of Connecticut criminal law and Connecticut state traffic controls over Mohegan Sun.



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Waiver of Sovereign Immunity; Jurisdiction; Exhaustion of Tribal Remedies

Indian tribes enjoy sovereign immunity from unconsented suit similar to that of the states and the United States. In order to sue an Indian tribe (or an
agency or instrumentality of an Indian tribe, such as us), the Tribe must have effectively waived its sovereign immunity with respect to the matter in dispute. Further, in most commercial disputes with Indian tribes, the jurisdiction of the federal
courts, which are courts of limited jurisdiction, may be difficult or impossible to obtain. A commercial dispute is unlikely to present a federal question, and some courts have ruled that an Indian tribe as a party is not a citizen of any state for
purposes of establishing diversity jurisdiction in the federal courts. State courts also may lack jurisdiction over suits brought by non-Indians against Indian tribes in Connecticut. The remedies available against an Indian tribe also depend, at
least in part, upon the rules of comity requiring initial exhaustion of remedies in tribal tribunals and, as to some judicial remedies, the tribes consent to jurisdictional provisions contained in the disputed agreements. The United States
Supreme Court has held that, where a tribal court exists, jurisdiction in that forum first must be exhausted before any dispute can be heard properly by federal courts which otherwise would have jurisdiction. Where a dispute as to the jurisdiction
of the tribal forum exists, the tribal court first must rule as to the limits of its own jurisdiction.

In connection with some of our
contractual arrangements, including our outstanding indebtedness, we, the Tribe, MBC, Mohegan Ventures-NW, Mohegan Golf and to the extent applicable, the Pocono Downs entities, WTG, MTGA Gaming and certain other of our subsidiaries and entities have
agreed to waive our and their respective sovereign immunity from unconsented suit to permit any court of competent jurisdiction to: (1) enforce and interpret the terms of our applicable outstanding indebtedness, and award and enforce the award
of damages owing as a consequence of a breach thereof, whether such award is the product of litigation, administrative proceedings, or arbitration; (2) determine whether any consent or approval of the Tribe or us has been granted improperly or
withheld unreasonably; (3) enforce any judgment prohibiting the Tribe or us from taking any action, or mandating or obligating the Tribe or us to take any action, including a judgment compelling the Tribe or us to submit to binding arbitration;
and (4) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. § 1302 (or any successor statute).

The
Indian Gaming Regulatory Act of 1988

Regulatory Authority

The operation of casinos and of all gaming on Indian land is subject to IGRA, which is administered by the NIGC, an independent agency within the United
States Department of the Interior, which exercises primary federal regulatory responsibility over Indian gaming. The NIGC has exclusive authority to issue regulations governing tribal gaming activities, approve tribal ordinances for regulating Class
II and Class III Gaming (as described below), approve management agreements for gaming facilities, conduct investigations and generally monitor tribal gaming. Certain responsibilities under IGRA (such as the approval of per capita distribution plans
to tribal members and the approval of transfer of lands into trust status for gaming) are retained by the BIA. The BIA also has responsibility to review and approve land leases and other agreements relating to Indian lands. Criminal enforcement is
the exclusive responsibility of the United States Department of Justice, except to the extent such enforcement responsibility is shared with the State of Connecticut under the Mohegan Compact and under the federal law that recognizes the Tribe.

The NIGC is empowered to inspect and audit all Indian gaming facilities, to conduct background checks on all persons associated with Class
II Gaming, to hold hearings, issue subpoenas, take depositions, adopt regulations and assess fees and impose civil penalties for violations of IGRA. IGRA also prohibits illegal gaming on Indian land and theft from Indian gaming facilities. The NIGC
has adopted rules implementing specific provisions of IGRA, which govern, among other things, the submission and approval of tribal gaming ordinances or resolutions and require an Indian tribe to have the sole proprietary interest in and
responsibility for the conduct of any gaming. Tribes are required to issue gaming licenses only under articulated standards, to conduct or commission financial audits of their gaming enterprises, to perform or commission background investigations
for



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primary management officials and key employees and to maintain their facilities in a manner that adequately protects the environment and the public health
and safety. These rules also set out review and reporting procedures for tribal licensing of gaming operation employees.

Additionally, the
NIGC established the Minimum Internal Control Standards, or MICS, that require each gaming tribe or its designated tribal government body or agency to establish and implement tribal MICS by February 4, 2000. We established and implemented
tribal MICS on February 4, 2000. As of September 30, 2008, we believe we were in material compliance with the tribal MICS.

Tribal Ordinances

Under IGRA, except to the extent otherwise provided in a tribal-state compact, Indian tribal governments
have primary regulatory authority over Class III Gaming on land within a tribes jurisdiction. Therefore, our gaming operations, and persons engaged in gaming activities, are guided by and subject to the provisions of the Tribes
ordinances and regulations regarding gaming.

IGRA requires that the NIGC review tribal gaming ordinances and authorizes the NIGC to
approve such ordinances only if they meet specific requirements relating to (1) the ownership, security, personnel background, record keeping and auditing of a tribes gaming enterprises; (2) the use of the revenues from such gaming;
and (3) the protection of the environment and the public health and safety. The Tribe adopted its gaming ordinance in July 1994, and the NIGC approved the gaming ordinance in November 1994.

Classes of Gaming

IGRA classifies
games that may be conducted on Indian lands into three categories. Class I Gaming includes social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as part of, or in connection with,
tribal ceremonies or celebrations. Class II Gaming includes bingo, pull-tabs, lotto, punch boards, tip jars, certain non-banked card games (if such games are played legally elsewhere in the state), instant bingo and other games similar
to bingo, if those games are played at the same location where bingo is played. Class III Gaming includes all other forms of gaming, such as slot machines, video casino games (e.g., video blackjack and video poker), so-called table
games (e.g., blackjack, craps and roulette) and other commercial gaming (e.g., sports betting and pari-mutuel wagering).

Class I
Gaming on Indian lands is within the exclusive jurisdiction of the Indian tribes and is not subject to IGRA. Class II Gaming is permitted on Indian lands if (1) the state in which the Indian lands lie permits such gaming for any purpose by any
person, organization or entity; (2) the gaming is not otherwise specifically prohibited on Indian lands by federal law; (3) the gaming is conducted in accordance with a tribal ordinance or resolution which has been approved by the NIGC;
(4) an Indian tribe has sole proprietary interest and responsibility for the conduct of gaming; (5) the primary management officials and key employees are tribally licensed; and (6) several other requirements are met. Class III Gaming
is permitted on Indian lands if the conditions applicable to Class II Gaming are met and, in addition, the gaming is conducted in conformance with the terms of a tribal-state compact (a written agreement between the tribal government and the
government of the state within whose boundaries the tribes lands lie).

With the growth of the Internet and other modern advances,
computers and other technology aids are increasingly used to conduct specific kinds of gaming. The United States Congress has considered legislation that limits and/or prohibits gaming conducted over the Internet. On September 30, 2006, the
United States Congress passed legislation restricting Internet gambling by prohibiting the use of credit cards, checks and electronic fund transfers for online gaming. The legislation was signed into law by the President of the United States on
October 13, 2006.



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Tribal-State Compacts

IGRA requires states to negotiate in good faith with Indian tribes that seek to enter into tribal-state compacts for the conduct of Class III Gaming. Such
tribal-state compacts may include provisions for the allocation of criminal and civil jurisdiction between the state and the Indian tribe necessary for the enforcement of such laws and regulations, taxation by the Indian tribe of gaming activities
in amounts comparable to those amounts assessed by the state for comparable activities, remedies for breach of compacts, standards for the operation of gaming and maintenance of the gaming facility, including licensing and any other subjects that
are directly related to the operation of gaming activities. While the terms of tribal-state compacts vary from state to state, compacts within one state tend to be substantially similar. Tribal-state compacts usually specify the types of permitted
games, establish technical standards for gaming, set maximum and minimum machine payout percentages, entitle the state to inspect casinos, require background investigations and licensing of casino employees and may require the tribe to pay a portion
of the states expenses for establishing and maintaining regulatory agencies. Some tribal-state compacts are for set terms, while others are for indefinite duration.

IGRA provides that if an Indian tribe and state fail to successfully negotiate a tribal-state compact, the United States Department of the Interior may approve gaming procedures pursuant to which Class III gaming may
be conducted on Indian lands. The Mohegan Compact, approved by the United States Secretary of the Interior in 1994, does not have a specific term and will remain in effect until terminated by written agreement of both parties, or the provisions are
modified as a result of a change in applicable law. Our gaming operations are subject to the requirements and restrictions contained in the Mohegan Compact which authorizes the Tribe to conduct most forms of Class III Gaming.

Tribal-state compacts have been the subject of litigation in a number of states, including Alabama, California, Florida, Kansas, Michigan, Mississippi,
New Mexico, New York, Oklahoma, Oregon, South Dakota, Texas, Washington and Wisconsin. Tribes frequently seek to enforce the constitutionality of the provision of IGRA which entitles tribes to bring suit in federal court against a state that fails
to negotiate a tribal-state compact in good faith. The United States Supreme Court resolved this issue by holding that the Indian Commerce Clause does not grant Congress authority to abrogate sovereign immunity granted to the states under the
Eleventh Amendment. Accordingly, IGRA does not grant jurisdiction over a state that did not consent to be sued.

There has been litigation
in a number of states challenging the authority of state governors, under state law, to enter into tribal-state compacts without legislative approval. Federal courts have upheld such authority in Louisiana and Mississippi. The highest state courts
of Arizona, Kansas, Michigan, New Mexico, New York and Rhode Island have held that the governors of those states did not have authority to enter into such compacts without the consent or authorization of the legislatures of those states. In the New
Mexico and Kansas cases, the courts held that the authority to enter into such compacts is a legislative function under their respective state constitutions. The court in the New Mexico case also held that state law does not permit casino-style
gaming.

In Connecticut, there has been no litigation challenging the governors authority to enter into tribal-state compacts. If
such a suit were filed, however, the Tribe does not believe that the precedent in the New Mexico or Kansas cases would apply. The Connecticut Attorney General has issued a formal opinion, which states that, existing state statutes provide the
Governor with the authority to negotiate and execute the Mohegan Compact. Thus, the Attorney General declined to follow the Kansas case. In addition, the United States Court of Appeals for the Second Circuit has held, in a case brought by the
Mashantucket Pequot Tribe, that Connecticut law authorizes casino gaming. After execution of the Mohegan Compact, the Connecticut General Assembly passed a law requiring that future gaming compacts be approved by the legislature, but that law does
not apply to previously executed compacts such as the Mohegan Compact.

Possible Changes in Federal Law

Several bills have been introduced in the United States Congress which would amend IGRA. While there have been a number of technical amendments to the
law, to date, there have been no material changes to IGRA. Any amendment to IGRA could change the regulatory environment and requirements within which the Tribe could conduct gaming.



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Pennsylvania Racing Regulation

Our harness racing operations at the Pocono Downs entities are subject to extensive regulation under the Pennsylvania Racing Act. Under that law, the
Pennsylvania Harness Racing Commission, or Harness Racing Commission, is responsible for, among other things:



| |  |  | granting permission annually to maintain racing licenses and schedule races;
| | - |  | ----------------------------------------------------------------------------



| |  |  | approving, after a public hearing, the opening of additional OTWs and racetracks;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | approving simulcasting activities;
| | - |  | ----------------------------------



| |  |  | licensing all officers, directors, racing officials and certain other employees of a company; and
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | approving all contracts entered into by a company affecting racing, pari-mutuel wagering, phone/internet wagering and OTW operations.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------

As in most states, the regulations and oversight applicable to our operations in Pennsylvania are intended primarily to safeguard the legitimacy of
the sport and its freedom from inappropriate or criminal influences. The Harness Racing Commission has broad authority to regulate in the best interests of racing and may, to that end, disapprove the involvement of certain personnel in our
operations, deny approval of certain acquisitions following their consummation or withhold permission for a proposed OTW site for a variety of reasons, including community opposition. The Pennsylvania legislature also has reserved the right to
revoke the power of the Harness Racing Commission to approve additional OTWs and could, at any time, terminate pari-mutuel wagering as a form of legalized gaming in Pennsylvania or subject such wagering to additional restrictive regulation or
taxation.

We have obtained permission from the Harness Racing Commission to conduct live racing at Pocono Downs and to operate the several
OTWs that we own. The Harness Racing Commission can refuse to grant permission to continue to operate existing facilities.

Pennsylvania Gaming Regulations

Our slot machine operations at Pocono Downs are subject to extensive regulation
under the Pennsylvania Gaming Act. Under that law, the PGCB is responsible for, among other things:



| |  |  | granting permission annually to maintain existing slot machine licenses;
| | - |  | ------------------------------------------------------------------------



| |  |  | approving, after a public hearing, the granting of additional slot machine licenses (to the extent allowed under the Pennsylvania Gaming Act);
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | licensing all officers, directors, gaming officials and certain other employees of a company with slot machine operations; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | approving all contracts entered into by a company affecting slot machine operations.
| | - |  | ------------------------------------------------------------------------------------

As in most states, the regulations and oversight applicable to our operations in Pennsylvania are intended primarily to safeguard the legitimacy of
gaming and its freedom from inappropriate or criminal influences. The PGCB has broad authority to regulate in the best interests of gaming and may, to that end, disapprove the involvement of certain personnel in our operations, deny approval of
certain acquisitions following their consummation or withhold permission on applicable gaming matters for a variety of reasons. In addition, while many of the regulations issued by the PGCB are temporary in nature, the PGCB is revising and issuing
permanent regulations which can deviate from the previously issued temporary regulations. Evaluation of these permanent regulations is still ongoing, while the regulations are being developed and implemented.



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Material Agreements

The following is a summary of the material terms of several of our and the Tribes material agreements. This summary does not restate these agreements in their entirety. We urge you to read these agreements
because they, and not these summaries, define our rights and obligations and the rights and obligations of the Tribe. Copies of these agreements are included as exhibits to this Form 10-K.

Gaming Compact with the State of Connecticut

In April 1994, the Tribe and the State of Connecticut entered into a gaming compact to authorize and regulate the Tribes conduct of gaming on the Tribes land in Connecticut. The Mohegan Compact has a
perpetual term and is substantively similar to the procedures that govern gaming operations of the Mashantucket Pequot Tribe in Connecticut and provide, among other things, as follows:

(1) The Tribe is authorized to conduct on its reservation those Class III gaming activities specifically enumerated in the Mohegan Compact
or amendments thereto. The forms of Class III gaming authorized under the Mohegan Compact include: (a) specific types of games of chance; (b) video facsimiles of such authorized games of chance (i.e., slot machines); (c) off-track
pari-mutuel betting on animal races; (d) pari-mutuel betting, through simulcasting, on animal races; and (e) certain other types of pari-mutuel betting on games and races conducted at the gaming facility (some types currently are together
with off-track pari-mutuel telephone betting on animal races, under a moratorium).

(2) The Tribe must establish standards
of operations and management of all gaming operations in order to protect the public interest, ensure the fair and honest operation of gaming activities and maintain the integrity of all Class III gaming activities conducted on the Tribes
lands. The first of such standards was set forth in the Mohegan Compact and approved by the State of Connecticut gaming agency. State of Connecticut gaming agency approval is required for any revision to such standards. The Tribe must supervise the
implementation of these standards by regulation through a Tribal gaming agency.

(3) Criminal law enforcement matters
relating to Class III gaming activities are under the concurrent jurisdiction of the State of Connecticut and the Tribe.

(4) All gaming employees must obtain and maintain a gaming employee license issued by the State of Connecticut gaming agency.

(5) Any enterprise providing gaming services or gaming equipment to the Tribe is required to hold a valid, current gaming services registration issued by the State of Connecticut gaming agency.

(6) The State of Connecticut annually assesses the Tribe for the costs attributable to its regulation of the Tribes gaming
operations and for the provision of law enforcement at the Tribes gaming facility.

(7) Net revenues from the
Tribes gaming operations may be applied only for purposes related to Tribal government operations and general welfare, Tribal economic development, charitable contributions and payments to local governmental agencies.

(8) Tribal ordinances and regulations governing health and safety standards at the gaming facilities may be no less rigorous than the
applicable laws and regulations of the State of Connecticut.

(9) Service of alcoholic beverages within any gaming facility
is subject to regulation by the State of Connecticut.

(10) The Tribe waives any defense which it may have by virtue of
sovereign immunity with respect to any action brought in United States District Court to enforce the Mohegan Compact.

In May 1994, the
Tribe and the State of Connecticut entered into a memorandum of understanding, or MOU, which sets forth certain matters regarding the implementation of the Mohegan Compact. The MOU stipulates that a portion of the revenues earned on slot machines
must be paid to the State of Connecticut. This



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payment is known as the slot win contribution. For each 12-month period commencing July 1, 1995, the slot win contribution shall be the lesser of:
(a) 30% of gross revenues from slot machines, or (b) the greater of (i) 25% of gross revenues from slot machines or (ii) $80.0 million. The slot win contribution payments will not be required if the State of Connecticut legalizes
any other gaming operations with slot machines or other commercial casino games within the State of Connecticut except those operations consented to by the Tribe and the Mashantucket Pequot Tribe.

Agreement with the Town of Montville

On June 16, 1994, the Tribe and the Town of Montville entered into an agreement whereby the Tribe agreed to pay to the town $500,000 annually to minimize the impact on the town resulting from the decreased tax revenues on reservation
land held in trust. The Tribe assigned its rights and obligations in the agreement with the Town of Montville to us.

Land Lease from
the Tribe to the Authority

Mohegan Sun is located upon land that is held in trust for the Tribe by the United States. We entered
into a land lease with the Tribe under which the Tribe leases to us the property and all buildings, improvements and related facilities constructed or installed on the property. The lease was approved by the Secretary of the Interior on, and became
effective as of, September 29, 1995. Summarized below are several key provisions of this lease. See also Part I. Item 2. Properties.

Term

The term of the lease is 25 years with an option, exercisable by us, to extend the term for one
additional 25-year period. Upon the termination of the lease, we will be required to surrender to the Tribe possession of the property and improvements, excluding any equipment, furniture, trade fixtures or other personal property.

Rent and Other Operating Expenses

We
are required to pay to the Tribe a nominal annual rental fee. For any period when the Tribe or another agency or instrumentality of the Tribe is not the tenant under the lease, the rent will be eight percent of the tenants gross revenues from
the premises. We are responsible for the payment of all costs of owning, operating, constructing, maintaining, repairing, replacing and insuring the leased property.

Use of Leased Property

We may use the leased property and improvements solely for the construction
and operation of Mohegan Sun, unless prior approval is obtained from the Tribe for any proposed alternative use. Similarly, no construction or alteration of any building or improvement located on the leased property by us may be made unless complete
and final plans and specifications have been approved by the Tribe. Following foreclosure of any mortgage on our interest under the lease or any transfer of such interest to the holder of such mortgage in lieu of foreclosure, the leased property and
improvements may be used for any lawful purpose, subject only to applicable codes and governmental regulations provided; however, that a non-Indian holder of the leased property may not conduct gaming operations on the property.

Permitted Mortgages and Rights of Permitted Mortgagees

We may not mortgage, pledge or otherwise encumber our leasehold estate in the leased property except to a holder of a permitted mortgage. Under the lease, a permitted mortgage includes the leasehold
mortgage securing our obligations under our credit facility granted by us that provides, among other things, that: (1) the Tribe will have the right to notice of, and to cure, any default by us; (2) the Tribe will have the right to prior



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notice of an intention by the holder to foreclose on the permitted mortgage and the right to purchase the mortgage in lieu of any foreclosure; and
(3) the permitted mortgage is subject and subordinated to any and all access and utility easements granted by the Tribe under the lease. As provided in the lease, each holder of a permitted mortgage has the right to notice of any default by us
under the lease and the opportunity to cure such default within any applicable cure period.

Default Remedies

We will be in default under the lease if, subject to the notice provisions, we fail to make lease payments or to comply with our covenants under the lease
or if we pledge, encumber or convey our interest in the lease in violation of the terms of the lease. Following a default, the Tribe may, with approval from the United States Secretary of the Interior, terminate the lease unless a permitted mortgage
remains outstanding with respect to the leased property. In that case, the Tribe may not: (1) terminate the lease or our right to possession of the leased property; (2) exercise any right of re-entry; (3) take possession of and/or
relet the leased property or any portion thereof; or (4) enforce any other right or remedy which may materially and adversely affect the rights of the holder of the permitted mortgage, unless the default triggering such rights was a monetary
default which such holder failed to cure after notice.

Priority Distribution Agreement with the Tribe

On August 1, 2001, we entered into a priority distribution agreement with the Tribe, which obligates us to make monthly payments to the Tribe to the
extent of our net cash flows, as defined in the priority distribution agreement. The priority distribution agreement, which has a perpetual term, also clarifies and records the terms pursuant to which we made such payments to the Tribe prior to the
effective date of the priority distribution agreement. The priority distribution agreement obligates us to make monthly priority distribution payments to the Tribe in a maximum aggregate amount of $14.0 million per calendar year, adjusted annually
in accordance with the formula specified in the priority distribution agreement to reflect the effects of inflation. However, payments pursuant to the priority distribution agreement do not reduce our obligation to make payments for governmental
services provided by the Tribe or any payments under any other agreements with the Tribe to the extent that such agreements are permitted under our bank credit facility. See Certain Indebtedness Bank Credit Facility. The monthly payments
under the priority distribution agreement are our limited obligations payable only to the extent of our net cash flows and are not secured by a lien or encumbrance on any of our assets or property.

Relinquishment Agreement with Trading Cove Associates

General

In February 1998, we entered into a relinquishment agreement with Trading Cove Associates,
or TCA, under which we and TCA agreed to terminate a then-existing management agreement with TCA. This termination occurred on December 31, 1999. On January 1, 2000, we assumed the day-to-day management of Mohegan Sun. To compensate TCA
for terminating its management rights, we agreed to pay to TCA 5% of revenues, as defined in the relinquishment agreement, generated by Mohegan Sun during the 15-year period commencing on January 1, 2000 and ending on December 31, 2014.

Relinquishment Payments

The payments under the relinquishment agreement are divided into senior relinquishment payments and junior relinquishment payments, each of which are 2.5% of revenues (as defined in the relinquishment agreement). Senior relinquishment
payments are payable quarterly in arrears and commenced on April 25, 2000, and the junior relinquishment payments are payable semi-annually in arrears and commenced on July 25, 2000. Under the relinquishment agreement, revenues are defined
as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues (including hotel revenues, room service, food and beverage sales, parking



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revenues, ticket revenues and other fees or receipts from the Mohegan Sun Arena and convention center and, all rental or other receipts from the lessees,
licensees and concessionaires, but not the gross receipts of such lessees, licensees and concessionaires, and proceeds of business interruption insurance) derived directly or indirectly from the facilities (as such term is defined in the
relinquishment agreement). Under the relinquishment agreement, the definition of revenues excludes revenues generated from certain expansion areas of Mohegan Sun, such as the Casino of the Wind, as such areas do not constitute facilities
as defined under the relinquishment agreement. Accordingly, revenues generated from such areas are not subject to the relinquishment agreement.

Subordination of Relinquishment Payments/Priority Distribution to the Tribe

The relinquishment agreement provides that each
of the senior and junior relinquishment payments are subordinated in right to payment of senior secured obligations, which includes our bank credit facility and capital lease obligations, and that the junior relinquishment payments are further
subordinated to payment of all other senior obligations, including our senior notes. The relinquishment agreement also provides that all relinquishment payments are subordinated in right of payment to the minimum priority distribution payment, as
defined in the relinquishment agreement, from us to the Tribe to the extent then due.

Trademarks

In connection with the relinquishment agreement, TCA granted us an exclusive, irrevocable, perpetual, world-wide and royalty-free license with respect to
trademarks and other similar rights including the Mohegan Sun name, used at or developed for Mohegan Sun. We capitalized $130.0 million of the relinquishment liability in connection with the trademark value of the Mohegan Sun brand name.

Pocono Downs Purchase Agreement

In October 2004, we entered into a purchase agreement with a subsidiary of Penn National Gaming, Inc., pursuant to which we acquired the Pocono Downs entities for approximately $280.0 million. In August 2006, we
entered into an amendment of the Pocono Downs purchase agreement with the seller, a subsidiary of Penn National Gaming, Inc. Pursuant to the amendment, in exchange for our agreement to modify certain provisions of the purchase agreement, including
the elimination of our post-closing termination rights, we will receive an aggregate refund of $30.0 million of the original purchase price for the Pocono Downs entities, payable in five annual installments of $7.0 million, $7.0 million, $6.5
million, $6.0 million and $3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. We have received the $7.0 million installments due in November 2007 and 2008.

Management and Development Agreements with Other Tribes

Cowlitz Project

In September 2004, Salishan-Mohegan entered into development and management
agreements with the Cowlitz Tribe regarding the Cowlitz Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing, development, construction and furnishing, and provides assistance with
the financing, of the Cowlitz Project. The development agreement provides for certain development fees of 3.0% of total Project Costs, as defined in the development agreement, which are to be distributed to Mohegan VenturesNW and the Mohegan
Tribe pursuant to the Salishan-Mohegan operating agreement. The management agreement is for a period of seven years commencing with the opening of the proposed casino, during which Salishan-Mohegan will manage, operate and maintain the proposed
casino. The management agreement provides for a management fee of 24.0% of Net Revenues, as defined in the management agreement, which approximates net income from the Cowlitz Project. Pursuant to the operating agreement, management fees will be
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percentages. Development of the Cowlitz Project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a
gaming compact with the State of Washington and the United States Department of the Interior accepting land into trust on behalf of the Cowlitz Tribe. The management agreement is subject to approval by the NIGC.

Menominee Project

In October 2004,
we entered into a management agreement with the Menominee Tribe, and MKGA regarding the Menominee Project. Terms of the management agreement grant us the exclusive right and obligation to manage, operate and maintain the proposed casino and
destination resort to be located in Kenosha, Wisconsin, for a period of seven years commencing with the opening of the proposed casino, in consideration of a management fee of 13.4% of Net Revenues, as defined in the management agreement, which
approximates net income earned from the Menominee Project.

In March 2007, WTG was formed to participate in the development of the
Menominee Project. WTG consists of two members, our wholly-owned subsidiary, MVW, which holds an 85.40% membership interest in WTG, and a wholly-owned subsidiary of the Mohegan Tribe, MV, which holds the remaining 14.60% membership interest.
Following formation in March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC for consideration of $6.4 million. As a result
of the purchase, we and the Mohegan Tribe, through MVW and MV, respectively, will receive development fees payable to WTG of 13.4% of Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and MKGA, which
approximates net income from the Menominee Project over a period of seven years following the opening of the casino. Development of the Menominee Project is subject to certain governmental and regulatory approvals, including but not limited to, the
United States Department of the Interior accepting new land into trust for gaming at the project site in Kenosha, Wisconsin. The management agreement is subject to approval by the NIGC.

Certain Indebtedness

The following is a summary of the material terms of our material debt
obligations. This summary does not restate in entirety the terms of the agreements under which we incurred the indebtedness. We urge you to read these agreements because they, and not these summaries, define our rights and obligations, and, in some
cases, those of the Tribe. These agreements are included as exhibits to this Form 10-K.

Bank Credit Facility

In March 2007, we entered into a bank credit facility providing for up to $1.0 billion in borrowing capacity, including a $250.0
million increase option, from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. This bank credit facility replaced our prior bank credit facility. The five-year senior secured
revolving credit facility included a $300.0 million term loan conversion provision which was triggered upon the initial accumulation of $300.0 million in total borrowings on the bank credit facility on August 15, 2008. The term loan requires
principal payments in quarterly installments of $750,000 beginning December 31, 2008 through the maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. As of September 30,
2008, the amount under letters of credit issued pursuant to the bank credit facility totaled $7.2 million, of which no amount was drawn, as discussed below under Letters of Credit. Inclusive of the term loan and letters of credit, which
reduce borrowing availability under the bank credit facility, we had approximately $692.8 million of borrowing capacity under the bank credit facility as of September 30, 2008, without taking into account covenants under the bank credit facility and
the amended bank credit facility, the line of credit and note indentures. Considering restrictive financial covenants under our bank credit facility and note indentures, the amount available for borrowings approximated $85.0 million under the bank
credit facility as of September 30, 2008.



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In February 2008, we received requisite consent from our lenders to Amendment No. 1 to the bank
credit facility. Amendment No. 1, among other things, provided for increases in the permitted capital expenditures for Project Horizon and Project Sunrise from $800.0 million and $200.0 million, respectively, to $950.0 million and $215.0
million, respectively. Amendment No. 1 also modified our total leverage, senior leverage and minimum fixed charge coverage ratio covenants to conform with the increase in projected expenditures and the change in the projected completion dates
for Project Horizon and Project Sunrise.

At our option, each advance of loan proceeds accrues interest on the basis of a base rate or on
the basis of a one-month, two-month, three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on our Total Leverage Ratio, as each term is defined in the bank credit facility, at the time each loan is
made. We also pay commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar
quarter. The Applicable Rate for base rate advances is between 0.000% and 1.375%, and the Applicable Rate for Eurodollar rate advances is between 1.250% and 2.625%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate
is the higher of Bank of Americas announced prime rate or the federal funds rate plus 0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate
advances is payable quarterly in arrears. As of September 30, 2008, we had a $300.0 million Eurodollar rate loan and no base rate loan outstanding. The Eurodollar rate loan outstanding at September 30, 2008 was based on a one-month
Eurodollar rate of 3.704% plus an Applicable Rate of 2.125%. The Applicable Rate for commitment fees was 0.300% as of September 30, 2008.

The bank credit facility is collateralized by a lien on substantially all of our assets, including the assets comprising Pocono Downs and a leasehold mortgage on the land previously taken into trust by the federal government and
improvements which comprise Mohegan Sun. We will also be required to pledge additional assets as collateral for the bank credit facility as we or our guarantor subsidiaries acquire them. Our obligations under the bank credit facility are guaranteed
by MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. The bank credit facility subjects us to a number of restrictive covenants, including financial covenants. These financial covenants relate to,
among other things, our permitted total debt and senior debt leverage ratios, our minimum fixed charge coverage ratio, our maximum capital expenditures and a periodic test which ensures that we have sufficient liquidity under our bank credit
facility and other allowed borrowings, projected cash flows over applicable construction periods and existing cash and cash equivalents to cover planned construction expenditures.

The bank credit facility includes non-financial covenants by us and the Tribe of the type customarily found in loan agreements for similar transactions
including requirements that:



| |  |  | the Tribe preserve its existence as a federally recognized Indian tribe;
| | - |  | ------------------------------------------------------------------------



| |  |  | the Tribe cause us to continually operate both the Mohegan Sun and Pocono Downs entities in compliance with all applicable laws; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | except under specific conditions, limit us from selling or disposing of our assets, limit the transfer of our assets to our non-guarantor subsidiary, limit the
incurrence by us and our guarantor subsidiaries of other debt or contingent obligations and limit our ability to extend credit, make investments or commingle our assets with assets of the Tribe.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of September 30, 2008, we and the Tribe were in compliance with all of our and their respective covenant requirements in the bank credit
facility.

On December 10, 2008, we amended and restated our bank credit facility following the suspension of Project Horizon. Among
other things, the amended bank credit facility reduced the overall size of the credit facility from $1.0 billion to $850.0 million, reduced the term loan from $300.0 million to $150.0 million and



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reduced the increase option from $250.0 million to $150.0 million. Factoring in the reduction in the size of our bank credit facility from $1.0 billion to
$850.0 million, our borrowing capacity effectively was reduced to approximately $542.8 million under the amended bank credit facility from approximately $692.8 million under the bank credit facility as of September 30, 2008, without taking into
account covenants under the bank credit facility and amended bank credit facility, as applicable, and note indentures. Pursuant to the amendment, we also obtained the right to use proceeds from the amended bank credit facility to repay our 63/8% $330.0 million Senior Subordinated Notes at maturity on July 15, 2009, which is our current intention.

2005 61/8% Senior Notes

In February 2005, we issued $250.0 million Senior
Notes with fixed interest payable at a rate of 6.125% per annum, or the 2005 Senior Notes. The net proceeds from this financing were used to repay amounts outstanding under the prior bank credit facility and to pay fees and expenses associated
with the issuance. The 2005 Senior Notes mature on February 15, 2013. The first call date for the 2005 Senior Notes is February 15, 2009. Interest on the 2005 Senior Notes is payable semi-annually on February 15 and August 15.
The 2005 Senior Notes are uncollateralized general obligations, which are effectively subordinated to all of our existing and future senior secured indebtedness, including the bank credit facility. The 2005 Senior Notes rank equally in right of
payment with 50% of our payment obligations under the Relinquishment Agreement that are then due and owing and rank senior to the remaining 50% of our payment obligations under the Relinquishment Agreement that are then due and owing, the 2001
Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf,
MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Notes.

2001 83/8% Senior Subordinated Notes

In July 2001, we issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.375% per annum, or the 2001 Senior Subordinated Notes. The proceeds from this financing were used to pay
transaction costs, pay down $90.0 million on the then existing bank credit facility and fund costs related to Project Sunburst. Interest on the 2001 Senior Subordinated Notes is payable semi-annually on January 1 and July 1. The 2001
Senior Subordinated Notes mature on July 1, 2011. The first call date for the 2001 Senior Subordinated Notes was July 1, 2006. The 2001 Senior Subordinated Notes are uncollateralized general obligations and are subordinated to the bank
credit facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of our payment obligations under the Relinquishment Agreement that are then due and owing. The 2001 Senior Subordinated Notes rank equally with the
2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of our payment obligations under the Relinquishment Agreement that are then due and
owing. MBC is a guarantor of the 2001 Senior Subordinated Notes.

In August 2004, we completed a cash tender offer and consent solicitation
to repurchase any or all of its outstanding 2001 Senior Subordinated Notes. As part of the tender offer, we solicited and received requisite consents to certain proposed amendments to the indentures governing the 2001 Senior Subordinated Notes,
which eliminated substantially all of the restrictive covenants thereunder. The aggregate principal amount of 2001 Senior Subordinated Notes tendered was $133.7 million. An aggregate principal amount of $16.3 million of the 2001 Senior Subordinated
Notes remain outstanding as of September 30, 2008.

2002 8% Senior Subordinated Notes

In February 2002, we issued $250.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.000% per annum, or the 2002 Senior
Subordinated Notes. The proceeds from this financing were used to pay transaction costs and pay down $243.0 million on the then existing bank credit facility. Interest on the 2002 Senior Subordinated Notes is payable semi-annually on April 1
and October 1. The 2002 Senior Subordinated



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Notes mature on April 1, 2012. The first call date for the 2002 Senior Subordinated Notes was April 1, 2007. The 2002 Senior Subordinated Notes are
uncollateralized general obligations and are subordinated to the bank credit facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of our payment obligations under the Relinquishment Agreement that are then due
and owing. The 2002 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of our payment
obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2002 Senior Subordinated Notes.

2003 63/8% Senior Subordinated Notes

In July 2003, we issued $330.0 million
Senior Subordinated Notes with fixed interest payable at a rate of 6.375% per annum, or the 2003 Senior Subordinated Notes. The proceeds from this financing were used to repurchase substantially all of the outstanding $300.0 million 8.750%
Senior Subordinated Notes issued in March 1999 and to pay fees and expenses associated with the issuance. Interest on the 2003 Senior Subordinated Notes is payable semi-annually on January 15 and July 15. The 2003 Senior Subordinated Notes
mature on July 15, 2009. We have the option of repaying the 2003 Senior Subordinated Notes at maturity with proceeds from the amended bank credit facility as described above. In accordance with SFAS No. 6, Classification of
Short-Term Obligations Expected to Be Refinanced (SFAS No. 6), we have classified the 2003 Senior Subordinated Notes as long-term debt for financial reporting purposes based on our intent and ability to refinance this debt on
a long-term basis through the use of proceeds from the amended bank credit facility. The 2003 Senior Subordinated Notes are uncollateralized general obligations and are subordinated to the bank credit facility, the 2005 Senior Notes and, in a
liquidation, bankruptcy or similar proceeding, 50% of our payment obligations under the Relinquishment Agreement that are then due and owing. The 2003 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior
Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of our payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono
Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2003 Senior Subordinated Notes.

2004 71/8% Senior Subordinated Notes

In August 2004, we issued $225.0 million Senior Subordinated Notes with fixed interest payable at a rate of 7.125% per annum, or the 2004 Senior
Subordinated Notes. The net proceeds from this financing, together with $130.0 million of availability under the prior bank credit facility, were used to repurchase substantially all of the outstanding 2001 Senior Subordinated Notes and
substantially all of the outstanding 1999 Senior Notes tendered in the tender offers described above and to pay fees and expenses associated with the issuance. The 2004 Senior Subordinated Notes mature on August 15, 2014. The first call date
for the 2004 Senior Subordinated Notes is August 15, 2009. Interest on the 2004 Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2004 Senior Subordinated Notes are uncollateralized general
obligations and are subordinated to the bank credit facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of our payment obligations under the Relinquishment Agreement that are then due and owing. The 2004
Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of our payment obligations under the
Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2004 Senior Subordinated Notes.

2005 67/8% Senior Subordinated Notes

In February 2005, we issued $150.0
million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum, or the 2005 Senior Subordinated Notes. The net proceeds from this financing were used to



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repay amounts outstanding under the prior bank credit facility and to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated Notes
mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15, 2010. Interest on the 2005 Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2005 Senior
Subordinated Notes are uncollateralized general obligations and are subordinated to the bank credit facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of our payment obligations under the Relinquishment
Agreement that are then due and owing. The 2005 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the
remaining 50% of our payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior
Subordinated Notes.

The senior and senior subordinated note indentures contain certain financial and non-financial covenants with which we
and the Tribe must comply. The financial covenants include, among other things, limitations on restricted payments and the incurrence of indebtedness, while the non-financial covenants include, among other things, reporting obligations, compliance
with laws and regulations and our continued existence. As of September 30, 2008, both we and the Tribe were in compliance with all of their respective covenant requirements in the senior and senior subordinated note indentures.

WNBA Promissory Note

We and
MBC are parties to a membership agreement with WNBA, LLC, or the membership agreement. The membership agreement sets forth the terms and conditions pursuant to which MBC acquired a membership in the WNBA and the right to own and operate a
professional basketball team in the WNBA. We guaranteed the obligations of MBC under the Membership Agreement.

In consideration for this
acquisition, MBC paid $2.0 million, with funds advanced from us, and issued a promissory note to the WNBA, or the WNBA note, for $8.0 million. The WNBA note accrues interest at an annual rate equal to a three-month Eurodollar rate plus 1.50%. We
guaranteed the obligations of MBC under the WNBA note. Pursuant to the WNBA note, principal payments of $1.0 million, subject to adjustment for certain revenue thresholds, and interest payments are required to be paid to the WNBA on each anniversary
of the WNBA note. The WNBA note is scheduled to mature in January 2011, but will mature no later than January 2013. As of September 30, 2008, the principal balance outstanding on the WNBA note was $3.0 million.

Line of Credit

We have a
$25.0 million revolving loan agreement with Bank of America, or the line of credit. Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of our Leverage Ratio, as each term is
defined in the line of credit. Borrowings under the line of credit are uncollateralized obligations. The line of credit was amended in March 2008 to extend the maturity date from March 31, 2008 to March 31, 2009. As of September 30,
2008, we had $2.9 million in loans outstanding under the line of credit, which were based on a one-month Eurodollar rate of 2.486% plus an Applicable Margin of 1.775%. The line of credit subjects us to certain covenants, including a covenant to
maintain at least $25.0 million available for borrowing under the bank credit facility. As of September 30, 2008, we were in compliance with all covenant requirements in the line of credit and had $22.1 million of borrowing capacity thereunder.

Letters of Credit

As of September 30, 2008, we maintained five uncollateralized letters of credit, three of which we maintained to satisfy potential workers compensation liabilities, overdue pari-mutuel wagering tax liabilities of the Pocono Downs
entities and potential contractor and subcontractor liabilities relating to Project Horizon, and two of which related to road work at the Pocono Downs entities. The letters of credit expire on various dates from January 2009 through September 2009,
subject to renewals. As of September 30, 2008, no amounts were drawn on the letters of credit.



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Salishan-Mohegan Bank Credit Facility

In October 2006, Salishan-Mohegan entered into a $25.0 million revolving loan agreement with Bank of America, or the Salishan credit facility, which
matures on September 30, 2009. The revolving loan has no mandatory amortization provisions and is payable in full at maturity. At the option of Salishan-Mohegan, each advance of loan proceeds accrues interest on the basis of a base rate or on
the basis of a one-month, two-month, three-month or six-month Eurodollar rate, plus a spread of 1.250% for base rate loans and an Applicable Rate, as defined in the Salishan credit facility, of 2.250% for Eurodollar loans. The base rate is the
higher of Bank of Americas announced prime rate or the federal funds rate plus 0.500%. The Salishan credit facility is collateralized by a lien on substantially all of the existing and future assets of Salishan-Mohegan. The obligations of
Salishan-Mohegan under the Salishan credit facility are also guaranteed by the Tribe. The Salishan credit facility subjects Salishan-Mohegan to a number of restrictive covenants, including financial and non-financial covenants customarily found in
loan agreements for similar transactions.

As of September 30, 2008, Salishan-Mohegan had $21.0 million in Eurodollar rate loans and
no base rate loans outstanding. The Eurodollar rate loans outstanding at September 30, 2008 were comprised of: (1) a $17.8 million loan based on a one-month Eurodollar rate of 3.709% plus an Applicable Rate of 2.250%; (2) a $2.2
million loan based on a one-month Eurodollar rate of 2.488% plus an Applicable Rate of 2.250%; and (3) a $1.0 million loan based on a one-month Eurodollar rate of 3.704% plus an Applicable Rate of 2.250%. The Applicable Rate for commitment fees
was 0.50% as of September 30, 2008. As of September 30, 2008, Salishan-Mohegan had $4.0 million of borrowing capacity under the Salishan credit facility.

Environmental Matters

The site on which Mohegan Sun is located formerly was occupied by United Nuclear Corporation, a naval
products manufacturer of, among other things, nuclear reactor fuel components. United Nuclear Corporations facility was officially decommissioned on June 8, 1994 when the Nuclear Regulatory Commission confirmed that all licensable
quantities of such nuclear material had been removed from the site and that any residual contamination from such material was remediated according to the Nuclear Regulatory Commission approved decommissioning plan.

From 1991 through 1993, United Nuclear Corporation commissioned environmental audits and soil sampling programs which detected, among other things,
volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. The Connecticut Department of Environmental Protection, or DEP, reviewed the environmental audits and reports and established cleanup requirements for the
site. In December 1994, the DEP approved United Nuclear Corporations remedial plan, which determined that groundwater remediation was unnecessary because although the groundwater beneath the site was contaminated, it met the applicable
groundwater criteria given the classification of the groundwater under the site. In addition, extensive remediation of contaminated soils and additional investigation were completed to achieve the DEPs cleanup criteria and demonstrate that the
remaining soils complied with applicable cleanup criteria. Initial construction at the site also involved extensive soil excavation. According to the data gathered in a 1995 environmental report commissioned by United Nuclear Corporation,
remediation is complete and is consistent with the applicable Connecticut cleanup requirements. The DEP has reviewed and approved the cleanup activities at the site, and, as part of the DEPs approval, United Nuclear Corporation was required to
perform post-closure groundwater monitoring at the site to ensure the adequacy of the cleanup. In addition, under the terms of United Nuclear Corporations environmental certification and indemnity agreement with the Department of the Interior
(which took the former United Nuclear Corporation land into trust for the Tribe), United Nuclear Corporation agreed to indemnify the Department of the Interior for environmental actions and expenses based on acts or conditions existing or occurring
as a result of United Nuclear Corporations activities on the property.

We are not currently incurring, and did not incur in the
fiscal years ended September 30, 2008, 2007 and 2006, any material costs related to compliance with environmental requirements with respect to the Mohegan



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Sun sites former use by the United Nuclear Corporation. Notwithstanding the foregoing, no assurance can be given that any existing environmental
studies reveal all environmental liabilities, or that future laws, ordinances or regulations will not impose any material environmental liability, or that a material environmental condition does not otherwise currently exist.

Prior to acquiring the Pocono Downs entities, we conducted an extensive environmental investigation of the Pocono Downs facilities. In the course of that
work, we identified several environmental conditions at Pocono Downs facility for which corrective actions are necessary to bring the property into compliance with applicable laws and regulations. Downs Racing implemented a comprehensive plan to
mitigate and resolve these conditions. As of July 2008, Downs Racing has completed its remediation project and by all indications, remediation measures are functioning appropriately. In addition, in the summer of 2008, Pocono Downs was contacted by
the Pennsylvania Department of Environmental Protection, or PA DEP, with regard to operation of its horseracing facility. Specifically, the PA DEP indicated that Pocono Downs would have to acquire permits, as well as follow accepted procedures, with
regard to the management of the manure produced by the large volume of horses at the facility. The purpose of these measures is to ensure that there is no environmental contamination from associated runoff into streams and other ground water that
would cause environmental issues. Pocono Downs is currently completing the permitting process through the PA DEP and will be advised as to what additional measures, if any, it must take with regard to the operation of its horseracing facility within
the appropriate environmental standards.

Employees and Labor Relations

As of September 30, 2008, the Connecticut entities employed approximately 8,400 full-time employees and 1,900 seasonal, part-time and on-call
employees. Pursuant to the Tribal Employment Rights Ordinance, when recruiting and hiring personnel, except with respect to key personnel, Mohegan Sun is obligated to give preference first to qualified members of the Tribe and then to enrolled
members of other Indian tribes. See Certain Relationships and Related Transactions. None of Mohegan Suns employees are covered by collective bargaining agreements.

As of September 30, 2008, the Pocono Downs entities employed approximately 1,100 full-time employees and 175 part-time and on-call employees.
Certain of our Pocono Downs employees are represented under collective bargaining agreements between Downs Racing, the International Union of Operating Engineers Local Union 542C (Local Union 542C) and Teamsters Local No. 401
(Local No. 401). The agreement with Local Union 542C expires on March 31, 2010 and relates to equipment and heavy equipment operators. The agreement with Local No. 401 expires on January 31, 2012 and relates to truck
drivers and maintenance employees.

Item 1A. Risk Factors.

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, set forth below are cautionary statements
identifying important factors that could cause actual events or results to differ materially from any forward-looking statements made by or on behalf of us, whether oral or written. We wish to ensure that any forward-looking statements are
accompanied by meaningful cautionary statements in order to maximize to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. Accordingly, any such statements are
qualified in their entirety by reference to, and are accompanied by, the following important factors that could cause actual events or results to differ materially from our forward-looking statements. Refer also to Cautionary Note Regarding
Forward-Looking Statements on page 1 of this Form 10-K.



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Risks Related to Our Business

Our substantial indebtedness could affect our financial condition adversely.

We currently have and will continue to have a significant amount of indebtedness. As of September 30, 2008, we had outstanding debt totaling $1.55
billion.

Our substantial indebtedness could have significant adverse effects on our business. Such adverse effects include, but are not
limited to, the following:



| |  |  | make it more difficult for us to satisfy our debt service obligations;
| | - |  | ----------------------------------------------------------------------



| |  |  | increase our vulnerability to adverse economic and industry conditions;
| | - |  | -----------------------------------------------------------------------



| |  |  | require us to dedicate a substantial portion of our cash flows from operations to payments on our indebtedness, thereby reducing the availability of our cash flows
to fund working capital, capital expenditures and other general operating requirements;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for, or reacting to, changes in our business and the gaming industry, which may place us at a disadvantage compared to our
competitors with stronger liquidity positions, thereby hurting our results of operations and ability to meet our debt service obligations with respect to our outstanding indebtedness; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit, along with the financial and other restrictive covenants in our outstanding indebtedness, our ability to borrow additional funds.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------

Our failure to generate sufficient cash flows could prevent us from fulfilling our debt service obligations.

Our ability to make payments on and to refinance our indebtedness will depend upon our ability to generate cash flows from operations in
the future. This, to a certain extent, is subject to financial, economic, political, competitive regulatory and other factors beyond our control. If we are unable to generate sufficient cash flows from operations, or if future borrowings are not
available to us under our bank credit facility, we may be unable to meet our debt service obligations with respect to our outstanding indebtedness.

In addition, the term loan under our amended bank credit facility requires principal payments in quarterly installments of $750,000 beginning December 31, 2008 through June 30, 2010. If we have not repaid the term loan in full
prior to June 30, 2010, principal payments under the amended bank credit facility will increase to $30.0 million per quarter beginning June 30, 2010, with a continuing automatic and permanent reduction of the revolver by such amount after
payment in full of the term loan. If we are unable or fail to repay the term loan in full prior to such date, we will experience a significant accelerated decrease in liquidity under the amended bank credit facility, and we may be unable to meet our
debt service obligations thereunder.

We believe that we will need to refinance all or part of our indebtedness at or prior to each
maturity thereof. Our access to financing depends on the willingness of banks to lend to us, our credit rating and conditions in the capital markets in general. We cannot assure you that we will be able to obtain debt for refinancing or to fund our
growth, or that financing options available to us will be on favorable or acceptable terms. We may have to adopt one or more alternative strategies, such as reducing or delaying planned capital expenditures, disposing of some of our assets and/or
seeking to restructure some or all of our debt. These financing strategies may not be affected on satisfactory terms, if at all.

There is
also a risk that the banks that participate in our bank credit facility may not be able to perform when we request additional funds to be advanced to us under the amended bank credit facility. If funds are not available to be drawn under the terms
of the amended bank credit facility, we may not be able to secure additional financing.



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Our diversification efforts may not be successful.

We receive and evaluate various opportunities to diversify our business interests. These opportunities primarily include the development and management
of, investment in, or ownership of other gaming enterprises through direct investments, acquisitions, joint venture arrangements and loan transactions. We are currently pursuing diversification efforts in the states of Washington (Cowlitz Project)
and Wisconsin (Menominee Project) and in the Commonwealth of Massachusetts, and we are currently exploring other potential opportunities. Each of these efforts requires various levels of regulatory approval prior to development of the proposed
projects, and a failure to achieve any of these approvals may result in the termination of the respective project. Additionally, there can be no assurance that we will continue to pursue any of these opportunities or that any of them will be
consummated.

An entitys ability to enforce its rights against us is limited by our sovereign immunity and that of the Tribe, MBC,
Mohegan Ventures-NW, Mohegan Golf, MVW and, to the extent applicable, the Pocono Downs entities, WTG and MTGA Gaming.

Although we, the
Tribe, MBC, Mohegan Ventures-NW, Mohegan Golf, MVW, and to the extent applicable, the Pocono Downs entities, WTG and MTGA Gaming, each have sovereign immunity and may not be sued without our and their respective consents, a limited waiver of
sovereign immunity and consent to suit has been granted, as applicable, in connection with some of our outstanding indebtedness. Each such waiver includes suits against us to enforce our obligation to repay certain outstanding indebtedness.
Generally, waivers of sovereign immunity have been held to be enforceable against Indian tribes. In the event that any waiver of sovereign immunity is held to be ineffective, an entity could be precluded from judicially enforcing their rights and
remedies. With limited exceptions, we, the Tribe, MBC, Mohegan Ventures-NW, Mohegan Golf, MVW, the Pocono Downs entities, WTG and MTGA Gaming have not waived sovereign immunity from private civil suits, including violations of the federal securities
laws. For this reason, an entity may not have any remedy against us, the Tribe, MBC, Mohegan Ventures-NW, Mohegan Golf, MVW, the Pocono Downs entities, WTG or MTGA Gaming for violations of federal securities laws.

Disputes may be brought in a federal or state court that has jurisdiction over the matter. However, federal courts may not exercise jurisdiction over
disputes not arising under federal law, and state courts may not exercise jurisdiction over disputes arising on the Mohegan reservation. In addition, the Tribes Constitution has established a special court, the Gaming Disputes Court, to rule
on disputes with respect to Mohegan Sun. The federal and state courts, under the doctrines of comity and exhaustion of tribal remedies, may be required to (1) defer to the jurisdiction of the Gaming Disputes Court or (2) require that any
plaintiff exhaust its remedies in the Gaming Disputes Court before bringing any action in federal or state court. Thus, there may be no federal or state court forum with respect to a dispute.

The Tribes Constitution currently has a provision that prohibits the Tribe from enacting any law that would impair the obligations of contracts
entered into in furtherance of the development, construction, operation and promotion of gaming on Tribal lands. However, this provision could be amended by a supermajority of the Tribes registered voters to impair the obligation of such
contracts.

Any rights as a creditor are limited to our assets and those of our guarantor subsidiaries.

Any rights as a creditor in a bankruptcy, liquidation or reorganization or similar proceeding would be limited to our assets and the assets of our
guarantor subsidiaries, and would not encompass the assets of our other subsidiary that is not a guarantor, the Tribe or its other affiliates.

We, the Tribe and our wholly owned subsidiaries may not be subject to the federal bankruptcy laws, which could impair the ability of our creditors to be repaid from the sale of our assets if we are unwilling or unable to meet our debt
service obligations.

We, the Tribe and our wholly owned subsidiaries may not be subject to the federal bankruptcy laws. No assurance
can be given that, if an event of default occurs, a forum will be available to creditors other than the



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Gaming Disputes Court. In such court, there are presently limited precedents for the interpretation of Tribal law with respect to bankruptcy or insolvency.
Any execution of a judgment of the Gaming Disputes Court or any other court on Tribal lands will require the cooperation of the Tribes officials in the exercise of their police powers. Thus, to the extent that a judgment of the Gaming Disputes
Court must be executed on Tribal lands, the practical realization of any benefit of such a judgment will be dependent upon the willingness and ability of Tribal officials to carry out such judgment. In addition, the land on which Mohegan Sun is
located is owned by the United States in trust for the Tribe, and our creditors and the creditors of the Tribe may not foreclose upon or obtain title to the land.

Restrictions contained in our bank credit facility and the indentures to which we are a party may impose limits on our ability to pursue our business strategies.

Our bank credit facility, as amended, and the indentures to which we are a party contain customary operating and financial restrictions that limit our
discretion on various business matters. These restrictions include covenants limiting our ability to:



| |  |  | incur additional indebtedness;
| | - |  | ------------------------------



| |  |  | pay dividends or make other distributions;
| | - |  | ------------------------------------------



| |  |  | make certain investments;
| | - |  | -------------------------



| |  |  | use assets as security in other transactions;
| | - |  | ---------------------------------------------



| |  |  | sell certain assets or merge with or into another person;
| | - |  | ---------------------------------------------------------



| |  |  | grant liens;
| | - |  | ------------



| |  |  | make capital expenditures; and
| | - |  | ------------------------------



| |  |  | enter into transactions with affiliates.
| | - |  | ----------------------------------------

These restrictions may, among other things, reduce our flexibility in planning for, or reacting to, changes in our business and the gaming industry in general and thereby may negatively impact our financial condition, results of operations
and our ability to meet our debt service obligations.

The bank credit facility also requires us to maintain a fixed charge coverage ratio
and not to exceed certain ratios of senior leverage and total leverage, as defined in the bank credit facility. If these ratios are not maintained or are exceeded, as applicable, it may not be possible for us to borrow additional funds to meet our
obligations.

Additionally, our failure to comply with covenants in our debt instruments could result in an event of default, which, if not
cured or waived, could have a material adverse effect on us and could result in the acceleration of all then-outstanding amounts of such debt and an inability to make debt service payments.

A further downturn in the regional economy could impact our financial performance negatively.

Primarily all Mohegan Sun and Pocono Downs patrons arrive via automobile and are assumed to work or live in the northeastern United States and
northeastern Pennsylvania, respectively. Moderate or severe economic downturns or adverse conditions in the northeastern United States or northeastern Pennsylvania may affect negatively our financial performance. During periods of economic
contraction, our revenues may decrease while some of our costs remain fixed, resulting in decreased earnings. This is because the gaming and other leisure activities that we offer are discretionary expenditures and participation in such activities
may decline during economic downturns because consumers have less disposable income. Even an uncertain economic outlook may affect adversely consumer spending in our gaming operations and related facilities, because consumers spend less in
anticipation of a potential economic downturn.



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The ongoing economic weakness in the regional markets in which our businesses operate, and in the
national economy in general, has negatively impacted consumer confidence and the amount of consumer spending at Mohegan Sun and Pocono Downs. If these conditions continue or worsen, our business, assets, financial condition and results of operations
could continue to be affected adversely.

The loss of a key management member could have a material adverse effect on us, Mohegan Sun
and the Pocono Downs entities.

Our success depends in large part on the continued service of key management personnel, particularly
Mitchell Grossinger Etess, Chief Executive Officer of the Authority and Chief Executive Officer and President of Mohegan Sun, Jeffrey E. Hartmann, Chief Operating Officer of the Authority and Executive Vice President and Chief Operating Officer of
Mohegan Sun, Leo M. Chupaska, Chief Financial Officer of the Authority, and Robert J. Soper, President and Chief Executive Officer of the Pocono Downs entities. The loss of the services of one or more of these individuals or other key personnel
could have a material adverse effect on our business, operating results and financial condition. The key management personnel are currently retained pursuant to employment agreements.

We may be subject to a material environmental liability as a result of possible incomplete remediation of known environmental hazards and the
existence of unknown environmental hazards.

Our properties and operations are subject to a wide range of environmental laws and
regulations governing, among other things, air emissions, wastewater discharges, the use, management and disposal of hazardous and non-hazardous materials and wastes, and the clean-up of contamination. Noncompliance with such laws and regulations,
and past or future activities resulting in environmental releases, could cause us to incur substantial costs, including clean-up costs, fines and penalties, investments to retrofit or upgrade our facilities and programs, or could affect our
operations.

The site on which Mohegan Sun is located was formerly occupied by United Nuclear Corporation, a naval products manufacturer
of, among other things, nuclear reactor fuel components. Prior to the decommissioning of United Nuclear Corporation facilities on the site, extensive remediation of contaminated soils and additional investigations were completed. The site currently
meets federal and state remediation requirements.

Prior to acquiring the Pocono Downs entities, we conducted an extensive environmental
investigation of the Pocono Downs facilities. In the course of that work, we identified several environmental conditions at the Pocono Downs facility for which corrective actions are necessary to bring the property into compliance with applicable
laws and regulations. Downs Racing implemented a comprehensive plan to mitigate and resolve these conditions. As of July 2008, Downs Racing has completed its remediation project and by all indications, remediation measures are functioning
appropriately. In addition, in the summer of 2008, Pocono Downs was contacted by the PA DEP with regard to operation of its horseracing facility. Specifically, the PA DEP indicated that Pocono Downs would have to acquire permits, as well as follow
accepted procedures, with regard to the management of the manure produced by the large volume of horses at the facility. The purpose of these measures is to ensure that there is no environmental contamination from associated runoff into streams and
other ground water that would cause environmental issues. Pocono Downs is currently completing the permitting process through the PA DEP and will be advised as to what additional measures, if any, it must take with regard to the operation of its
horseracing facility within the appropriate environmental standards.

Notwithstanding the foregoing, we cannot assure you that:



| |  |  | the various environmental reports or any other existing environmental studies prepared with respect to these sites revealed all environmental liabilities;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any prior owners or tenants did not create any material environmental condition not known to us;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | future laws, ordinances or regulations will not impose any material environmental liability; or
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | a material environmental condition does not otherwise exist on any site.
| | - |  | ------------------------------------------------------------------------



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Any of the above could have a material adverse effect upon our future operating results and ability to
meet our debt service obligations.

Risks Related to Mohegan Sun

The following summarizes the material risks we face as a result of existing and potential competition that may affect our results of operations at Mohegan
Sun. A more extensive discussion of the competitive landscape affecting Mohegan Sun can be found under Market and Competition from Other Gaming Operations. In addition, our harness racing and slot machine operations at Pocono Downs are
subject to competition in Pennsylvania and southeastern New York, as described below under Risks Related to Our Pocono Downs Operations.

We face intense competition in our target market from Foxwoods Resort Casino.

The existing gaming
industry in our market areas is highly competitive. Mohegan Sun primarily competes with Foxwoods, operated by the Mashantucket Pequot Tribe. Foxwoods is approximately ten miles from Mohegan Sun and is the largest gaming facility in the United States
in terms of total gaming positions. Foxwoods has been in operation for approximately fifteen years and may have greater financial resources and operating experience than us.

On May 17, 2008, MGM Grand at Foxwoods opened, reportedly adding 825 hotel rooms, 1,444 slot machines, 53 table games, and additional retail,
entertainment, parking, meeting and convention facilities to Foxwoods, at a cost of approximately $700.0 million. The new hotel and casino is owned and operated by the Mashantucket Pequot Tribe, with marketing and other services available under
license from MGM Mirage.

In addition to Foxwoods, we also face competition from existing casinos and other gaming operations elsewhere
in our market areas.

Since the completion of Project Sunburst in 2002, we have broadened Mohegan Suns target market beyond
day-trip customers to include guests making overnight stays at the resort. Consequently, Mohegan Sun also now competes directly for customers with resort casinos in Atlantic City, New Jersey. Many of these casinos may have greater resources,
operating experience and name recognition than Mohegan Sun and may benefit from available mass transit options. Moreover, several Atlantic City properties have completed or are undergoing renovation and expansion, which could make them more
attractive destinations and divert potential customers from Mohegan Sun.

Mohegan Sun also currently faces competition from several casinos
and gaming facilities located on Indian tribal lands in New York, and from racetracks and other facilities in New York and Rhode Island that operate video gaming machines. New York has six federally recognized Indian tribes located in the central,
northern and western parts of the state. Three of these tribes, the Oneida Nation of New York, the Seneca Nation and the St. Regis Mohawk Tribe of New York, currently engage in casino gaming. The St. Regis Mohawk Tribe has a pending land-into-trust
application with the Bureau of Indian Affairs, which, if approved, would allow for the conversion of approximately 29 acres at the Monticello Raceway in Monticello, New York into a tribal-owned casino. In addition to these three tribes, other Indian
tribes have been pursuing potential casino projects, which, if completed, will add significant casino space and hotel rooms to the northeastern United States gaming market. In addition, eight thoroughbred and harness racetracks located in various
parts of the state of New York, including Yonkers Raceway in Yonkers, currently operate an aggregate of approximately 13,000 video gaming machines, with additional facilities under development at Aqueduct Raceway in Queens and under consideration
for Belmont Park in Nassau County. Two facilities located in Rhode Island operate an aggregate of approximately 6,200 video gaming machines.



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New market entrants in our market areas could adversely affect our operations and our ability to meet
our financial obligations.

Under current law, outside of Atlantic City, New Jersey, full-scale commercial casino gaming in the
northeastern United States may be conducted only by federally recognized Indian tribes operating under federal Indian gaming laws or on cruise ships in international waters. In recent years, there has been an increase in the number of Indian tribes
seeking to engage in commercial casino gaming, including full-scale commercial casinos, in the northeastern United States and in the number of individual groups seeking to obtain federal recognition as Indian tribes so that they may engage in
commercial casino gaming in the northeastern United States. Under federal law, after obtaining federal recognition and before full scale commercial casino gaming operations may commence, a tribe must, among other things, have land taken into trust
by the federal government, negotiate a gaming compact with the state in which they intend to engage in commercial casino gaming, adopt a tribal gaming ordinance and construct a facility. A tribe may also need to negotiate a gaming management
agreement and obtain financing to construct a facility. Many Indian tribes and individual groups seeking to gain federal recognition as Indian tribes are pursuing commercial casino gaming in the northeastern United States. These efforts are ongoing
in Connecticut, Maine, Massachusetts, New York and Rhode Island.

In addition, a number of states, including Maine, Massachusetts, Rhode
Island, New York and Maryland, have considered or are considering legalization of one or more forms of commercial casino gaming by non-Indians in one or more locations. Based on internal analysis of the existing and potential gaming market in our
market areas, we believe that competition from other commercial casino gaming operations will continue to increase in the future. We are unable to predict whether any of the efforts discussed above by other federally recognized Indian tribes,
individual groups attempting to gain federal recognition as Indian tribes or legalization of commercial casino gaming by non-Indians will lead to the establishment of additional commercial casino gaming operations in the northeastern United States.
If established, we are uncertain of the impact such commercial casino gaming operations will have on our operations and our ability to meet our financial obligations.

Because the gaming industry in the State of Connecticut has experienced seasonal fluctuations in the past, we also may experience seasonal variations in our revenue and operating results that could adversely affect
our cash flows.

The gaming industry in the State of Connecticut has experienced seasonal fluctuations, with the heaviest gaming
activity occurring between May and August. Similarly, the heaviest gaming activity has occurred at Mohegan Sun between May and August. As a result of these seasonal fluctuations, we likely will continue to experience seasonal variations in our
quarterly revenue and operating results that could result in decreased cash flows during periods in which gaming activity is not at peak levels. These variations in quarterly revenue and operating results could affect adversely our overall financial
condition.

Negative conditions affecting the lodging industry may have an adverse affect on our revenue and cash flows.

We depend on the revenue generated from the hotel at Mohegan Sun, together with the revenue generated from the other portions of Mohegan Sun, to meet
our debt obligations and fund our operations. Revenue generated from the operation of the hotel is subject primarily to conditions affecting our gaming operations, but is also subject to the lodging industry in general, and as a result, our cash
flows and financial performance may be affected not only by the conditions in the gaming industry, but also by those in the lodging industry. Some of these conditions are as follows:



| |  |  | changes in the local, regional or national economic climate;
| | - |  | ------------------------------------------------------------



| |  |  | changes in local conditions such as an oversupply of hotel properties;
| | - |  | ----------------------------------------------------------------------



| |  |  | decreases in the level of demand for hotel rooms and related services;
| | - |  | ----------------------------------------------------------------------



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| |  |  | the attractiveness of our hotel to consumers and competition from comparable hotels;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | cyclical over-building in the hotel industry;
| | - |  | ---------------------------------------------



| |  |  | changes in travel patterns;
| | - |  | ---------------------------



| |  |  | changes in room rates and increases in operating costs due to inflation and other factors; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | the periodic need to repair and renovate the hotel.
| | - |  | ---------------------------------------------------

The ongoing economic weakness in the regional markets in which our businesses operate, and in the national economy in general, has had a negative impact on the lodging industry and on our financial results. The
continuation of, or adverse changes in, these conditions could further adversely affect our hotels financial performance and results of operations.

Our obligations under the relinquishment agreement could affect adversely our financial condition and prevent us from fulfilling our debt service obligations.

Pursuant to the terms of the relinquishment agreement, we are required, among other things, to pay TCA 5% of certain revenues (as defined in the
relinquishment agreement) generated by Mohegan Sun during the 15-year period which commenced on January 1, 2000. During the fiscal year ended September 30, 2008, we paid $76.1 million in relinquishment payments.

This obligation consumes a significant portion of our operating cash flows that might otherwise be available to, among other things, reduce indebtedness
and fund working capital, capital expenditures and other general operating requirements and thereby affect our ability to meet our debt service obligations. As a result, our flexibility in planning for, or reacting to, changes in our business and
the gaming industry in general is reduced. This may place us at a disadvantage compared to our competitors that do not have such an obligation.

Our construction, renovation and expansion projects may face significant inherent risks that could adversely affect our financial condition.

Construction costs and completion dates for our construction, renovation and expansion projects are based on budgets, design documents and schedule estimates prepared with the assistance of architects, contractors and
consultants. Such projects are inherently subject to significant development and construction risks, which could cause unanticipated cost increases. These include the following:



| |  |  | escalation of construction costs above anticipated amounts;
| | - |  | -----------------------------------------------------------



| |  |  | shortage of material and skilled labor;
| | - |  | ---------------------------------------



| |  |  | weather interference;
| | - |  | ---------------------



| |  |  | engineering problems;
| | - |  | ---------------------



| |  |  | environmental problems;
| | - |  | -----------------------



| |  |  | fire, flood and other natural disasters;
| | - |  | ----------------------------------------



| |  |  | labor disputes; and
| | - |  | -------------------



| |  |  | geological, construction, demolition, excavation and/or equipment problems.
| | - |  | ---------------------------------------------------------------------------

Furthermore, although construction activities may be planned to minimize disruption, construction noise and debris and the temporary closing of some of
the facility, such activities may disrupt our current operations. Unexpected construction delays could exacerbate or magnify these disruptions. We cannot assure you that our construction, renovation or expansion projects will not have a material
adverse effect on our results of operations.



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We may suspend or elect not to proceed with our construction, renovation or expansion projects once
they have been undertaken, resulting in charges that could adversely affect our financial condition.

In connection with any of our
construction, renovation or expansion projects, we may suspend, elect not to proceed with or fail to complete such projects once they have been undertaken. In such case, we may be required to carry assets on our balance sheet for suspended projects
or incur significant costs relating to design and construction work performed and materials purchased that may no longer be useful for terminated projects. In addition, our agreements or arrangements with third parties relating to the suspension or
termination of such projects could cause us to incur additional fees and costs. Our suspension of, election not to proceed with, or failure to complete construction, renovation or expansion projects may result in adverse effects to our financial
condition.

On September 22, 2008, we announced the suspension of the hotel, retail and parking garage elements of the Earth Expansion
of Project Horizon as a result of the ongoing national economic recession. We have also announced that we intend to re-evaluate the feasibility of such elements in approximately 12 months. We can provide no assurances, however, that construction of
these elements of Project Horizon will resume at such time, or at all, or the effects that such delay will have on our business, operations or financial condition. As of September 30, 2008, we had incurred approximately $58.0 million for the
Earth Expansion relating to the excavation and foundation work for the planned podium and hotel tower, as well as professional fees for design and architectural work performed. We may incur additional expenses relating to the suspension for the
termination of construction-related employees, obsolescence of project materials purchased and termination of third party agreements and construction insurance for the project. We can provide no assurances that any actual costs associated with the
termination of agreements resulting from the suspension of Project Horizon will approximate estimated costs or that such costs will commence when anticipated.

The risks associated with operating an expanded facility and managing its growth could have a material adverse effect on Mohegan Suns future performance.

With the opening of the Casino of the Wind and Sunrise Square, and when and if the remainder of Project Horizon is completed, we will have a larger amount
of gaming space, more entertainment venues and retail space, as well as a new hotel. There can be no assurance that the Authority will be successful in integrating the new amenities into Mohegan Suns current operations or in managing the
expanded resort. The failure to integrate and manage the new services and amenities successfully could have a material adverse effect on the Authoritys results of operations and its ability to meet its debt service obligations with respect to
its outstanding indebtedness.

Risks Related to the Indian Gaming Industry

Gaming is a highly regulated industry and changes in the law could have a material adverse effect on the Tribes and our ability to conduct
gaming, and thus on our ability to meet our debt service obligations.

Gaming on the Tribes reservation is regulated extensively
by federal, state and tribal regulatory bodies, including the NIGC and agencies of the State of Connecticut, such as the Department of Revenue Services Division of Special Revenue, the State Police and the Department of Consumer
Protections Division of Liquor Control. As is the case with any casino, changes in applicable laws and regulations could limit or materially affect the types of gaming that may be conducted, or services provided, by us and the revenues
realized therefrom.

Currently, the operation of all gaming on Indian lands is subject to IGRA. Over the past several years, legislation
has been introduced in the United States Congress with the intent of modifying a variety of perceived problems with IGRA. Virtually all of the proposals that have been considered seriously would be prospective in effect and contain clauses that
would grandfather existing Indian gaming operations such as Mohegan Sun. Legislation also has been proposed, however, which would have the effect of repealing many of the key



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provisions of IGRA and prohibiting the continued operation of particular classes of gaming on Indian reservations in states where such gaming is not
otherwise allowed on a commercial basis. While none of the substantive proposed amendments to IGRA have been enacted, we cannot predict the effects of future legislative acts. In the event that Congress passes prohibitory legislation that does not
include any grandfathering exemption for existing tribal gaming operations, and if such legislation is sustained in the courts against tribal challenge, our ability to meet our debt service obligations would be materially and adversely affected.

In addition, under federal law, gaming on Indian land is dependent on the permissibility under state law of specific forms of gaming or
similar activities. If the State of Connecticut were to make various forms of gaming illegal or against public policy, such action may have an adverse effect on our ability to conduct our gaming operations. In fact, in January 2003, the State of
Connecticut repealed its Las Vegas nights statute, but the state Attorney General opined that the repeal did not affect the two existing Indian gaming compacts. Connecticut currently permits, among other things, a state lottery, jai alai fronton
betting, greyhound racing and off-track betting parlors.

A change in our current tax-exempt status, and that of our subsidiaries, could
have a material adverse effect on our ability to meet our debt service obligations.

Based on current interpretation of the Internal
Revenue Code of 1986, as amended, or the Code, we, the Tribe and certain of our subsidiaries are not subject to federal income taxes. However, we cannot assure you that the United States Congress will not reverse or modify the exemption for Indian
tribes from federal income taxation.

Efforts have been made in the United States Congress over the past several years to amend the Code to
provide for taxation of the net income of tribal business entities. These efforts have included a House of Representatives bill that would have taxed gaming income earned by Indian tribes as unrelated business income subject to corporate tax rates.
Although no such legislation has been enacted, such legislation could be passed in the future. A change in the tax law could have a material adverse effect on our financial performance.

Risks Related Pocono Downs

The adoption of modifications to the Pennsylvania Gaming Act could result in changes to the rules and regulations under which gaming is conducted in the Commonwealth, which in turn could negatively impact our operations and expected
profitability.

It has been reported that there may be attempts to amend the Pennsylvania Gaming Act in future legislative sessions. As
with any gaming operation, changes in applicable laws or regulations could limit or materially affect the types of gaming we may conduct or the services we may provide, at Pocono Downs. In addition, several legal challenges have been filed in both
state and federal court challenging various provisions of the Pennsylvania Gaming Act. If any legislation or legal challenges were to succeed, our ability to continue to operate a gaming site at Pocono Downs could be adversely affected.

If Pocono Downs is not able to compete successfully with existing and potential competitors, we may not be able to generate sufficient cash flows
to fulfill our debt service obligations relating to the acquisition and our development activities.

In July 2004, Pennsylvania Governor
Ed Rendell signed the Pennsylvania Gaming Act, permitting up to 61,000 slot machines at 14 locations throughout the state. The Pennsylvania Gaming Act authorized slot machines at seven harness and thoroughbred racetracks, and five stand-alone slot
facilities.



43



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The PGCB has awarded conditional slot machine licenses to two facilities which are located closer to
Pocono Downs and are more likely than the other licensed slot operations to have an impact on our Pocono Downs operations. These two facilities are:



| |  |  | Mount Airy, LLC was approved for a conditional Category Two slot machine license to operate a slot machine parlor at the former Mount Airy Lodge in Mount Pocono,
which is approximately 40 miles from Pocono Downs. In October 2007, Mount Airy, LLC opened its $412.0 million Mount Airy Resort and Casino, which includes approximately 2,300 slot machines. In November 2007, the facility introduced a 188-room hotel.
Due to economic conditions, in early 2008 Mount Airy, LLC announced that it will eliminate plans for the expansion of slot machines, hotel rooms, additional restaurants, conference space, spa, pools, retail shops and additional parking at the
facility.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sands Bethworks Gaming, a partnership between BethWorks and Las Vegas Sands, Inc., owner of the Venetian Resort and Casino in Las Vegas, was approved for a
conditional Category Two slot machine license to operate a gaming facility in Bethlehem, which is approximately 70 miles from Pocono Downs. The group had previously announced plans for a $630.0 million Phase I project that would offer 3,000 slot
machines, a 300-room hotel, retail shops and restaurants to the public by the spring of 2009 and a future expansion that would increase the total number of slot machines to 5,000 by late 2009. Plans for the hotel, retail shops and restaurants
affiliated with the casino facility have been suspended indefinitely by Sands Bethworks Gaming. Instead, Sands Bethworks Gaming has announced that it will proceed with only the casino portion of the project, with construction expected to be
completed by mid 2009.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the other slot facilities in Pennsylvania, including a proposed facility in
Philadelphia being developed by Foxwoods Development, Pocono Downs faces competition from a VLT gaming facility at Monticello Raceway in Monticello, New York and its intended replacement under construction in Kiamesha Lake in the Catskills and also
from any full scale casino gaming operation that is ultimately developed by an Indian tribe in the Catskills region. The Catskills are approximately 90 miles from Pocono Downs. Pocono Downs also faces competition from Tioga Downs Racetrack in
Nichols, New York, approximately 100 miles from Pocono Downs, which operates a racetrack and gaming floor with 750 VLTs. In November 2008, Maryland voters passed a referendum authorizing state-licensed slot operations in that state, expected in
2011.

We are uncertain of the impact these racetracks and planned commercial casino gaming operations will have on our operations and our
ability to meet our financial obligations.

Our operations of the Pocono Downs business subject us to regulation by the PGCB and
Pennsylvanias State Harness Racing Commission.

As owners and operators of the Mohegan Sun at Pocono Downs gaming and
entertainment facility offering slot machine gaming, live harness racing and off-track wagering in the Commonwealth of Pennsylvania, we are subject to extensive state regulation by the PGCB, the Harness Racing Commission and other state regulatory
bodies such as the liquor control board. Applicable rules and regulations may require that we obtain a variety of registrations, permits and approvals to conduct our operations. Regulatory bodies may, for any reason set forth in the applicable
legislation, rules and regulations, limit, condition, suspend, deny or revoke a license to conduct our operations as we intend to conduct them. We cannot assure you that we will be able to continually renew all registrations, permits, approvals or
licenses necessary to conduct our business in Pennsylvania as we intend to conduct it. Any of these events, or any changes in applicable laws or regulations, could have a material adverse effect on our business, financial condition and results of
operations.

Changes in or the issuance of additional regulations by the PGCB may adversely affect our operations at Pocono Downs.

Under the Pennsylvania Gaming Act, the PGCB has broad authority to regulate gaming activities. Slot machine gaming is a new industry in
Pennsylvania and many of the regulations issued by the PGCB to date are



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temporary in nature. PGCB is in the process of issuing permanent regulations to take the place of the temporary regulations previously issued. Evaluation of
those regulations is currently underway as those sections are being revised and reissued. Such additional or permanent regulations could adversely affect our gaming operations at Pocono Downs.

Assessments for regulatory costs may negatively impact our operating results.

Under the Pennsylvania Gaming Act, the Pennsylvania Department of Revenue and the PGCB have the right to assess certain regulatory costs against slot
machine operators. At this time, the amount of such costs and the allocation methodology for assessing licensed facilities has not been determined. Once determined, these assessments could adversely affect our operating results at Pocono Downs.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Mohegan Sun is located on 185 acres of the Tribes approximately 507-acre reservation just outside of Uncasville, Connecticut, approximately one mile
from the interchange of Interstate 395 and Connecticut Route 2A. The land located in southeastern Connecticut upon which Mohegan Sun is situated is held in trust for the Tribe by the United States. Mohegan Sun has its own exit from Route 2A, giving
patrons direct access to Interstate 395 and Interstate 95, the main highways connecting Boston, Providence and New York City. By highway, Mohegan Sun is approximately 125 miles from New York City, New York, 100 miles from Boston, Massachusetts, 45
miles from Hartford, Connecticut and 50 miles from Providence, Rhode Island.

We have a lease with the Tribe for land on which Mohegan Sun
is located. The initial term of the lease is 25 years, with an option to renew for one additional 25-year term provided that we are not in default under the lease. The lease also provides that all improvements constructed on the site will become the
property of the Tribe. The lease is a net lease requiring that we assume all costs of operating, constructing, maintaining, repairing, replacing and insuring the leased property, in addition to the payment of a nominal annual rental fee.

We have entered into various lease agreements with the Tribe for properties adjacent to Mohegan Sun. The properties are used for providing access
and/or parking for Mohegan Sun.

In connection with the purchase of the Pocono Downs entities, we acquired Pocono Downs, a harness racing
facility located on approximately 400 acres of land in Plains Township, Pennsylvania. The harness racing facility is currently one of only two harness racetracks in Pennsylvania and one of only four thoroughbred and harness racing facilities in the
state. It has a 5/8 mile all-weather, lighted track with seating for approximately 3,500 and parking capacity for approximately 6,500. Pocono Downs, the first slot machine facility in the Commonwealth of Pennsylvania, was opened at the Pocono Downs
racetrack in November 2006. In addition, we also acquired the OTW facility located in Carbondale, Erie, which was subsequently sold to a third party in July 2007, and Lehigh Valley (Allentown), and we lease the East Stroudsburg and Hazleton
facilities. The Lehigh Valley (Allentown) OTW is a 28,000 square-foot facility and is the largest OTW in the Commonwealth of Pennsylvania.

Salishan-Mohegan owns land in Clark County, Washington for the purposes of developing a casino to be owned by the Cowlitz Tribe. Mohegan Ventures-NW, one of three members in Salishan-Mohegan, is our wholly-owned subsidiary. The Mohegan
Tribe is also a member of Salishan-Mohegan. The land shall be transferred to the Cowlitz Tribe or the United States upon: (1) receipt of necessary financing for the development of the proposed casino; and (2) the underlying property being
accepted to be taken into trust by the United States Department of the Interior.

In November 2006, we formed a wholly owned subsidiary,
Mohegan Golf, to purchase and operate a golf course in southeastern Connecticut. In May 2007, Mohegan Golf acquired substantially all of the assets of



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Pautipaug Country Club Inc., which included a golf course located in Sprague and Franklin, Connecticut. The club was renamed Mohegan Sun Country Club at
Pautipaug and first opened under the ownership of Mohegan Golf in June 2007.

Item 3. Legal Proceedings.

We are a defendant in litigation incurred in our normal course of business. We believe that, based on the advice of counsel, the aggregate liability, if
any, arising from such litigation will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 4. Submission of Matters to a Vote of Security Holders.

None.



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##### Table of Contents

PART II

Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.

We have not issued or sold any equity securities.

Item 6. Selected Financial Data.

The selected financial data shown
below for the fiscal years ended September 30, 2008, 2007 and 2006 and as of September 30, 2008 and 2007, have been derived from our consolidated financial statements included in this Form 10-K. The selected financial data shown below for
the fiscal years ended September 30, 2005 and 2004 and as of September 30, 2006, 2005 and 2004 have been derived from our financial statements for those years, which are not included in this Form 10-K. The financial information shown below
should be read in conjunction with our consolidated financial statements and related notes beginning on page F-1 of this Form 10-K, Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations and the other
financial and statistical data included in this Form 10-K. Amounts shown in the following table are in thousands.



|                                                            |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|----------------------------------------------------------- |  | ------------------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | ---- |  | ---- | --------- | - |  | - | --------- | ----
|                                                            |  | As of or for the Fiscal Years Ended September 30, |          
|                                                            |  | 2008                                              |           |   | 2007 |   |           | 2006 |  |   | 2005      |      |  | 2004 |          
|Operating Results:                                          |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Gross revenues                                              |  | $                                                 | 1,707,738 |   |      | $ | 1,751,912 |      |  | $ | 1,547,971 |      |  | $    | 1,454,066 |   |  | $ | 1,367,933 |     
|Promotional allowances                                      |  |                                                   | (135,555  | ) |      |   | (131,846  | )    |  |   | (124,917  | )    |  |      | (125,148  | ) |  |   | (111,007  | )   
|                                                            |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Net revenues                                                |  | $                                                 | 1,572,183 |   |      | $ | 1,620,066 |      |  | $ | 1,423,054 |      |  | $    | 1,328,918 |   |  | $ | 1,256,926 |     
|                                                            |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Income from operations (1)                                  |  | $                                                 | 263,366   |   |      | $ | 292,568   |      |  | $ | 249,232   |      |  | $    | 139,136   |   |  | $ | 246,617   |     
|Total other expense (2)                                     |  |                                                   | (116,835  | ) |      |   | (120,670  | )    |  |   | (94,882   | )(3) |  |      | (116,211  | ) |  |   | (143,748  | )(4)
|                                                            |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Income from continuing operations before minority interests |  |                                                   | 146,531   |   |      |   | 171,898   |      |  |   | 154,350   |      |  |      | 22,925    |   |  |   | 102,869   |     
|Minority interests                                          |  |                                                   | 2,729     |   |      |   | 648       |      |  |   | 420       |      |  |      | 514       |   |  |   | 18        |     
|                                                            |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Income from continuing operations                           |  |                                                   | 149,260   |   |      |   | 172,546   |      |  |   | 154,770   |      |  |      | 23,439    |   |  |   | 102,887   |     
|Total income from discontinued operations (5)               |  |                                                   |          |   |      |   | 21        |      |  |   | 147       |      |  |      | 228       |   |  |   |          |     
|                                                            |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Net income                                                  |  | $                                                 | 149,260   |   |      | $ | 172,567   |      |  | $ | 154,917   |      |  | $    | 23,667    |   |  | $ | 102,887   |     
|                                                            |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Other Data:                                                 |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Interest expense, net of capitalized interest               |  | $                                                 | 93,793    |   |      | $ | 94,363    |      |  | $ | 90,928    |      |  | $    | 88,011    |   |  | $ | 78,970    |     
|Capital expenditures                                        |  | $                                                 | 383,688   |   |      | $ | 162,195   |      |  | $ | 101,920   |      |  | $    | 50,991    |   |  | $ | 30,680    |     
|Net cash flows provided by operating activities             |  | $                                                 | 173,091   |   |      | $ | 284,403   |      |  | $ | 254,260   |      |  | $    | 247,075   |   |  | $ | 214,805   |     
|                                                            |  |                                                   |           |   |     
|Balance Sheet Data:                                         |  |                                                   |           |   |      |   |           |      |  |   |           |      |  |      |           |   |  |   |           |     
|Total assets                                                |  | $                                                 | 2,362,905 |   |      | $ | 2,079,977 |      |  | $ | 1,914,357 |      |  | $    | 1,856,868 |   |  | $ | 1,579,705 |     
|Long-term debt and capital lease obligations                |  | $                                                 | 1,528,991 |   |      | $ | 1,276,109 |      |  | $ | 1,225,804 |      |  | $    | 1,226,348 |   |  | $ | 1,003,051 |     



|(1) | Total operating costs and expenses included in income from operations includes a non-cash relinquishment liability reassessment credit of $68.9 million for the fiscal year 2008 and
non-cash relinquishment liability reassessment charges of $3.0 million, $39.4 million, $123.6 million and $3.9 million for the 2007, 2006, 2005 and 2004 fiscal years. A discussion of our accounting for the relinquishment liability may be found in
Notes 2 and 11 to our consolidated financial statements beginning on page F-1 of this Form 10-K.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | For the fiscal years ended September 30, 2008, 2007, 2006, 2005 and 2004, total other expense includes $27.1 million, $29.8 million, $30.7 million, $27.5 million and $29.9
million, respectively, for the accretion of discount to the relinquishment liability to reflect the impact of the time value of money. A discussion of our accounting for the relinquishment liability may be found in Notes 2 and 11 to our consolidated
financial statements beginning on page F-1 of this Form 10-K.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes a non-cash gain of $24.5 million from a settlement on the Pocono Downs purchase agreement in August 2006. A discussion of this transaction may be found in Note 10 to our
consolidated financial statements beginning on page F-1 of this Form 10-K.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes a loss on extinguishment of debt of $34.1 million. This loss was comprised of a tender premium of $31.0 million, a write-off of unamortized debt issuance costs of $3.5
million and other transaction costs of approximately $1.1 million, offset by a net gain of $1.5 million from the recognition of the remaining net deferred gain on the sale of related derivative instruments.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | A discussion of our accounting for discontinued operations may be found in Note 16 to our consolidated financial statements beginning on page F-1 of this Form 10-K.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes
beginning on page F-1 of this Annual Report on Form 10-K, Item I. Business and Item 6. Selected Financial Data.

Overview

The Tribe and the Authority

The Mohegan Tribe of Indians of Connecticut, or the Mohegan Tribe or the Tribe, is a federally recognized Indian tribe with an approximately 507-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut.
Under the Indian Gaming Regulatory Act of 1988, or IGRA, federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a gaming compact with the
state in which they operate. The Tribe and the State of Connecticut have entered into such a compact, the Mohegan Compact, which has been approved by the United States Secretary of the Interior. We were established as an instrumentality of the
Tribe, with the exclusive power to conduct and regulate gaming activities on tribal lands and the non-exclusive authority to conduct such activities elsewhere. Our gaming operation at Mohegan Sun is one of only two legally authorized gaming
operations in New England offering traditional slot machines and table games. Through our subsidiary, Downs Racing, L.P., or Downs Racing, we also own the Pocono Downs entities, or Pocono Downs, which operate a gaming and entertainment facility
offering slot machines and harness racing in Plains Township, Pennsylvania, and several off-track wagering, or OTW, facilities located elsewhere in Pennsylvania. We are governed by a nine-member Management Board, whose members also comprise the
Mohegan Tribal Council, the governing body of the Tribe. Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

Mohegan Sun

In October 1996,
we opened a gaming and entertainment complex known as Mohegan Sun. Mohegan Sun is located on a 185-acre site on the Tribes reservation overlooking the Thames River with direct access from Interstate 395 and Connecticut Route 2A. Mohegan Sun is
approximately 125 miles from New York City, New York and approximately 100 miles from Boston, Massachusetts. In fiscal 2002, we completed a major expansion of Mohegan Sun known as Project Sunburst, which included increased gaming, restaurant and
retail space, an entertainment arena, an approximately 1,200-room luxury Sky Hotel Tower and approximately 100,000 square feet of convention space. In August 2007 and August 2008, we completed the Sunrise Square and Casino of the Wind components of
Project Horizon, respectively.



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Mohegan Sun operates in an approximately 3.1 million square-foot facility, which includes the
following:

Casino of the Earth

As of September 30, 2008, the Casino of the Earth had approximately 188,000 square feet of gaming space and offered:



| |  |  | approximately 3,700 slot machines and 200 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including the Birches Bar & Grill, a 315-seat full-service restaurant and bar, three full-service themed fine dining
restaurants, with a fourth area featuring cuisine from all three adjacent restaurant themes, a 630-seat buffet, the Hong Kong Street food outlet offering authentic Southeast Asian cuisine and multiple service bars, all operated by us,
for a current total of approximately 1,700 restaurant seats;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an approximately 10,000 square-foot, 410-seat lounge featuring live entertainment seven days a week;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | an approximately 11,000 square-foot simulcasting race book facility;
| | - |  | --------------------------------------------------------------------



| |  |  | four retail shops providing shopping opportunities ranging from Mohegan Sun logo souvenirs to cigars; and
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Sunrise Square, an 8,500 square-foot Asian-themed gaming area offering 46 table games.
| | - |  | --------------------------------------------------------------------------------------

Casino of the Sky

As of
September 30, 2008, the Casino of the Sky had approximately 119,000 square feet of gaming space and offered:



| |  |  | approximately 2,300 slot machines and 120 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including two full-service restaurants, a 24-hour coffee shop, a 330-seat buffet and five lounges and bars, all operated by us, as well
as four full-service restaurants, three quick-service restaurants and a multi-station food court operated by third parties, for a total of approximately 2,500 restaurant seats;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mohegan After Dark, consisting of a nightclub, lounge and pub, operated by a third party;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | the Mohegan Sun Arena with seating for up to 10,000;
| | - |  | ----------------------------------------------------



| |  |  | a 350-seat Cabaret;
| | - |  | -------------------



| |  |  | The Shops at Mohegan Sun containing 30 different retail shops, seven of which we own;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | an approximately 1,200-room luxury Sky Hotel Tower with a private high limit table games suite on the 36th floor;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | an approximately 20,000 square-foot spa operated by a third party;
| | - |  | ------------------------------------------------------------------



| |  |  | approximately 100,000 square feet of convention space; and
| | - |  | ----------------------------------------------------------



| |  |  | a child care facility and an arcade style entertainment area operated by a third party.
| | - |  | ---------------------------------------------------------------------------------------

Casino of the Wind

As of
September 30, 2008, the Casino of the Wind had approximately 45,000 square feet of gaming space and offered:



| |  |  | approximately 660 slot machines, 28 table games and a 42-table themed poker room; and
| | - |  | -------------------------------------------------------------------------------------



| |  |  | 20,000 square feet of new dining and retail amenities, including a two-level, 16,000-square-foot Jimmy Buffetts Margaritaville Restaurant and Chiefs
Deli, a casual dining restaurant operated by us.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Mohegan Sun has parking spaces for approximately 12,000 guests and 3,100 employees. In addition, we
operate a gasoline and convenience center, an approximately 4,000 square-foot, 20-pump facility located adjacent to Mohegan Sun.

Project Horizon

Project Horizon, Mohegan Suns second major expansion, initially was planned to include four
major components: Sunrise Square, Casino of the Wind, Property Infrastructure and the Earth Expansion. As of September 30, 2008, two of the components, Sunrise Square and Casino of the Wind, had been completed.

Sunrise Square was completed in August 2007 at a cost of approximately $16.7 million. Sunrise Square includes 8,500 square feet of gaming space offering
46 table games such as Mini-Baccarat, Sic Bo and Pai Gow Poker, a 5,000-square-foot bus lobby and a 4,000-square-foot Hong Kong Street food outlet.

Casino of the Wind was completed in August 2008 at a cost of approximately $113.3 million. Casino of the Wind added approximately 45,000 square feet of gaming space, approximately 660 slot machines, 28 table games and
a 42-table themed poker room, as well as approximately 20,000 square feet of new dining and retail amenities.

As of September 30,
2008, we had incurred approximately $24.8 million for Property Infrastructure costs relating to additional surface parking lots, site development and road improvements on or adjacent to the property. We currently anticipate incurring an additional
$14.3 million to complete the Property Infrastructure component. This component is anticipated to be completed in the third quarter of fiscal 2009.

On September 22, 2008, we announced the suspension of the hotel, retail and parking garage elements of the Earth Expansion component of Project Horizon as a result of the ongoing national economic recession. We intend to re-evaluate
the feasibility of the suspended elements in approximately 12 months. As of September 30, 2008, we had incurred approximately $58.0 million for the Earth Expansion relating to excavation and foundation work for the planned podium and hotel
tower, as well as professional fees for design and architectural work. We currently anticipate incurring an additional $69.5 million in connection with the Earth Expansion relating to the construction of the Earth guest connector and the retail
podium, which will connect the Winter Parking Garage to the Casino of the Earth. The Earth Expansion also will incorporate renovated food and beverage facilities, including a burger restaurant, a family-style sit down pizzeria and a four-station
quick-serve dining area, as well as 7,000 square feet of new retail space.

In addition, the construction of a 1,500-space parking garage
that was anticipated to be built adjacent to the Earth Expansion was suspended. As of September 30, 2008, we had incurred approximately $3.8 million relating to the parking garage, and anticipate incurring an additional $1.2 million to complete
improvements to the parking garage.

The revised costs for Project Horizon are currently estimated to be approximately $301.6 million,
excluding capitalized interest. Revised costs include previous investments in the Property Infrastructure, Parking Garage and Earth Expansion. A breakdown of the costs is as follows:



| |  |  | $16.7 million for Sunrise Square
| | - |  | --------------------------------



| |  |  | $113.3 million for Casino of the Wind
| | - |  | -------------------------------------



| |  |  | $39.1 million for Property Infrastructure
| | - |  | -----------------------------------------



| |  |  | $5.0 million for restoration of the Winter Parking Garage
| | - |  | ---------------------------------------------------------



| |  |  | $127.5 million for the Earth Expansion
| | - |  | --------------------------------------



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As of September 30, 2008, costs incurred for Project Horizon, excluding capitalized interest,
totaled approximately $216.6 million. Remaining project costs are estimated to total approximately $85.0 million and are anticipated to be incurred in fiscal 2009.

Mohegan Basketball Club

In January 2003, we formed a wholly owned subsidiary, the Mohegan
Basketball Club, LLC, or MBC, for the purpose of owning and operating a professional basketball team in the Womens National Basketball Association, or WNBA. MBC entered into a membership agreement with the WNBA permitting it to operate the
Connecticut Sun basketball team. The team plays its home games in the Mohegan Sun Arena.

Mohegan Golf

In November 2006, we formed a wholly owned subsidiary, Mohegan Golf, LLC, or Mohegan Golf, to purchase and operate a golf course in southeastern
Connecticut. In May 2007, Mohegan Golf acquired substantially all of the assets of Pautipaug Country Club Inc., or PCC, which included a golf course located in Sprague and Franklin, Connecticut. The golf course was renamed Mohegan Sun Country Club
at Pautipaug and first opened under the ownership of Mohegan Golf in June 2007.

Pocono Downs

Through Downs Racing, we own and operate the slot machine and harness racing facility known as Mohegan Sun at Pocono Downs located on approximately 400
acres in Plains Township, Pennsylvania, as well as several Pennsylvania OTWs located in Carbondale, East Stroudsburg, Hazleton and Lehigh Valley (Allentown). Harness racing has been conducted at Pocono Downs since 1965. The Lehigh Valley (Allentown)
OTW is a 28,000 square-foot facility and is the largest OTW in the Commonwealth of Pennsylvania.

Downs Racing completed the 2008 harness
racing season at Pocono Downs in September 2008 and will continue its harness racing activities when the 2009 racing season begins in the spring of 2009. Year round simulcast pari-mutuel racing activities also are conducted at Pocono Downs and the
OTW facilities. A state of the art, pari-mutuel simulcast facility at Pocono Downs opened in March 2006. Construction of a new paddock adjacent to the racetrack is currently underway and is expected to be completed for the 2009 racing season.

In August 2006, we entered into an amendment of the Pocono Downs purchase agreement with the seller, a subsidiary of Penn National Gaming,
Inc. Pursuant to the amendment, in exchange for our agreement to modify certain provisions of the purchase agreement, including the elimination of our post-closing termination rights, we will receive an aggregate refund of $30.0 million of the
original purchase price for the Pocono Downs entities, payable in five annual installments of $7.0 million, $7.0 million, $6.5 million, $6.0 million and $3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. We have received the
$7.0 million installments due in November 2007 and 2008.

In September 2006, Downs Racing secured a permanent Category One slot machine
license, which permits the installation and operation of up to 3,000 slot machines at Pocono Downs. Under certain conditions, Downs Racing may be permitted to install up to a total of 5,000 slot machines.

Pocono Downs became the first location to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of its gaming and entertainment
facility opened in November 2006. The total cost incurred for development of the Phase I facility was approximately $70.0 million.

Pocono
Downs opened Project Sunrise, Phase II of its gaming and entertainment facility, on July 17, 2008. The combined facility now includes approximately 2,500 slot machines, several dining options, including a



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300-seat buffet and a quick-serve dining area, six retail outlets, three bars/lounges, additional parking and bus amenities. In addition, the food court that
previously operated in the Phase I facility has been renovated as a 275-seat banquet and meeting venue, which opened in October 2008. Construction also is currently underway to renovate additional areas of the Phase I facility. When completed, the
renovated facility is anticipated to serve as a multi-purpose venue. The final cost of Project Sunrise, including the Phase I renovation, is anticipated to be approximately $199.0 million, excluding capitalized interest.

Other Diversification Projects

The Tribe has determined that it is in its long-term best interest to pursue diversification of its business interests, both directly and through us. As a result, from time to time, we and the Tribe receive and evaluate various business
opportunities. These opportunities primarily include the development and management of, investment in, or ownership of other gaming enterprises through direct investments, acquisitions, joint venture arrangements and loan transactions. In addition
to the developments described below, we and the Tribe are currently exploring other opportunities, although there is no assurance that we or the Tribe will continue to pursue any of these opportunities or that any of them will be consummated.

Cowlitz Project

In July 2004, we formed Mohegan Ventures-Northwest, LLC, or Mohegan Ventures-NW, one of three members in Salishan-Mohegan, LLC, or Salishan-Mohegan. Salishan-Mohegan was formed to participate in the proposed development and management of a
casino to be located in Clark County, Washington, or the Cowlitz Project, and owned by the Cowlitz Indian Tribe, or the Cowlitz Tribe. Mohegan Ventures-NW holds a 49.15% membership interest, the Mohegan Tribe holds a 7.85% membership interest and
Salishan Company, LLC, or Salishan Company, holds a 43.00% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Mohegan Tribe each hold one of four seats on the Board of Managers of Salishan-Mohegan.

In September 2004, Salishan-Mohegan entered into development and management agreements with the Cowlitz Tribe regarding the Cowlitz Project. Under the
terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing, development, construction and furnishing, and provides assistance with the financing, of the Cowlitz Project. The development agreement provides
for certain development fees of 3.0% of total Project Costs, as defined in the development agreement, which are to be distributed to Mohegan VenturesNW and the Mohegan Tribe pursuant to the Salishan-Mohegan operating agreement. As of April
2006, Salishan-Mohegan purchased the land to be used as the site for the proposed casino, which will be transferred to the Cowlitz Tribe or the United States under certain conditions in the development agreement. The management agreement is for a
period of seven years commencing with the opening of the proposed casino, during which Salishan-Mohegan will manage, operate and maintain the proposed casino. The management agreement provides for a management fee of 24.0% of Net Revenues, as
defined in the management agreement, which approximates net income from the Cowlitz Project. Pursuant to the operating agreement, management fees will be allocated to the members of Salishan-Mohegan based on their respective membership percentages.
Development of the Cowlitz Project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of Washington and the United States Department of the Interior accepting land
into trust on behalf of the Cowlitz Tribe. The management agreement is subject to approval by the National Indian Gaming Commission, or the NIGC.

In May 2008, the Bureau of Indian Affairs, or BIA, published a final rule relating to gaming on trust lands acquired after October 17, 1988. The new rule addresses, among other things, the process used by the BIA to determine what
lands should be taken into trust for an initial reservation or restored lands for a tribe, such as the Cowlitz Tribe, seeking its initial or restored reservation. The new rule also expressly provides that a tribe may rely on earlier final agency
decisions, including decisions of the NIGC. In November 2005, the Cowlitz Tribe received an opinion from the NIGC determining that if the BIA takes the Cowlitz Project site into trust, the land will constitute restored lands of the Cowlitz Tribe. As
a result of this opinion by the NIGC, the additional



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analysis called for under the new rule is not expected to apply to the BIAs decision for the Cowlitz Tribe. In May 2008, the BIA published a Final
Environmental Impact Statement for the Cowlitz Project site.

Menominee Project

In October 2004, we entered into a management agreement with the Menominee Indian Tribe of Wisconsin, or the Menominee Tribe, and the Menominee Kenosha
Gaming Authority, or MKGA. The terms of the management agreement grant us the exclusive right and obligation to manage, operate and maintain a proposed casino and destination resort to be located in Kenosha, Wisconsin, or the Menominee Project, for
a period of seven years commencing with the opening of the proposed casino, in consideration of a management fee of 13.4% of Net Revenues, as defined in the management agreement, which approximates net income earned from the Menominee Project. The
management agreement is subject to approval by the NIGC.

In March 2007, Wisconsin Tribal Gaming, LLC, or WTG, was formed to participate in
the development of the proposed casino to be owned by the Menominee Tribe. WTG consists of two members, our wholly-owned subsidiary, Mohegan Ventures Wisconsin, LLC, or MVW, which holds an 85.40% membership interest in WTG, and a wholly-owned
subsidiary of the Mohegan Tribe, Mohegan Ventures, LLC, or MV, which holds the remaining 14.60% membership interest. Following formation in March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets,
and assumed certain liabilities from Kenesah Gaming Development, LLC for consideration of $6.4 million. As a result of the purchase, we and the Mohegan Tribe, through MVW and MV, respectively, will receive development fees payable to WTG of 13.4% of
Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and MKGA, which approximates net income from the Menominee Project over a period of seven years following the opening of the casino. Development of the
Menominee Project is subject to certain governmental and regulatory approvals, including but not limited to, the United States Department of the Interior accepting new land into trust for gaming at the project site in Kenosha, Wisconsin.

In January 2008, the BIA rejected 11 applications from tribes with existing reservations to take new off-reservation land into trust in connection
with gaming projects. The BIA also advised 11 other tribes that their applications were incomplete and would not be considered further. While no decision has been issued on the Menominee application, the BIA also issued a memorandum addressing its
policy on applications for off-reservation gaming projects in January 2008, which stated that the greater the distance between a proposed project and the tribes existing reservation, the greater the scrutiny that would be applied to the
application, weighing the potential benefits to the tribe against concern for the commuting distance from the existing reservation, among other factors. In November 2008, the United States Department of the Interior rejected the Menominee
Tribes request to suspend review of the Menominee Tribes application to take off-reservation land into trust in connection with the Menominee Project and a federal court subsequently refused to issue a temporary restraining order to
prevent the United States Department of the Interior from taking further action on the application. While we expect to continue to support and pursue the Menominee Project, we believe, these actions decreased the probability that the Menominee Tribe
will obtain the necessary regulatory approvals in order to proceed with the Menominee Project. As a result of we have fully reserved the WTG receivables pertaining to reimbursable development costs and expenses in connection with the Menominee
Project of $8.1 million and have written-off the related development rights intangible asset of $3.7 million.

Notwithstanding the new rule
published by the BIA relating to gaming on trust lands acquired after October 17, 1988, as discussed above, the standard for the Secretary of the Interiors determination to take new lands into trust for the Menominee Project remains
whether the gaming establishment would be in the best interest of the Menominee Tribe and its members and would not be detrimental to the surrounding community. The Governor of Wisconsin must also concur with the action. The new rule clarifies,
however, that only local governments and nearby Indian tribes within 25 miles of the site are part of the formal consultation with the surrounding community.



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Other Projects

In March 2008, we formed Mohegan Gaming & Hospitality, LLC, or MG&H, with the Tribe to evaluate and pursue new business opportunities.
Our wholly-owned subsidiary, MTGA Gaming, LLC, or MTGA Gaming, holds a 49.00% membership interest in MG&H and the Tribe holds the remaining 51.00% membership interest. MG&H has formed a wholly owned subsidiary, Mohegan Resorts, LLC, or
Mohegan Resorts. It is anticipated that certain of our and the Tribes future diversification efforts will be conducted, directly or indirectly, through MG&H and/or Mohegan Resorts. Mohegan Resorts is currently evaluating potential gaming
opportunities in the Commonwealth of Massachusetts, and a wholly-owned subsidiary of Mohegan Resorts has entered into a ground lease for approximately 152 acres of land located in Palmer, Massachusetts, which would serve as a potential site for
future gaming development, if legalized in Massachusetts. A wholly-owned subsidiary of Mohegan Resorts was also a partner in an unsuccessful effort, ended in September 2008, to secure a gaming license for the development of a gaming facility to be
located in the State of Kansas.

Explanation of Key Financial Statement Captions

Gross revenues

Our gross
revenues are derived primarily from the following four sources:



| |  |  | gaming revenues, which include revenues from slot machines, table games, keno, live harness racing at Pocono Downs and racebook operations, including pari-mutuel
wagering revenues from our racebook operations at Mohegan Sun and our Pennsylvania OTW facilities;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | food and beverage revenues;
| | - |  | ---------------------------



| |  |  | hotel revenues; and
| | - |  | -------------------



| |  |  | retail, entertainment and other revenues, which include revenues from retail shops we manage, the Mohegan Sun Arena, MBC and Mohegan Golf.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

Our largest component of revenues is gaming revenues, which are recognized as amounts wagered less prizes paid out, and
is comprised primarily of revenues from slot machines and table games at Mohegan Sun, as well as slot machines at Pocono Downs. Revenues from slot machines are the largest component of our gaming revenues. Gross slot revenues, also referred to as
gross slot win, represent all amounts played in the slot machines reduced by both (1) winnings paid out, and (2) slot tickets issued. Pursuant to the Mohegan Compact and requirements of our Pennsylvania Category One slot machine license,
we report gross slot revenues and other statistical information related to slot machine operations to the State of Connecticut and the Commonwealth of Pennsylvania. On a monthly basis, we also post this information on our website at
www.mtga.com.

Other commonly used terms in the discussion of revenues from slot machines include progressive slot machines,
progressive jackpots, net slot revenues, slot handle, gross slot hold percentage and net slot hold percentage. Progressive slot machines retain a portion of each amount wagered and aggregate these amounts with similar amounts from other slot
machines in order to create one-time winnings that are substantially larger than those paid in the ordinary course of play. We refer to such aggregated amounts as progressive jackpots. Wide-area progressive jackpot amounts are paid by a third party
vendor, and we remit a weekly payment to the vendor based on a percentage of the slot handle for each wide-area progressive slot machine. We accrue in-house progressive jackpot amounts until paid, and such accrued amounts are deducted from gross
slot revenues, along with wide-area progressive jackpot amounts, to arrive at net slot revenues, also referred to as net slot win. Net slot revenues are included in gaming revenues in the accompanying consolidated statements of income. Slot handle
is the total amount wagered by patrons on slot machines during the period, including free promotional slot plays issued to patrons, or the e-Bonus program. Gross slot hold percentage is the gross slot win as a percentage of slot handle. Net slot
hold percentage is the net slot win as a percentage of slot handle.

Commonly used terms in the discussion of revenues from table games
include table games revenues, table games drop and table games hold percentage. Table games revenues represents the closing table games inventory plus table games drop and credit slips for cash, chips or tokens returned to the casino cage, less
opening table games inventory, discounts provided on patron losses, free bet coupons and chip fills to the tables. Table games



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drop is the total amount of cash, free bet coupons, cash advance drafts, customer deposit withdrawals, safekeeping withdrawals and credit issued at the table
contained in the locked container at each gaming table. Table games hold percentage is the table games revenues as a percentage of table games drop.

Revenues from food and beverages, hotel, retail, entertainment events and other services are recognized at the time the service is performed. Minimum rental revenues that we receive pursuant to our rental lease
agreements for The Shops at Mohegan Sun and tenants at Pocono Downs are recognized on a straight-line basis over the terms of the leases. Percentage rents are recognized in the period in which the tenants exceed their respective percentage rent
thresholds.

Promotional allowances

We operate a program for our guests at Mohegan Sun and Pocono Downs, without membership fees, called the Players Club. This program provides complimentary food, beverages, hotel, retail, entertainment and other
services to guests, as applicable, based on points that are awarded for guests gaming activities. These points may be used to purchase, among other things, items at the retail stores and restaurants located within Mohegan Sun and Pocono Downs,
including The Shops at Mohegan Sun and the Mohegan Sun gasoline and convenience center. Points also may be used to purchase hotel services and tickets to entertainment events held at Mohegan Sun facilities. The retail value of these complimentary
items is included in gross revenues when redeemed at facilities operated by us and then deducted as promotional allowances to arrive at net revenues. The cost associated with reimbursing third parties for the value of these complimentary items
redeemed at third party facilities is charged to gaming expenses.

We also have ongoing promotional programs which offer coupons to our
guests for the purchase of food, beverage, hotel and retail amenities offered within Mohegan Sun and Pocono Downs, as applicable. The retail value of items or services purchased with coupons at facilities operated by us within Mohegan Sun and Pocono
Downs is included in gross revenues and the respective coupon value is deducted as promotional allowances to arrive at net revenues. The cost associated with reimbursing third parties for the value of coupons redeemed at third party facilities is
charged to gaming expenses.

Gaming expenses

Gaming expenses primarily include the portion of gross slot revenues which must be paid to the State of Connecticut and the PGCB, which are referred to as slot win contribution and slot machine tax assessments,
respectively. For each 12-month period commencing July 1, 1995, the slot win contribution from Mohegan Sun is the lesser of (a) 30.0% of gross slot revenues, or (b) the greater of (i) 25.0% of gross slot revenues, or
(ii) $80.0 million. The current assessment of the amount payable to the PGCB on a daily basis is 55.0% of gross slot revenues at Pocono Downs. In addition to this daily assessment, Downs Racing must pay to the PGCB, on an annual basis, amounts
necessary to ensure that the city and municipality hosting Pocono Downs will receive an annual minimum of $10.0 million from the local share assessment. The local share assessment is equal to the greater of 2.0% of annual gross slot revenues or
$10.0 million.

Gaming expenses also include, among other things, expenses associated with operation of slot machines, table games, keno,
live harness racing at Pocono Downs and racebook, certain marketing expenses, and promotional expenses for the Players Club points and coupons redeemed at our hotel, restaurants and retail outlets, as well as third party tenant outlets.

Income from operations

We calculate income from operations as net revenues less total operating costs and expenses. Income from operations represents only those amounts that relate to our consolidated operations and excludes accretion of
discount to the relinquishment liability, interest income, interest expense, write-off of debt issuance costs, minority interests, income from discontinued operations and other non-operating income and expense.



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Reassessment of relinquishment liability and accretion of discount to the relinquishment liability

In February 1998, we entered into a relinquishment agreement with Trading Cove Associates, or TCA. The relinquishment agreement
provides that we will make certain payments to TCA out of, and determined as a percentage of, revenues, as defined in the relinquishment agreement, generated by Mohegan Sun over a 15-year period. In accordance with Statement of Financial Accounting
Standards, or SFAS, No. 5, Accounting for Contingencies, or SFAS No. 5, we have recorded a relinquishment liability of the estimated present value of our obligations under the relinquishment agreement. We reassess projected revenues
and consequently the relinquishment liability: (i) annually in conjunction with our budgeting process, and (ii) when necessary to account for material increases or decreases in projected revenues over the relinquishment period. Further, we
record a quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimates and judgments used with respect to calculating the relinquishment liability, future events that
affect such estimates and judgments may cause the actual relinquishment liability to differ significantly from the estimate. In addition, we have capitalized $130.0 million of this relinquishment liability in connection with the trademark value of
the Mohegan Sun brand name. Under SFAS No. 142, Goodwill and Other Intangible Assets, or SFAS 142, the Mohegan Sun trademark is no longer subject to amortization because it has been deemed to have an indefinite useful life. SFAS
142, however, requires the trademark to be evaluated at least annually for impairment by applying a fair-value test and, if impairment occurs, the amount of impaired trademark must be written-off immediately.

Results of Operations

Summary Operating
Results

As of September 30, 2008, we own and operate Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun
Country Club at Pautipaug in Connecticut, or the Connecticut entities, and the Pocono Downs entities. All of our revenues are derived from these operations. Our executive officers review and assess the performance and operating results and determine
the proper allocation of resources to the Connecticut entities and the Pocono Downs entities on a separate basis. We therefore believe that we have two operating segments, one comprised solely of Mohegan Sun, which includes the operations of the
Connecticut entities, and another, referred to as Pocono Downs, herein, comprised of the operations of the Pocono Downs entities. The two operating segments are also separate reportable segments due to the differing nature of their operations.

The following table summarizes our results from operations on a property basis (in thousands):



|                               |  |                                          |           |   |          |   |           |      |  |   |                 |   |                     |           |         |           |  |   |           |  |       |   |  |        |  
|------------------------------ |  | ---------------------------------------- | --------- | - | -------- | - | --------- | ---- |  | - | --------------- | - | ------------------- | --------- | ------- | --------- |  | - | --------- |  | ----- | - |  | ------ | -
|                               |  | For the Fiscal Years Ended September 30, |          
|                               |  |                                          |           |   |          |   |           |      |  |   | Dollar Variance |   | Percentage Variance |          
|                               |  | 2008 (1)                                 |           |   | 2007 (2) |   |           | 2006 |  |   | 08 vs. 07       |   |                     | 07 vs. 06 |         | 08 vs. 07 |  |   | 07 vs. 06 | 
|Net revenues:                  |  |                                          |           |   |          |   |           |      |  |   |                 |   |                     |           |         |           |  |   |           |  |       |   |  |        |  
|Mohegan Sun                    |  | $                                        | 1,362,945 |   |          | $ | 1,430,560 |      |  | $ | 1,392,958       |   |                     | $         | (67,615 | )         |  | $ | 37,602    |  | -4.7  | % |  | 2.7    | %
|Pocono Downs                   |  |                                          | 209,238   |   |          |   | 189,506   |      |  |   | 30,096          |   |                     |           | 19,732  |           |  |   | 159,410   |  | 10.4  | % |  | 529.7  | %
|                               |  |                                          |           |   |          |   |           |      |  |   |                 |   |                     |           |         |           |  |   |           |  |       |   |  |        |  
|Total                          |  | $                                        | 1,572,183 |   |          | $ | 1,620,066 |      |  | $ | 1,423,054       |   |                     | $         | (47,883 | )         |  | $ | 197,012   |  | -3.0  | % |  | 13.8   | %
|Income (loss) from operations: |  |                                          |           |   |          |   |           |      |  |   |                 |   |                     |           |         |           |  |   |           |  |       |   |  |        |  
|Mohegan Sun                    |  | $                                        | 280,232   |   |          | $ | 287,017   |      |  | $ | 267,415         |   |                     | $         | (6,785  | )         |  | $ | 19,602    |  | -2.4  | % |  | 7.3    | %
|Pocono Downs                   |  |                                          | 12,093    |   |          |   | 16,137    |      |  |   | (7,547          | ) |                     |           | (4,044  | )         |  |   | 23,684    |  | -25.1 | % |  | -313.8 | %
|Corporate expenses             |  |                                          | (28,959   | ) |          |   | (10,586   | )    |  |   | (10,636         | ) |                     |           | (18,373 | )         |  |   | 50        |  | 173.6 | % |  | -0.5   | %
|                               |  |                                          |           |   |          |   |           |      |  |   |                 |   |                     |           |         |           |  |   |           |  |       |   |  |        |  
|Total                          |  | $                                        | 263,366   |   |          | $ | 292,568   |      |  | $ | 249,232         |   |                     | $         | (29,202 | )         |  | $ | 43,336    |  | -10.0 | % |  | 17.4   | %
|Net income                     |  | $                                        | 149,260   |   |          | $ | 172,567   |      |  | $ | 154,917         |   |                     | $         | (23,307 | )         |  | $ | 17,650    |  | -13.5 | % |  | 11.4   | %



|(1) | Includes operating results of Casino of the Wind at Mohegan Sun from opening date of August 29, 2008 to September 30, 2008 & Project Sunrise at Pocono Downs from opening date of
July 17, 2008 to September 30, 2008.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of the Phase I slot facility at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------



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The important factors and trends that most contributed to our financial performance for the fiscal years
ended September 30, 2008, 2007 and 2006 are as follows:



| |  |  | the ongoing national economic recession and the continued weakening of consumer discretionary spending resulting in lower spending by gaming patrons, which impacted
gaming revenues at Mohegan Sun and Pocono Downs in fiscal 2008;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | lower slot revenues at Mohegan Sun in fiscal 2008, due to increased competition in the Northeast gaming market from recently expanded VLT facilities at Empire City
in Yonkers, New York and Twin River in Lincoln, Rhode Island, and our Connecticut competitor, Foxwoods Resort Casino, or Foxwoods, following the opening of its MGM Grand at Foxwoods hotel and gaming facility in May 2008;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher gas prices, as we believe patrons in the New York City and Boston area markets likely chose to frequent closer gaming facilities, thereby reducing slot
revenues at Mohegan Sun in fiscal 2008;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the opening of slot operations at Pocono Downs in November 2006 and Project Sunrise in July 2008, which generated gross slot revenues of $176.2 million and $157.2
million in fiscal 2008 and 2007, respectively;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased competition in the Pennsylvania gaming market following the opening of Mount Airy Casino Resort, or Mount Airy, in Mount Pocono, Pennsylvania, in October
2007;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher table games drop at Mohegan Sun resulting from increased high-limit table games play and the continued success of our Asian table games business;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher number of shows at the Mohegan Sun Arena, including more headliner shows, in fiscal 2008, which we believe contributes to gaming, food and beverage, hotel
and retail and other revenues; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an increase in offers of promotional room rates to casino hotel guests, designed to maintain occupancy levels to support and improve gaming and other revenues.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

Other significant factors that affected our financial performance for the fiscal years ended September 30, 2008,
2007 and 2006 are as follows:



| |  |  | a decrease in table games hold percentage at Mohegan Sun in fiscal year 2008, which negatively impacted table games revenues and income from operations;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased promotional activities, including significant free promotional slot plays, from Foxwoods and Mount Airy, which had the effect of reducing slot revenues
for the Connecticut and Pennsylvania gaming markets in fiscal 2008, including slot revenues at Mohegan Sun and Pocono Downs;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the $9.5 million in non-cash charges in fiscal 2008 for additional reserves against the net assets of WTG in connection with the Menominee Project;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $6.9 million of additional gaming expenses in fiscal 2008 for e-Bonus escrow payments at Mohegan Sun related to disputed slot win contributions due on free
promotional slot plays;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a $3.5 million charge in fiscal 2007 in connection with a settlement of property tax litigation related to the Pocono Downs facility;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased operating costs at Pocono Downs in fiscal 2008 as a result of the opening of Project Sunrise and a full year of slot operations;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher salary and wage costs at Mohegan Sun in fiscal 2008 due to market driven compensation adjustments and increased medical benefits;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher allowances for doubtful accounts related to gaming receivables at Mohegan Sun in fiscal 2008;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a non-cash relinquishment liability reassessment credit of $68.9 million for fiscal 2008, compared to non-cash relinquishment liability reassessment charges of $3.0
million and $39.4 million in fiscal 2007 and 2006, respectively; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a non-cash, non-operating gain of $24.5 million from a settlement on the Pocono Downs purchase agreement, which resulted in a significant non-recurring increase in
net income in fiscal 2006.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Net revenues for the fiscal year ended September 30, 2008 compared to the prior fiscal year
decreased primarily as a result of the declines in slot and table games revenues at Mohegan Sun. These declines were partially offset by increased slot revenues at Pocono Downs due to a full year of slot operations and the opening of Project
Sunrise, on July 17, 2008, as well as higher entertainment revenues at Mohegan Sun.

Net revenues for the fiscal year ended
September 30, 2007 compared to the prior fiscal year increased primarily as a result of the addition of slot revenues at Pocono Downs from the opening of the Phase I slot facility in November 2006, as well as increased gaming revenues at
Mohegan Sun.

Income from operations for the fiscal year ended September 30, 2008 compared to the prior fiscal year decreased as a
result of the decline in net revenues at Mohegan Sun and increased operating costs and expenses at Pocono Downs due to the opening of Project Sunrise and a full year of slot operations. The decrease also was the result of higher Corporate-related
expenses resulting primarily from the additional reserves recorded against the net assets of WTG in connection with the Menominee Project and increased allocated expenditures related to governmental and certain administrative services provided by
the Tribe. The total decrease in income from operations was partially offset by the growth in net revenues at Pocono Downs and the non-cash relinquishment liability reassessment credit, which was $68.9 million for the fiscal year ended
September 30, 2008 compared to a $3.0 million non-cash relinquishment liability reassessment charge for the prior fiscal year The non-cash relinquishment liability reassessment credit had the effect of reducing operating expenses. Our operating
margin, or income from operations as a percentage of net revenues, for the fiscal year ended September 30, 2008 decreased to 16.8% from 18.1% for the prior fiscal year. This decrease was primarily attributable to a 270 basis point decline in
Pocono Downs operating margin to 5.8% for the fiscal year ended September 30, 2008 from 8.5% for the prior fiscal year. The decrease in operating margin at Pocono Downs was primarily attributable to the continued weakening of the regional
economy, new competition from Mount Airy and the increased operating costs and expenses. Pocono Downs has a significantly lower operating margin than Mohegan Sun due to higher gaming tax rates assessed by the Commonwealth of Pennsylvania. The
overall decrease in operating margin for the fiscal year ended September 30, 2008 also was due to the increase in Corporate-related expenses. Mohegan Suns operating margin increased slightly to 20.6% for the fiscal year ended
September 30, 2008 from 20.1% for the prior fiscal year. The increase in Mohegan Suns operating margin was primarily due to the non-cash relinquishment liability reassessment credit, a reduction in slot win contribution to the State of
Connecticut, commensurate with the lower slot revenues, as well as decreased redemption costs due to decreased utilization of Players Club points and promotional expenditures targeting third party outlets. Mohegan Suns operating margin
for the fiscal year ended September 30, 2008 was negatively impacted by the lower net revenues, higher salary and wage costs due to market driven compensation adjustments and increased medical benefit costs and higher allowances for doubtful
accounts related to gaming receivables.

Income from operations for the fiscal year ended September 30, 2007 compared to the prior
fiscal year increased as a result of the growth in net revenues, offset by an increase in operating costs and expenses of 13.1%. Our operating margin for the fiscal year ended September 30, 2007 increased to 18.1% from 17.5% for the prior
fiscal year, primarily due to the decrease in the non-cash relinquishment liability reassessment charge, which was $3.0 million for the fiscal year ended September 30, 2007 compared to $39.4 million for the prior fiscal year. The decrease in
reassessment charge was partially offset by the opening of the Phase I slot facility at Pocono Downs, which has a significantly lower operating margin than Mohegan Sun due to higher gaming tax rates assessed by the Commonwealth of Pennsylvania.
Margins also were reduced by the $3.5 million charge recorded in connection with the litigation settlement and an increase in promotional programs at Mohegan Sun to offset the impact of the new slot product being added to the Northeast gaming
market.

Net income for the fiscal year ended September 30, 2008 compared to the prior fiscal year decreased primarily due to the
decrease in income from operations.

Net income for the fiscal year ended September 30, 2007 compared to the prior fiscal year
increased primarily due to the increase in income from operations, partially offset by a substantial decrease in other



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non-operating income from the prior fiscal year, which included the $24.5 million non-cash non-operating gain from a settlement on the Pocono Downs purchase
agreement.

Mohegan Sun

Gross Revenues

Gross revenues consisted of the following (in thousands):



|                                |  |                                          |           |      |   |           |  |                 |           |  |                     |         |   |           |   |        |           |  |      |   |  |      |  
|------------------------------- |  | ---------------------------------------- | --------- | ---- | - | --------- |  | --------------- | --------- |  | ------------------- | ------- | - | --------- | - | ------ | --------- |  | ---- | - |  | ---- | -
|                                |  | For the Fiscal Years Ended September 30, |          
|                                |  |                                          |           |      |   |           |  | Dollar Variance |           |  | Percentage Variance |        
|                                |  | 2008                                     |           | 2007 |   | 2006      |  | 08 vs. 07       |           |  | 07 vs. 06           |         |   | 08 vs. 07 |   |        | 07 vs. 06 | 
|Gaming                          |  | $                                        | 1,209,547 |      | $ | 1,286,915 |  | $               | 1,253,028 |  | $                   | (77,368 | ) |           | $ | 33,887 |           |  | -6.0 | % |  | 2.7  | %
|Food and beverage               |  |                                          | 93,028    |      |   | 94,905    |  |                 | 93,713    |  |                     | (1,877  | ) |           |   | 1,192  |           |  | -2.0 | % |  | 1.3  | %
|Hotel                           |  |                                          | 48,740    |      |   | 47,333    |  |                 | 50,818    |  |                     | 1,407   |   |           |   | (3,485 | )         |  | 3.0  | % |  | -6.9 | %
|Retail, entertainment and other |  |                                          | 139,490   |      |   | 129,658   |  |                 | 120,316   |  |                     | 9,832   |   |           |   | 9,342  |           |  | 7.6  | % |  | 7.8  | %
|                                |  |                                          |           |      |   |           |  |                 |           |  |                     |         |   |           |   |        |           |  |      |   |  |      |  
|Total                           |  | $                                        | 1,490,805 |      | $ | 1,558,811 |  | $               | 1,517,875 |  | $                   | (68,006 | ) |           | $ | 40,936 |           |  | -4.4 | % |  | 2.7  | %
|                                |  |                                          |           |      |   |           |  |                 |           |  |                     |         |   |           |   |        |           |  |      |   |  |      |  

The table below summarizes the percentage of gross revenues from each of the four revenue sources:



|                                |  |                                          |   |  |       |   |  |       |  
|------------------------------- |  | ---------------------------------------- | - |  | ----- | - |  | ----- | -
|                                |  | For the Fiscal Years Ended September 30, |  
|                                |  | 2008                                     |   |  | 2007  |   |  | 2006  |  
|Gaming                          |  | 81.1                                     | % |  | 82.6  | % |  | 82.6  | %
|Food and beverage               |  | 6.2                                      | % |  | 6.1   | % |  | 6.2   | %
|Hotel                           |  | 3.3                                      | % |  | 3.0   | % |  | 3.3   | %
|Retail, entertainment and other |  | 9.4                                      | % |  | 8.3   | % |  | 7.9   | %
|                                |  |                                          |   |  |       |   |  |       |  
|Total                           |  | 100.0                                    | % |  | 100.0 | % |  | 100.0 | %
|                                |  |                                          |   |  |       |   |  |       |  

The following table presents data related to gaming revenues (in millions, except where noted):



|                                                    |  |                                          |        |   |      |   |        |      |  |   |           |   |  |                     |      |   |           |   |      |           |  |      |   |  |      |  
|--------------------------------------------------- |  | ---------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | --------- | - |  | ------------------- | ---- | - | --------- | - | ---- | --------- |  | ---- | - |  | ---- | -
|                                                    |  | For the Fiscal Years Ended September 30, |       
|                                                    |  |                                          |        |   |      |   |        |      |  |   | Variance  |   |  | Percentage Variance |     
|                                                    |  | 2008                                     |        |   | 2007 |   |        | 2006 |  |   | 08 vs. 07 |   |  | 07 vs. 06           |      |   | 08 vs. 07 |   |      | 07 vs. 06 | 
|Slot handle                                         |  | $                                        | 10,111 |   |      | $ | 10,601 |      |  | $ | 10,540    |   |  | $                   | (490 | ) |           | $ | 61   |           |  | -4.6 | % |  | 0.6  | %
|Gross slot revenues                                 |  | $                                        | 856    |   |      | $ | 922    |      |  | $ | 905       |   |  | $                   | (66  | ) |           | $ | 17   |           |  | -7.2 | % |  | 1.9  | %
|Net slot revenues                                   |  | $                                        | 824    |   |      | $ | 889    |      |  | $ | 876       |   |  | $                   | (65  | ) |           | $ | 13   |           |  | -7.3 | % |  | 1.5  | %
|Weighted average number of slot machines (in units) |  |                                          | 6,159  |   |      |   | 6,060  |      |  |   | 6,201     |   |  |                     | 99   |   |           |   | (141 | )         |  | 1.6  | % |  | -2.3 | %
|Gross slot hold percentage                          |  |                                          | 8.5    | % |      |   | 8.7    | %    |  |   | 8.6       | % |  |                     | -0.2 | % |           |   | 0.1  | %         |  | -2.3 | % |  | 1.2  | %
|Gross slot win per unit per day (in dollars)        |  | $                                        | 380    |   |      | $ | 417    |      |  | $ | 400       |   |  | $                   | (37  | ) |           | $ | 17   |           |  | -8.9 | % |  | 4.3  | %
|Table games drop                                    |  | $                                        | 2,610  |   |      | $ | 2,482  |      |  | $ | 2,305     |   |  | $                   | 128  |   |           | $ | 177  |           |  | 5.2  | % |  | 7.7  | %
|Table games revenues                                |  | $                                        | 374    |   |      | $ | 386    |      |  | $ | 366       |   |  | $                   | (12  | ) |           | $ | 20   |           |  | -3.1 | % |  | 5.5  | %
|Weighted average number of table games (in units)   |  |                                          | 322    |   |      |   | 302    |      |  |   | 300       |   |  |                     | 20   |   |           |   | 2    |           |  | 6.6  | % |  | 0.7  | %
|Table games hold percentage (1)                     |  |                                          | 14.4   | % |      |   | 15.6   | %    |  |   | 15.9      | % |  |                     | -1.2 | % |           |   | -0.3 | %         |  | -7.7 | % |  | -1.9 | %
|Table games revenue per unit per day (in dollars)   |  | $                                        | 3,177  |   |      | $ | 3,511  |      |  | $ | 3,341     |   |  | $                   | (334 | ) |           | $ | 170  |           |  | -9.5 | % |  | 5.1  | %



|(1) | Table games hold percentage is relatively predictable over long periods of time, but can fluctuate significantly over shorter periods.
|--- | --------------------------------------------------------------------------------------------------------------------------------------



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Gaming revenues for the fiscal year ended September 30, 2008 compared to the prior fiscal year
decreased due to declines in both slot and table games revenues. The decrease in slot revenues was primarily attributable to the weakening economy, increased promotional activities from Foxwoods, including free promotional slot plays, and increased
competition from Empire City and Twin River, as well as Foxwoods, following the opening of its MGM Grand at Foxwoods hotel and gaming facility in May 2008. The decrease in slot revenues also was attributable, in part, to the continued weakening of
consumer discretionary spending and high gas prices, both resulting in lower spending by gaming patrons. During the fiscal year ended September 30, 2008, redemptions from free promotional slot plays at Foxwoods totaled $69.9 million compared to
$38.3 million for the prior fiscal year. The decrease in our gross slot hold percentage was primarily attributable to the redemption of $27.7 million in free promotional slot plays, which is reflected in slot handle, during the fiscal year. Our slot
win efficiency in the Northeast gaming market for the fiscal year ended September 30, 2008 decreased to 134.8% from 139.3% in the prior fiscal year. The decline in slot win efficiency in the Northeast gaming market was attributable, in part, to
increased competition from the VLTs at Empire City and Twin River and high gas prices, as customers in the New York City and Boston area markets likely chose to frequent closer gaming facilities. Our slot win efficiency in the Connecticut gaming
market for the fiscal year ended September 30, 2008 increased to 118.3% from 117.1% in the prior fiscal year. The decrease in table games revenues was primarily attributable to a decrease in table games hold percentage, partially offset by an
increase in table games drop. Table games hold percentage is relatively predictable over long periods of time, but can fluctuate significantly over shorter periods. The growth in table games drop resulted primarily from increased high-limit table
games play and the continued success of our Asian table games business.

Gaming revenues for the fiscal year ended September 30, 2007
compared to the prior fiscal year increased primarily due to the growth in table games and slot revenues. The increase in table games revenues was principally attributable to the strengthened awareness of the Mohegan Sun brand in the Northeast
gaming market due to enhancements in our targeted direct marketing programs, including our continued focus on high-end table games play with the introduction of new private and semi-private gaming space. The increase in table games revenues also was
due to the continued success of our Asian table games marketing program, including the opening of Sunrise Square in August 2007. Gross slot revenues growth rate decreased to 1.9% for fiscal year 2007 compared to the prior fiscal year growth rate of
5.1%. The decrease in gross slot revenues growth rate was attributable to increased competition and the slow down in the regional economy.

Food and beverage revenues for the fiscal year ended September 30, 2008 compared to the prior fiscal year decreased primarily due to a $2.0 million decline in food revenues, partially offset by a slight increase in beverage revenues.
The decline in food revenues primarily resulted from a 6.5% reduction in the number of meals served due to decreased patronage at Mohegan Sun-owned food outlets. The decrease in the number of meals served was partially offset by the addition of
revenues from the Hong Kong Street food outlet in Sunrise Square, and a 4.2% increase in the average price per cover.

Food and
beverage revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily due to a $925,000 increase in food revenues resulting from increased banquet revenues at the Mohegan Sun Convention Center and
the addition of new revenues from the 4,000-square-foot Hong Kong Street food outlet in Sunrise Square, which opened in August 2007. These increases were partially offset by a shift in patron visitation from Mohegan Sun-owned food
outlets to third party outlets located in the casino.



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The following table presents data related to hotel revenues:



|                                    |  |                                          |         |   |      |   |         |      |  |   |           |   |  |                     |       |   |           |   |      |           |  |     |   |  |      |  
|----------------------------------- |  | ---------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | --------- | - |  | ------------------- | ----- | - | --------- | - | ---- | --------- |  | --- | - |  | ---- | -
|                                    |  | For the Fiscal Years Ended September 30, |        
|                                    |  |                                          |         |   |      |   |         |      |  |   | Variance  |   |  | Percentage Variance |      
|                                    |  | 2008                                     |         |   | 2007 |   |         | 2006 |  |   | 08 vs. 07 |   |  | 07 vs. 06           |       |   | 08 vs. 07 |   |      | 07 vs. 06 | 
|Rooms occupied                      |  |                                          | 402,600 |   |      |   | 399,500 |      |  |   | 400,200   |   |  |                     | 3,100 |   |           |   | -700 |           |  | 0.8 | % |  | -0.2 | %
|Average daily room rate (ADR)       |  | $                                        | 113     |   |      | $ | 112     |      |  | $ | 120       |   |  | $                   | 1     |   |           | $ | (8   | )         |  | 0.9 | % |  | -6.7 | %
|Occupancy rate                      |  |                                          | 93.6    | % |      |   | 93.2    | %    |  |   | 93.3      | % |  |                     | 0.4   | % |           |   | -0.1 | %         |  | 0.4 | % |  | -0.1 | %
|Revenue per available room (REVPAR) |  | $                                        | 105     |   |      | $ | 104     |      |  | $ | 112       |   |  | $                   | 1     |   |           | $ | (8   | )         |  | 1.0 | % |  | -7.1 | %

Hotel revenues for the fiscal year ended September 30, 2008 compared to the prior fiscal year
increased primarily as a result the slight increases in ADR and hotel occupancy. The increase in ADR was supported by the growth in entertainment business, as further discussed below. The increase in hotel occupancy was partially attributable to
rooms being out of service during the prior fiscal year due to the hotel room renovation program.

Hotel revenues for the fiscal year ended
September 30, 2007 compared to the prior fiscal year decreased primarily as a result of a reduction in ADR. The decrease in ADR was the result of competitive pricing pressures in room rates offered to casino hotel guests in the Connecticut and
Atlantic City gaming markets. The reduction in rates was designed to maintain occupancy levels to support or improve gaming and non-gaming revenues. The decrease in hotel revenues also was partially due to a slight decrease in hotel occupancy as a
result of rooms being out of service due to the $10.0 million hotel room renovation program, which began in January 2007 and was completed in June 2007.

Retail, entertainment and other revenues for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased primarily as a result of a $10.6 million, or 21.1%, growth in entertainment
revenues due to an increase in the number of shows at the Mohegan Sun Arena, resulting in a 12.4% increase in Arena ticket sales, as well as a 10.7% increase in average price per ticket from more headliner shows performed in the Arena. The growth in
retail, entertainment and other revenues also was the result of a $2.4 million increase in gasoline revenues due to an increase in the average price per gallon of gasoline sold at the Mohegan Sun gasoline and convenience center. The increase in
retail, entertainment and other revenues was partially offset by a $4.4 million decline in retail revenues due to decreased patronage at Mohegan Sun-owned retail outlets.

Retail, entertainment and other revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily as a result of a $3.9 million, or 8.4%, growth in entertainment revenues
due to a 5.5% increase in average price per ticket for Mohegan Sun Arena events and a 2.0% increase in overall ticket sales at the Arena due to an increased number of headliner shows. The growth in retail, entertainment and other revenues also was
the result of a $1.5 million increase in rental revenue from The Shops at Mohegan Sun due to higher rent paid by new tenants, particularly the Coach outlet which opened in July 2006; a $1.4 million increase in gasoline revenues at the Mohegan Sun
gasoline and convenience center related to free coupon promotional programs during the fiscal year, which do not have an impact on net revenues; and a $1.7 million increase in retail and other revenues.

Promotional Allowances

The
retail value of providing promotional allowances is included in revenues as follows (in thousands):



|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|------------------------------- |  | ---------------------------------------- | ------- | ---- | - | ------- |  | --------------- | ------- |  | ------------------- | ------ | - | --------- | - | ------ | --------- |  | ---- | - |  | ---- | -
|                                |  | For the Fiscal Years Ended September 30, |        
|                                |  |                                          |         |      |   |         |  | Dollar Variance |         |  | Percentage Variance |       
|                                |  | 2008                                     |         | 2007 |   | 2006    |  | 08 vs. 07       |         |  | 07 vs. 06           |        |   | 08 vs. 07 |   |        | 07 vs. 06 | 
|Food and beverage               |  | $                                        | 43,544  |      | $ | 45,591  |  | $               | 46,894  |  | $                   | (2,047 | ) |           | $ | (1,303 | )         |  | -4.5 | % |  | -2.8 | %
|Hotel                           |  |                                          | 15,246  |      |   | 16,385  |  |                 | 17,356  |  |                     | (1,139 | ) |           |   | (971   | )         |  | -7.0 | % |  | -5.6 | %
|Retail, entertainment and other |  |                                          | 69,070  |      |   | 66,275  |  |                 | 60,667  |  |                     | 2,795  |   |           |   | 5,608  |           |  | 4.2  | % |  | 9.2  | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|Total                           |  | $                                        | 127,860 |      | $ | 128,251 |  | $               | 124,917 |  | $                   | (391   | ) |           | $ | 3,334  |           |  | -0.3 | % |  | 2.7  | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  



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The estimated cost of providing promotional allowances is included in operating costs and expenses,
primarily gaming, as follows (in thousands):



|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|------------------------------- |  | ---------------------------------------- | ------- | ---- | - | ------- |  | --------------- | ------- |  | ------------------- | ------ | - | --------- | - | ------ | --------- |  | ---- | - |  | ---- | -
|                                |  | For the Fiscal Years Ended September 30, |        
|                                |  |                                          |         |      |   |         |  | Dollar Variance |         |  | Percentage Variance |       
|                                |  | 2008                                     |         | 2007 |   | 2006    |  | 08 vs. 07       |         |  | 07 vs. 06           |        |   | 08 vs. 07 |   |        | 07 vs. 06 | 
|Food and beverage               |  | $                                        | 45,371  |      | $ | 46,427  |  | $               | 48,352  |  | $                   | (1,056 | ) |           | $ | (1,925 | )         |  | -2.3 | % |  | -4.0 | %
|Hotel                           |  |                                          | 8,048   |      |   | 8,866   |  |                 | 8,734   |  |                     | (818   | ) |           |   | 132    |           |  | -9.2 | % |  | 1.5  | %
|Retail, entertainment and other |  |                                          | 58,893  |      |   | 53,790  |  |                 | 46,874  |  |                     | 5,103  |   |           |   | 6,916  |           |  | 9.5  | % |  | 14.8 | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|Total                           |  | $                                        | 112,312 |      | $ | 109,083 |  | $               | 103,960 |  | $                   | 3,229  |   |           | $ | 5,123  |           |  | 3.0  | % |  | 4.9  | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  

Promotional allowances for the fiscal year ended September 30, 2008 compared to the prior
fiscal year decreased slightly as a result of reductions in food and beverage and hotel promotional offerings to patrons, offset by higher retail, entertainment and other promotional allowances, driven primarily by the higher retail price of
entertainment offerings and gasoline as discussed above under Gross Revenues.

Promotional allowances for the fiscal year ended
September 30, 2007 compared to the prior fiscal year increased primarily as a result of an increase in marketing programs targeting patrons in New York and Rhode Island, where expanded VLT facilities opened during the fiscal year.

Operating Costs and Expenses

Operating costs and expenses consisted of the following (in thousands):



|                                        |  |                                          |           |   |      |   |           |  |                 |           |  |                     |         |   |           |   |         |           |  |         |   |  |       |  
|--------------------------------------- |  | ---------------------------------------- | --------- | - | ---- | - | --------- |  | --------------- | --------- |  | ------------------- | ------- | - | --------- | - | ------- | --------- |  | ------- | - |  | ----- | -
|                                        |  | For the Fiscal Years Ended September 30, |          
|                                        |  |                                          |           |   |      |   |           |  | Dollar Variance |           |  | Percentage Variance |        
|                                        |  | 2008                                     |           |   | 2007 |   | 2006      |  | 08 vs. 07       |           |  | 07 vs. 06           |         |   | 08 vs. 07 |   |         | 07 vs. 06 | 
|Gaming                                  |  | $                                        | 739,327   |   |      | $ | 736,492   |  | $               | 700,674   |  | $                   | 2,835   |   |           | $ | 35,818  |           |  | 0.4     | % |  | 5.1   | %
|Food and beverage                       |  |                                          | 46,084    |   |      |   | 45,384    |  |                 | 47,182    |  |                     | 700     |   |           |   | (1,798  | )         |  | 1.5     | % |  | -3.8  | %
|Hotel                                   |  |                                          | 17,314    |   |      |   | 16,959    |  |                 | 16,883    |  |                     | 355     |   |           |   | 76      |           |  | 2.1     | % |  | 0.5   | %
|Retail, entertainment and other         |  |                                          | 56,019    |   |      |   | 47,010    |  |                 | 42,471    |  |                     | 9,009   |   |           |   | 4,539   |           |  | 19.2    | % |  | 10.7  | %
|Advertising, general and administrative |  |                                          | 207,164   |   |      |   | 211,643   |  |                 | 193,533   |  |                     | (4,479  | ) |           |   | 18,110  |           |  | -2.1    | % |  | 9.4   | %
|Pre-opening costs and expenses          |  |                                          | 1,204     |   |      |   | 445       |  |                 |          |  |                     | 759     |   |           |   | 445     |           |  | 170.6   | % |  | 100.0 | %
|Depreciation and amortization           |  |                                          | 84,548    |   |      |   | 82,613    |  |                 | 85,394    |  |                     | 1,935   |   |           |   | (2,781  | )         |  | 2.3     | % |  | -3.3  | %
|Relinquishment liability reassessment   |  |                                          | (68,947   | ) |      |   | 2,997     |  |                 | 39,407    |  |                     | (71,944 | ) |           |   | (36,410 | )         |  | -2400.5 | % |  | -92.4 | %
|                                        |  |                                          |           |   |      |   |           |  |                 |           |  |                     |         |   |           |   |         |           |  |         |   |  |       |  
|Total                                   |  | $                                        | 1,082,713 |   |      | $ | 1,143,543 |  | $               | 1,125,544 |  | $                   | (60,830 | ) |           | $ | 17,999  |           |  | -5.3    | % |  | 1.6   | %
|                                        |  |                                          |           |   |      |   |           |  |                 |           |  |                     |         |   |           |   |         |           |  |         |   |  |       |  

Gaming costs and expenses for the fiscal year ended September 30, 2008 compared to the prior
fiscal year increased primarily as a result of higher allowances for doubtful accounts related to gaming receivables, additional expenses associated with the e-Bonus escrow payments, increased labor costs due to market driven compensation
adjustments and increased medical benefit costs, greater air-travel expenditures for high-limit table games players and an increase in non-gaming complimentaries redeemed by casino patrons at Mohegan Sun-owned outlets. These increases were partially
offset by reduced slot win contribution to the State of Connecticut, commensurate with the lower slot revenues, as well as a reduction in redemption costs due to decreased utilization of Players Club points and promotional expenditures
targeting third party outlets. Slot win contribution and e-Bonus escrow expenses totaled $221.0 million and $230.4 million for the fiscal years ended September 30, 2008 and 2007, respectively. Gaming costs and expenses as a percentage of gaming
revenues was 61.1% for the fiscal year ended September 30, 2008 compared to 57.2% for the prior fiscal year.



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Gaming costs and expenses for the fiscal year ended September 30, 2007 compared to the prior fiscal
year increased primarily as a result of higher redemption costs due to increased utilization of Players Club points and promotional coupons at third party outlets, higher labor costs due to market driven compensation adjustments and increased
medical insurance costs, and higher casino marketing, advertising and promotional expenses. The increase in gaming costs and expenses also was due to higher slot win contribution to the State of Connecticut, commensurate with the growth in slot
revenues, as well as an increase in non-gaming complimentaries redeemed by casino patrons at Mohegan Sun-owned outlets. Slot win contribution payments totaled $230.4 million and $226.3 million for the fiscal years ended September 30, 2007 and
2006, respectively. Gaming costs and expenses as a percentage of gaming revenues was 57.2% for the fiscal year ended September 30, 2007 compared to 55.9% for the prior fiscal year.

Food and beverage costs and expenses for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased primarily as a result
of higher labor and medical insurance costs, as well as a decrease in food and beverage complimentaries resulting in a lower amount of food and beverage costs being allocated to gaming costs and expenses, partially offset by lower cost of goods sold
and other operating costs.

Food and beverage costs and expenses for the fiscal year ended September 30, 2007 compared to the prior
fiscal year decreased primarily as a result of lower cost of goods sold and other operating costs, partially offset by higher medical insurance costs and a decrease in food and beverage complimentaries resulting in a lower amount of food and
beverage costs being allocated to gaming costs and expenses.

Hotel costs and expenses for the fiscal year ended September 30, 2008
compared to the prior fiscal year increased primarily as a result of higher labor and medical benefit costs, as well as an increase in other operating costs, including costs for the replacement of room supplies.

Hotel costs and expenses for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily as a result of higher
labor and medical benefit costs. These increases were partially offset by a $1.0 million non-recurring charge recorded in the prior fiscal year for inventory obsolescence.

Retail, entertainment and other costs and expenses for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased
primarily due to a substantial growth in direct entertainment costs resulting from the increased number of shows at the Mohegan Sun Arena, including more headliner shows. Additionally, the increase in retail, entertainment and other costs and
expenses was due to higher cost of goods sold for gasoline resulting from the increase in average cost per gallon of gasoline sold at the Mohegan Sun gasoline and convenience center. These increases were partially offset by increased entertainment
and other complimentaries resulting in a greater amount of retail, entertainment and other costs and expenses being allocated to gaming costs and expenses, as well as decreased cost of goods sold for retail due to lower patronage at Mohegan
Sun-owned retail outlets.

Retail, entertainment and other costs and expenses for the fiscal year ended September 30, 2007 compared to
the prior fiscal year increased due to a substantial increase in entertainment costs related to the higher number of headliner shows at the Arena. The increase also was a result of increased cost of goods sold for the gas coupon promotion, partially
offset by increased retail and entertainment complimentaries, resulting in a higher amount of retail, entertainment and other costs and expenses being allocated to gaming costs and expenses.

Advertising, general and administrative costs and expenses for the fiscal year ended September 30, 2008 compared to the prior fiscal year decreased
primarily as a result of non-recurring one-time costs relating to the



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Sky hotel room renovation program and the Mohegan Sun ten-year anniversary festivities for employees and patrons, both of which occurred in 2007. These
reductions were partially offset by higher labor costs due primarily to market driven compensation adjustments and increased medical benefit costs, as well as increased professional costs and consulting expenditures.

Advertising, general and administrative costs and expenses for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased
primarily as a result of increased property maintenance, utilities, labor, medical insurance and other costs necessary to support Mohegan Sun operations, as well as significant one-time costs relating to the Sky hotel room renovation program. The
increase also was due to greater advertising expenditures from the production of new television commercials and approximately $2.0 million of additional costs associated with the Mohegan Sun ten-year anniversary festivities for employees and
patrons.

Pre-opening costs and expenses for the fiscal year ended September 30, 2008 were comprised of direct incremental personnel,
consulting and other costs associated with the Casino of the Wind component of Project Horizon. Construction of Casino of the Wind commenced in June 2007 and was completed in August 2008.

Pre-opening costs and expenses for the fiscal year ended September 30, 2007 were comprised of incremental personnel costs, consulting and other
costs primarily associated with the opening of Sunrise Square. Construction of Sunrise Square commenced in November 2006 and was completed in August 2007.

Relinquishment liability reassessment for the fiscal year ended September 30, 2008 compared to the reassessment in the prior fiscal year had the effect of substantially decreasing operating expenses. The
relinquishment liability reassessment credit in fiscal year 2008 was the result of our review of current revenue forecasts, resulting from the suspension of certain elements of Project Horizon, the estimated timing and extent of future competition
and other factors, which led to decreased revenue projections for the period in which the relinquishment agreement applies.

Our accounting
policy is to reassess projected revenues, and consequently the relinquishment liability, at least annually in conjunction with our budgeting process and when necessary to account for material increases or decreases in projected revenues over the
relinquishment period. Based on our suspension of certain elements of Project Horizon, recent operating trends and increased competition in the Northeast gaming market, all having the effect of decreasing future Mohegan Sun revenues, we concluded
that projected revenues from Mohegan Sun subject to the relinquishment agreement over the remaining relinquishment period, which expires on December 31, 2014, would decrease by approximately $1.55 billion, thereby decreasing the related
relinquishment liability, causing us to record a non-cash relinquishment liability credit of $68.9 million for the fiscal year ended September 30, 2008.

Relinquishment liability reassessment for the fiscal year ended September 30, 2007 compared to the reassessment in the prior fiscal year decreased significantly, which had the effect of decreasing operating
expenses. The relinquishment liability reassessment charge in fiscal year 2007 was the result of our review of revenue forecasts, including the estimated timing and extent of future competition and other factors, which led to increased revenue
projections for the period in which the relinquishment agreement applies. Based on our updated projections for Project Horizon and delayed competition in the Northeast gaming market, both having the effect of increasing estimated future Mohegan Sun
revenues, we concluded that projected revenues from Mohegan Sun subject to the relinquishment agreement over the remaining relinquishment period, would increase by approximately $139.8 million, thereby increasing the related relinquishment
liability, resulting in a non-cash relinquishment liability charge of $3.0 million for the fiscal year ended September 30, 2007.



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Pocono Downs

Gross Revenues

Gross revenues consisted of the following (in thousands):



|                  |  |                                          |         |          |   |         |  |                 |        |                     |   |           |  |   |           |  |      |   |  |       |  
|----------------- |  | ---------------------------------------- | ------- | -------- | - | ------- |  | --------------- | ------ | ------------------- | - | --------- |  | - | --------- |  | ---- | - |  | ----- | -
|                  |  | For the Fiscal Years Ended September 30, |        
|                  |  |                                          |         |          |   |         |  | Dollar Variance |        | Percentage Variance |  
|                  |  | 2008 (1)                                 |         | 2007 (2) |   | 2006    |  | 08 vs. 07       |        | 07 vs. 06           |   | 08 vs. 07 |  |   | 07 vs. 06 | 
|Gaming            |  | $                                        | 201,227 |          | $ | 182,428 |  | $               | 26,807 |                     | $ | 18,799    |  | $ | 155,621   |  | 10.3 | % |  | 580.5 | %
|Food and beverage |  |                                          | 10,940  |          |   | 7,192   |  |                 | 2,073  |                     |   | 3,748     |  |   | 5,119     |  | 52.1 | % |  | 246.9 | %
|Retail and other  |  |                                          | 4,766   |          |   | 3,481   |  |                 | 1,216  |                     |   | 1,285     |  |   | 2,265     |  | 36.9 | % |  | 186.3 | %
|                  |  |                                          |         |          |   |         |  |                 |        |                     |   |           |  |   |           |  |      |   |  |       |  
|Total             |  | $                                        | 216,933 |          | $ | 193,101 |  | $               | 30,096 |                     | $ | 23,832    |  | $ | 163,005   |  | 12.3 | % |  | 541.6 | %
|                  |  |                                          |         |          |   |         |  |                 |        |                     |   |           |  |   |           |  |      |   |  |       |  



|(1) | Includes operating results of Project Sunrise from opening date of July 17, 2008 to September 30, 2008.
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of the Phase I slot facility from opening date of November 14, 2006 to September 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------

The table below summarizes the percentage of gross revenues from each of the three revenue sources:



|                  |  |                                          |   |  |          |   |  |       |  
|----------------- |  | ---------------------------------------- | - |  | -------- | - |  | ----- | -
|                  |  | For the Fiscal Years Ended September 30, |  
|                  |  | 2008 (1)                                 |   |  | 2007 (2) |   |  | 2006  |  
|Gaming            |  | 92.8                                     | % |  | 94.5     | % |  | 89.1  | %
|Food and beverage |  | 5.0                                      | % |  | 3.7      | % |  | 6.9   | %
|Retail and other  |  | 2.2                                      | % |  | 1.8      | % |  | 4.0   | %
|                  |  |                                          |   |  |          |   |  |       |  
|Total             |  | 100.0                                    | % |  | 100.0    | % |  | 100.0 | %
|                  |  |                                          |   |  |          |   |  |       |  



|(1) | Includes operating results of Project Sunrise from opening date of July 17, 2008 to September 30, 2008.
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of the Phase I slot facility from opening date of November 14, 2006 to September 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------

The following table presents data related to gaming revenues (in thousands, except where noted):



|                                                    |  |                                          |           |   |          |   |           |      |  |           |   |  |                     |         |   |           |   |           |           |  |       |   |  |       |  
|--------------------------------------------------- |  | ---------------------------------------- | --------- | - | -------- | - | --------- | ---- |  | --------- | - |  | ------------------- | ------- | - | --------- | - | --------- | --------- |  | ----- | - |  | ----- | -
|                                                    |  | For the Fiscal Years Ended September 30, |          
|                                                    |  |                                          |           |   |          |   |           |      |  | Variance  |   |  | Percentage Variance |        
|                                                    |  | 2008 (1)                                 |           |   | 2007 (2) |   |           | 2006 |  | 08 vs. 07 |   |  | 07 vs. 06           |         |   | 08 vs. 07 |   |           | 07 vs. 06 | 
|Slot handle                                         |  | $                                        | 2,008,678 |   |          | $ | 1,690,417 |      |  | $         |  |  | $                   | 318,261 |   |           | $ | 1,690,417 |           |  | 18.8  | % |  | 100.0 | %
|Gross slot revenues                                 |  | $                                        | 176,173   |   |          | $ | 157,185   |      |  | $         |  |  | $                   | 18,988  |   |           | $ | 157,185   |           |  | 12.1  | % |  | 100.0 | %
|Net slot revenues                                   |  | $                                        | 176,743   |   |          | $ | 156,031   |      |  | $         |  |  | $                   | 20,712  |   |           | $ | 156,031   |           |  | 13.3  | % |  | 100.0 | %
|Weighted average number of slot machines (in units) |  |                                          | 1,476     |   |          |   | 1,143     |      |  |           |  |  |                     | 333     |   |           |   | 1,143     |           |  | 29.1  | % |  | 100.0 | %
|Gross slot hold percentage                          |  |                                          | 8.8       | % |          |   | 9.3       | %    |  |           |  |  |                     | -0.5    | % |           |   | 9.3       | %         |  | -5.4  | % |  | 100.0 | %
|Gross slot win per unit per day (in dollars)        |  | $                                        | 326       |   |          | $ | 427       |      |  | $         |  |  | $                   | (101    | ) |           | $ | 427       |           |  | -23.7 | % |  | 100.0 | %



|(1) | Includes operating results of Project Sunrise from opening date of July 17, 2008 to September 30, 2008.
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of the Phase I slot facility from opening date of November 14, 2006 to September 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------

Gaming revenues for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased primarily due to a full year of slot
operations and the opening of Project Sunrise, partially offset by increased



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competition from Mount Airy, which opened in October 2007. Slot results also were impacted by the continued weakening of the regional economy, business
disruptions caused by Project Sunrise construction and increased promotional activities from Mount Airy, including free promotional slot plays. During the fiscal year ended September 30, 2008, redemptions of free promotional slot plays at Mount
Airy totaled $11.9 million. The decrease in gross slot win per unit per day was primarily attributable to the increase in the weighted average number of slot machines during the fiscal year following the opening of Project Sunrise. The decrease in
gross slot hold percentage was primarily attributable to the redemption of $3.1 million in free promotional slot plays, which is reflected in slot handle, during the fiscal year. Our slot win efficiency for the fiscal year ended September 30,
2008 was 141.7%.

Gaming revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased as a result
of the addition of slot revenues following the opening of the Phase I slot facility.

Food and beverage revenues for the fiscal year ended
September 30, 2008 compared to the prior fiscal year increased primarily due to the opening of new food and beverage outlets in connection with Project Sunrise, increased utilization of Pocono Downs Players Club points and promotional
coupons at the propertys restaurants and a full period of slot operations, which resulted in increased patron visitation to the facility.

Food and beverage revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily due to the opening of the Phase I slot facility, which resulted in increased patron visitation to the
facility.

Retail and other revenues for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased
primarily due to the opening of new retail outlets in connection with Project Sunrise, increased utilization of Pocono Downs Players Club points and promotional coupons at the propertys retail outlets and a full period of slot
operations, which resulted in increased patron visitation to the facility.

Retail and other revenues for the fiscal year ended
September 30, 2007 compared to the prior fiscal year increased primarily due to the opening of the Phase I slot facility, which resulted in increased patron visitation to the facility.

Promotional Allowances

The
retail value of providing promotional allowances is included in revenues as follows (in thousands):



|                  |  |                                          |       |          |   |       |  |                 |   |                     |   |           |  |   |           |  |       |   |  |       |  
|----------------- |  | ---------------------------------------- | ----- | -------- | - | ----- |  | --------------- | - | ------------------- | - | --------- |  | - | --------- |  | ----- | - |  | ----- | -
|                  |  | For the Fiscal Years Ended September 30, |      
|                  |  |                                          |       |          |   |       |  | Dollar Variance |   | Percentage Variance |  
|                  |  | 2008 (1)                                 |       | 2007 (2) |   | 2006  |  | 08 vs. 07       |   | 07 vs. 06           |   | 08 vs. 07 |  |   | 07 vs. 06 | 
|Food and beverage |  | $                                        | 6,072 |          | $ | 2,547 |  | $               |  |                     | $ | 3,525     |  | $ | 2,547     |  | 138.4 | % |  | 100.0 | %
|Retail            |  |                                          | 1,623 |          |   | 1,048 |  |                 |  |                     |   | 575       |  |   | 1,048     |  | 54.9  | % |  | 100.0 | %
|                  |  |                                          |       |          |   |       |  |                 |   |                     |   |           |  |   |           |  |       |   |  |       |  
|Total             |  | $                                        | 7,695 |          | $ | 3,595 |  | $               |  |                     | $ | 4,100     |  | $ | 3,595     |  | 114.0 | % |  | 100.0 | %
|                  |  |                                          |       |          |   |       |  |                 |   |                     |   |           |  |   |           |  |       |   |  |       |  



|(1) | Includes operating results of Project Sunrise from opening date of July 17, 2008 to September 30, 2008.
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of the Phase I slot facility from opening date of November 14, 2006 to September 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------



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The estimated cost of providing promotional allowances is included in gaming costs and expenses as
follows (in thousands):



|                  |  |                                          |       |          |   |       |  |                 |   |                     |   |           |  |   |           |  |       |   |  |       |  
|----------------- |  | ---------------------------------------- | ----- | -------- | - | ----- |  | --------------- | - | ------------------- | - | --------- |  | - | --------- |  | ----- | - |  | ----- | -
|                  |  | For the Fiscal Years Ended September 30, |      
|                  |  |                                          |       |          |   |       |  | Dollar Variance |   | Percentage Variance |  
|                  |  | 2008 (1)                                 |       | 2007 (2) |   | 2006  |  | 08 vs. 07       |   | 07 vs. 06           |   | 08 vs. 07 |  |   | 07 vs. 06 | 
|Food and beverage |  | $                                        | 6,898 |          | $ | 2,816 |  | $               |  |                     | $ | 4,082     |  | $ | 2,816     |  | 145.0 | % |  | 100.0 | %
|Retail            |  |                                          | 2,223 |          |   | 991   |  |                 |  |                     |   | 1,232     |  |   | 991       |  | 124.3 | % |  | 100.0 | %
|                  |  |                                          |       |          |   |       |  |                 |   |                     |   |           |  |   |           |  |       |   |  |       |  
|Total             |  | $                                        | 9,121 |          | $ | 3,807 |  | $               |  |                     | $ | 5,314     |  | $ | 3,807     |  | 139.6 | % |  | 100.0 | %
|                  |  |                                          |       |          |   |       |  |                 |   |                     |   |           |  |   |           |  |       |   |  |       |  



|(1) | Includes operating results of Project Sunrise from opening date of July 17, 2008 to September 30, 2008.
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of the Phase I slot facility from opening date of November 14, 2006 to September 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------

Promotional allowances for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased primarily due to higher redemptions
under the Players Club program.

Promotional allowances for the fiscal year ended September 30, 2007 relate to the redemption at
the retail store and dining outlets located at Pocono Downs of Players Club points that are awarded for guests slot machine gaming activities. The retail value of points is included in gross revenues when redeemed and then deducted as
promotional allowances to arrive at net revenues.

Operating Costs and Expenses

Operating costs and expenses consisted of the following (in thousands):



|                                        |  |                                          |         |          |   |         |  |                 |        |  |                     |        |   |           |   |         |           |  |       |   |  |       |  
|--------------------------------------- |  | ---------------------------------------- | ------- | -------- | - | ------- |  | --------------- | ------ |  | ------------------- | ------ | - | --------- | - | ------- | --------- |  | ----- | - |  | ----- | -
|                                        |  | For the Fiscal Years Ended September 30, |        
|                                        |  |                                          |         |          |   |         |  | Dollar Variance |        |  | Percentage Variance |       
|                                        |  | 2008 (1)                                 |         | 2007 (2) |   | 2006    |  | 08 vs. 07       |        |  | 07 vs. 06           |        |   | 08 vs. 07 |   |         | 07 vs. 06 | 
|Gaming                                  |  | $                                        | 152,707 |          | $ | 132,841 |  | $               | 19,389 |  | $                   | 19,866 |   |           | $ | 113,452 |           |  | 15.0  | % |  | 585.1 | %
|Food and beverage                       |  |                                          | 3,867   |          |   | 5,115   |  |                 | 2,238  |  |                     | (1,248 | ) |           |   | 2,877   |           |  | -24.4 | % |  | 128.6 | %
|Retail and other                        |  |                                          | 829     |          |   | 1,425   |  |                 | 752    |  |                     | (596   | ) |           |   | 673     |           |  | -41.8 | % |  | 89.5  | %
|Advertising, general and administrative |  |                                          | 22,243  |          |   | 19,942  |  |                 | 7,589  |  |                     | 2,301  |   |           |   | 12,353  |           |  | 11.5  | % |  | 162.8 | %
|Pre-opening costs and expenses          |  |                                          | 3,448   |          |   | 3,391   |  |                 | 5,130  |  |                     | 57     |   |           |   | (1,739  | )         |  | 1.7   | % |  | -33.9 | %
|Depreciation and amortization           |  |                                          | 14,051  |          |   | 10,655  |  |                 | 2,545  |  |                     | 3,396  |   |           |   | 8,110   |           |  | 31.9  | % |  | 318.7 | %
|                                        |  |                                          |         |          |   |         |  |                 |        |  |                     |        |   |           |   |         |           |  |       |   |  |       |  
|Total                                   |  | $                                        | 197,145 |          | $ | 173,369 |  | $               | 37,643 |  | $                   | 23,776 |   |           | $ | 135,726 |           |  | 13.7  | % |  | 360.6 | %
|                                        |  |                                          |         |          |   |         |  |                 |        |  |                     |        |   |           |   |         |           |  |       |   |  |       |  



|(1) | Includes operating results of Project Sunrise from opening date of July 17, 2008 to September 30, 2008.
|--- | -------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of the Phase I slot facility from opening date of November 14, 2006 to September 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------

Gaming costs and expenses for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased primarily as a result of higher
operating costs and expenses necessary to support Project Sunrise and a full period of slot operations, including expenses associated with the PGCB slot machine and local share tax assessments, as well as an increase in non-gaming complimentaries
redeemed by casino patrons at food and beverage and retail outlets at the facility. Additionally, gaming costs and expenses for the fiscal year included approximately $1.1 million in expenses incurred for leased slot machines and related costs
during the transition from the Phase I slot facility to the Phase II slot facility. Slot machine and local share tax assessments to the PGCB totaled $103.4 million and $92.2 million for the fiscal years ended September 30, 2008 and 2007,



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respectively. Gaming costs and expenses as a percentage of gaming revenues was 75.9% for the fiscal year ended September 30, 2008 compared to 72.8% for
the prior fiscal year.

Gaming costs and expenses for the fiscal year ended September 30, 2007 compared to the prior fiscal year
increased primarily as a result of higher operating costs and expenses necessary to support the slot operations, including slot machine tax assessment payments to the PGCB. Slot machine tax assessment payments to the PGCB totaled $92.2 million for
the fiscal year ended September 30, 2007.

Food and beverage costs and expenses for the fiscal year ended September 30, 2008
compared to the prior fiscal year decreased primarily as a result of a higher amount of food and beverage complimentaries resulting in an increased amount of food and beverage costs being allocated to gaming costs and expenses, partially offset by
additional costs and expenses necessary to support new food and beverage outlets in connection with Project Sunrise.

Food and beverage
costs and expenses for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily as a result of additional costs and expenses necessary to support new food and beverage outlets in connection with the Phase I
slot facility.

Retail and other costs and expenses for the fiscal year ended September 30, 2008 compared to the prior fiscal year
decreased primarily as a result of a higher amount of retail and other complimentaries resulting in an increased amount of retail and other costs being allocated to gaming costs and expenses, partially offset by additional costs and expenses
necessary to support new retail outlets in connection with Project Sunrise.

Retail and other costs and expenses for the fiscal year ended
September 30, 2007 compared to the prior fiscal year increased primarily as a result of additional costs and expenses necessary to support a new retail outlet in connection with the Phase I slot facility.

Advertising, general and administrative costs and expenses for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased
primarily as a result of higher costs and expenses necessary to support Project Sunrise and a full period of slot operations, as well as increased advertising expenditures in response to the new competition. These increases were partially offset by
the $3.5 million non-recurring charge recorded in the prior fiscal year in connection with the settlement of property tax litigation related to the Pocono Downs facility.

Advertising, general and administrative costs and expenses for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily as a result of higher costs and expenses necessary to
support the slot operations, as well as the $3.5 million charge recorded in connection with the settlement of property tax litigation related to the Pocono Downs facility.

Pre-opening costs and expenses for the fiscal year ended September 30, 2008 were comprised of direct incremental personnel, consulting and other
costs associated with Project Sunrise. Construction of Project Sunrise commenced in May 2007 and was completed in July 2008.

Pre-opening
costs and expenses for the fiscal year ended September 30, 2007 were comprised primarily of direct incremental personnel, consulting and other costs associated with the Phase I slot facility. Construction of the Phase I slot facility commenced
in September 2005 and was completed in November 2006.

Depreciation and amortization expenses for the fiscal year ended September 30,
2008 compared to the prior fiscal year increased primarily due to the commencement of depreciation on the new Phase II facility and related slot machines and equipment placed in service in July 2008.



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Depreciation and amortization expenses for the fiscal year ended September 30, 2007 compared to the
prior fiscal year increased primarily due to the commencement of depreciation on the new Phase I facility and related slot machines and equipment placed in service in November 2006.

Corporate Expenses and Other Income (Expense)

Corporate expenses and other income (expense) consisted of the following (in thousands):



|                                                          |  |                                          |          |     |      |   |          |      |  |   |                 |   |           |                     |        |           |   |         |           |  |        |   |  |        |  
|--------------------------------------------------------- |  | ---------------------------------------- | -------- | --- | ---- | - | -------- | ---- |  | - | --------------- | - | --------- | ------------------- | ------ | --------- | - | ------- | --------- |  | ------ | - |  | ------ | -
|                                                          |  | For the Fiscal Years Ended September 30, |         
|                                                          |  |                                          |          |     |      |   |          |      |  |   | Dollar Variance |   |           | Percentage Variance |       
|                                                          |  | 2008                                     |          |     | 2007 |   |          | 2006 |  |   | 08 vs. 07       |   | 07 vs. 06 |                     |        | 08 vs. 07 |   |         | 07 vs. 06 | 
|Corporate expenses:                                       |  |                                          |          |     |      |   |          |      |  |   |                 |   |           |                     |        |           |   |         |           |  |        |   |  |        |  
|Depreciation and amortization                             |  | $                                        | 3,771    |     |      | $ | 79       |      |  | $ | 77              |   |           | $                   | 3,692  |           | $ | 2       |           |  | 4673.4 | % |  | 2.6    | %
|Corporate expenses                                        |  |                                          | 25,188   |     |      |   | 10,507   |      |  |   | 10,558          |   |           |                     | 14,681 |           |   | (51     | )         |  | 139.7  | % |  | -0.5   | %
|                                                          |  |                                          |          |     |      |   |          |      |  |   |                 |   |           |                     |        |           |   |         |           |  |        |   |  |        |  
|Total corporate expenses                                  |  | $                                        | 28,959   |     |      | $ | 10,586   |      |  | $ | 10,635          |   |           | $                   | 18,373 |           | $ | (49     | )         |  | 173.6  | % |  | -0.5   | %
|                                                          |  |                                          |          |     |      |   |          |      |  |   |                 |   |           |                     |        |           |   |         |           |  |        |   |  |        |  
|Other income (expense):                                   |  |                                          |          |     |      |   |          |      |  |   |                 |   |           |                     |        |           |   |         |           |  |        |   |  |        |  
|Accretion of discount to the relinquishment liability (1) |  | $                                        | (27,085  | )   |      | $ | (29,794  | )    |  | $ | (30,707         | ) |           | $                   | 2,709  |           | $ | 913     |           |  | -9.1   | % |  | -3.0   | %
|Interest income (2)                                       |  |                                          | 3,795    |     |      |   | 3,695    |      |  |   | 2,245           |   |           |                     | 100    |           |   | 1,450   |           |  | 2.7    | % |  | 64.6   | %
|Interest expense, net of capitalized interest             |  |                                          | (93,793  | )   |      |   | (94,363  | )    |  |   | (90,928         | ) |           |                     | 570    |           |   | (3,435  | )         |  | -0.6   | % |  | 3.8    | %
|Write off of debt issuance costs (3)                      |  |                                          |         |     |      |   | (71      | )    |  |   |                |   |           |                     | 71     |           |   | (71     | )         |  | -100.0 | % |  | 100.0  | %
|Other income (expense), net                               |  |                                          | 248      | (4) |      |   | (137     | )(4) |  |   | 24,508          |   |           |                     | 385    |           |   | (24,645 | )         |  | -281.0 | % |  | -100.6 | %
|                                                          |  |                                          |          |     |      |   |          |      |  |   |                 |   |           |                     |        |           |   |         |           |  |        |   |  |        |  
|Total other expense, net                                  |  | $                                        | (116,835 | )   |      | $ | (120,670 | )    |  | $ | (94,882         | ) |           | $                   | 3,835  |           | $ | (25,788 | )         |  | -3.2   | % |  | 27.2   | %
|                                                          |  |                                          |          |     |      |   |          |      |  |   |                 |   |           |                     |        |           |   |         |           |  |        |   |  |        |  



|(1) | Our accretion of the discount to the relinquishment liability reflects the accretion of the discount to the present value of the relinquishment liability for the impact of the time
value of money.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Comprised primarily of interest earned on long-term receivables from the Menominee Tribe related to the Menominee Project and the Cowlitz Tribe related to the Cowlitz Project, both
more fully described in Notes 13 and 14, respectively, to our consolidated financial statements included in this form 10-K.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents the unamortized debt issuance costs written off upon the termination of our $450.0 million bank credit facility in March 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(4) | Represents primarily gain (loss) on disposal of property and equipment.
|--- | -----------------------------------------------------------------------

Total Corporate costs and expenses for the fiscal year ended September 30, 2008 compared to the prior fiscal year increased primarily as a result of $9.5 million in non-cash charges for additional reserves
recorded against the net assets of WTG. These additional reserves were initially recorded for WTG following the issuance of new guidance by the Bureau of Indian Affairs in January 2008 on its policy for taking off-reservation land into trust for
gaming purposes and were subsequently increased in September 2008 following an unfavorable decision by the U.S. Department of the Interior to reject the Menominee Tribes request to suspend review of its application to take off-reservation land
into trust in connection with the Menominee Project and a federal courts subsequent refusal to issue a temporary restraining order to prevent the Interior Department from taking further action on the application. The increase in Corporate
costs and expenses also was attributable to increased allocated expenditures related to governmental and certain administrative services provided by the Tribe and increased professional costs and consulting expenditures related to various gaming
diversification efforts of $2.8 million and $2.7 million, respectively.

Corporate costs and expenses for the fiscal years ended
September 30, 2007 and 2006 were comparable.

Interest expense, net of capitalized interest, for the fiscal year ended
September 30, 2008 compared to the prior fiscal year decreased due to increases in capitalized interest relating to Project Horizon and Project Sunrise



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of $2.5 million and $2.4 million, respectively, to $3.5 million and $3.0 million, respectively, for the fiscal year ended September 30, 2008 from $1.0
million and $638,000, respectively, for the prior fiscal year. The decrease in interest expense also was attributable to lower weighted average interest rate, partially offset by increased weighted average outstanding debt. The weighted average
interest rate was 7.2% for the fiscal year ended September 30, 2008 compared to 7.4% in the prior fiscal year. The weighted average outstanding debt was $1.40 billion for the fiscal year ended September 30, 2008 compared to $1.30 billion
in the prior fiscal year. The increase in weighted average outstanding debt was due to additional borrowings on the bank credit facility to fund Project Horizon and Project Sunrise.

Interest expense, net of capitalized interest, for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased due to
higher weighted average outstanding debt, partially offset by the capitalization of $1.7 million in interest costs associated with Project Horizon at Mohegan Sun and the Phase I slot facility and Project Sunrise at Pocono Downs. The weighted average
outstanding debt was $1.30 billion for the fiscal year ended September 30, 2007 compared to $1.25 billion for the prior fiscal year. The increase in weighted average outstanding debt was the result of additional borrowing for the payment of the
$50.0 million slot license fee at Pocono Downs and capital expenditures at Mohegan Sun and Pocono Downs. The weighted average interest rate was 7.4% for each of the fiscal years ended September 30, 2007 and 2006.

Other income for the fiscal year ended September 30, 2006 related primarily to the $24.5 million gain recorded in connection with the August 2006
amendment of the agreement by which we acquired Pocono Downs. Pursuant to the amendment, in exchange for our agreement to modify certain provisions of the purchase agreement, including the elimination of our post-closing termination rights, we will
receive an aggregate refund of $30.0 million of the original purchase price for the Pocono Downs entities, payable in five annual installments of $7.0 million, $7.0 million, $6.5 million, $6.0 million and $3.5 million on November 14, 2007,
2008, 2009, 2010 and 2011, respectively. The gain recorded in fiscal year 2006 represents the present value of the payment stream for these installments. The $7.0 million installments due in November 2007 and 2008 were received on November 14,
2007 and 2008, respectively.

Seasonality

The gaming industry in Connecticut is seasonal in nature, with the heaviest gaming activity often occurring at Mohegan Sun between May and August. Additionally, live harness racing activity at Pocono Downs is seasonal, with the racing
season commencing in late March/early April and usually ending in the fall. The 2008 racing season ended in September. The overall gaming industry in Pennsylvania also is expected to be seasonal in nature. Accordingly, the results of operations for
the fiscal year ended September 30, 2008 are not necessarily indicative of the operating results for interim periods.

Liquidity, Capital Resources
and Capital Spending

Our cash flows consisted of the following (in thousands):



|                                                     |  |                                  |          |   |      |   |          |      |  |   |                 |   |  |                     |          |   |           |   |         |           |  |        |   |  |       |  
|---------------------------------------------------- |  | -------------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | --------------- | - |  | ------------------- | -------- | - | --------- | - | ------- | --------- |  | ------ | - |  | ----- | -
|                                                     |  | Fiscal Years Ended September 30, |         
|                                                     |  |                                  |          |   |      |   |          |      |  |   | Dollar Variance |   |  | Percentage Variance |         
|                                                     |  | 2008                             |          |   | 2007 |   |          | 2006 |  |   | 08 vs. 07       |   |  | 07 vs. 06           |          |   | 08 vs. 07 |   |         | 07 vs. 06 | 
|Net cash provided by operating activities            |  | $                                | 173,091  |   |      | $ | 284,403  |      |  | $ | 254,260         |   |  | $                   | (111,312 | ) |           | $ | 30,143  |           |  | -39.1  | % |  | 11.9  | %
|Net cash used in investing activities                |  |                                  | (320,750 | ) |      |   | (188,767 | )    |  |   | (104,164        | ) |  |                     | (131,983 | ) |           |   | (84,603 | )         |  | 69.9   | % |  | 81.2  | %
|Net cash provided by (used in) financing activities  |  |                                  | 126,847  |   |      |   | (66,223  | )    |  |   | (147,275        | ) |  |                     | 193,070  |   |           |   | 81,052  |           |  | -291.5 | % |  | -55.0 | %
|                                                     |  |                                  |          |   |      |   |          |      |  |   |                 |   |  |                     |          |   |           |   |         |           |  |        |   |  |       |  
|Net (decrease) increase in cash and cash equivalents |  | $                                | (20,812  | ) |      | $ | 29,413   |      |  | $ | 2,821           |   |  | $                   | (50,225  | ) |           | $ | 26,592  |           |  | -170.8 | % |  | 942.6 | %
|                                                     |  |                                  |          |   |      |   |          |      |  |   |                 |   |  |                     |          |   |           |   |         |           |  |        |   |  |       |  



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As of September 30, 2008 and September 30, 2007, we held cash and cash equivalents of $83.8
million and $104.7 million, respectively. As a result of the cash-based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and
amortization and relinquishment liability reassessments. The decrease in cash provided by operating activities for the fiscal year ended September 30, 2008 was attributable primarily to the decrease in operating income after adjustments for
non-cash items and higher working capital requirements, partially offset by the receipt of the $7.0 million pursuant to the amendment to the Pocono Downs purchase agreement.

Operating activities are a significant source of our cash flows. We use our cash flows provided by operating activities primarily to meet our working
capital requirements, provide funding for our maintenance capital expenditures, reduce our debt, provide distributions to the Tribe, provide payments under the relinquishment agreement and, from time to time, make investments. There are numerous
potential factors which may cause a substantial reduction in the amount of such cash flows, including, but not limited to, the following:



| |  |  | the ongoing national economic recession, which could result in reduced spending on discretionary items such as gaming activities;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased competition (including the legalization or expansion of gaming in New England, New York, New Jersey, Maryland or Pennsylvania);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an infrastructure or transportation disruption, such as the closure of Interstate 95 or 395 through Connecticut, for an extended period of time;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a change in Connecticut or Pennsylvania state laws regarding smoking in gaming facilities; and
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | an act of terrorism in the United States of America.
| | - |  | ----------------------------------------------------

In addition to cash generated by operating activities, we have relied on external sources of liquidity to meet our capital requirements. The increase in cash used in investing activities for the fiscal year ended
September 30, 2008 was attributable primarily to a $185.3 million increase in capital expenditures due to the construction projects described below under Capital Expenditures-Capital Expenditures Incurred. By comparison, the fiscal
year ended September 30, 2007 included the payment of the one-time slot machine license fee of $50.0 million to the PGCB, the acquisition of the Menominee Project development rights and other related assets for $6.4 million, the acquisition of
PCC for $4.7 million, partially offset by $7.0 million in proceeds from the sale of our Erie OTW. The increase in cash provided by financing activities for the fiscal year ended September 30, 2008 was primarily attributable to a $190.3 million
increase in total net borrowings. Borrowings during the fiscal year ended September 30, 2008 were used primarily to fund capital expenditures at Mohegan Sun and Pocono Downs. Borrowings during the fiscal year ended September 30, 2007 were
used primarily to fund the payment of the $50.0 million slot license fee for Pocono Downs.

External Sources of Liquidity

Notes. We financed the purchase of the Pocono Downs entities and much of the costs of construction of Mohegan Sun and Pocono Downs
with the net proceeds from the issuance of notes and borrowings under our bank credit facilities. As of September 30, 2008, we had:



| |  |  | $16.3 million outstanding in 83/8% senior subordinated notes due July 1, 2011 and first callable July 1, 2006, or
the 2001 senior subordinated notes;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $250.0 million outstanding in 8% senior subordinated notes due April 1, 2012 and first callable April 1, 2007, or the 2002 senior subordinated notes;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $330.0 million outstanding in 63/8% senior subordinated notes due July 15, 2009, or the 2003 senior subordinated notes;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | $225.0 million outstanding in 71/8% senior subordinated notes due August 15, 2014 and first callable on August 15,
2009, or the 2004 senior subordinated notes;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | $250.0 million outstanding in 61/8% senior notes due February 15, 2013 and first callable February 15, 2009, or the
2005 senior notes; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | $150.0 million outstanding in 67/8% senior subordinated notes due February 15, 2015 and first callable February 15,
2010, or the 2005 senior subordinated notes.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan
Golf, MVW, WTG and MTGA Gaming are guarantors of each of these notes, except for the 2001 senior subordinated notes, which are guaranteed solely by MBC.

In November 2008, Moodys Investors Services downgraded the credit rating on our 2005 senior notes from Ba1 to Ba3 and the credit rating on our senior subordinated notes from Ba3 to B3, primarily to reflect the
impact of the ongoing national recession, increased competition in the Northeast gaming market and our ability to reduce our indebtedness. These actions may impact our ability to access the capital debt markets in the future. If we are able to
access the capital debt markets, our cost of issuance may be greater than costs experienced by us in the past and we could be subject to more restrictive covenants and other terms in connection with such issuance.

Prior Bank Credit Facility.In March 2007, we extinguished our $450.0 million prior bank credit facility through an
amendment to, and restatement of, the facility, as discussed below.

Bank Credit Facility. In March 2007, we
entered into a bank credit facility providing for up to $1.0 billion in borrowing capacity, including a $250.0 million increase option, from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as
Administrative Agent. This bank credit facility replaced our prior bank credit facility. The five-year senior secured revolving credit facility included a $300.0 million term loan conversion provision which was triggered upon the initial
accumulation of $300.0 million in total borrowings on the bank credit facility on August 15, 2008. The term loan requires principal payments in quarterly installments of $750,000 beginning December 31, 2008 through the maturity date of March 9,
2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. As of September 30, 2008, the amount under letters of credit issued pursuant to the bank credit facility totaled $7.2 million, of which no
amount was drawn, as discussed below under Letters of Credit. Inclusive of the term loan and letters of credit, which reduce borrowing availability under the bank credit facility, we had approximately $692.8 million of borrowing capacity
under the bank credit facility as of September 30, 2008, without taking into account covenants under the bank credit facility and the amended bank credit facility, the line of credit and note indentures. Considering restrictive financial covenants
under our bank credit facility and note indentures, the amount available for borrowings approximated $85.0 million under the bank credit facility as of September 30, 2008.

In February 2008, we received requisite consent from our lenders to Amendment No. 1 to the bank credit facility. Amendment No. 1, among other
things, provided for increases in the permitted capital expenditures for Project Horizon and Project Sunrise from $800.0 million and $200.0 million, respectively, to $950.0 million and $215.0 million, respectively. Amendment No. 1 also modified
our total leverage, senior leverage and minimum fixed charge coverage ratio covenants to conform with the increase in projected expenditures and the change in the projected completion dates for Project Horizon and Project Sunrise.

At our option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month,
six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on our Total Leverage Ratio, as each term is defined in the bank credit facility, at the time each loan is made. We also pay commitment fees for the unused
portion of the revolving loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is
between 0.000% and 1.375%, and the Applicable Rate for Eurodollar rate advances is between 1.250% and 2.625%. The Applicable



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Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of Americas announced prime rate or the federal funds rate
plus 0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears. As of September 30, 2008, we had a $300.0
million Eurodollar rate loan and no base rate loan outstanding. The Eurodollar rate loan outstanding at September 30, 2008 was based on a one-month Eurodollar rate of 3.704% plus an Applicable Rate of 2.125%. The Applicable Rate for commitment
fees was 0.300% as of September 30, 2008.

The bank credit facility is collateralized by a lien on substantially all of our assets,
including the assets comprising Pocono Downs and a leasehold mortgage on the land previously taken into trust by the federal government and improvements which comprise Mohegan Sun. We will also be required to pledge additional assets as collateral
for the bank credit facility as we or our guarantor subsidiaries acquire them. Our obligations under the bank credit facility are guaranteed by MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. The
bank credit facility subjects us to a number of restrictive covenants, including financial covenants. These financial covenants relate to, among other things, our permitted total debt and senior debt leverage ratios, our minimum fixed charge
coverage ratio, our maximum capital expenditures and a periodic test which ensures that we have sufficient liquidity under our bank credit facility and other allowed borrowings, projected cash flows over applicable construction periods and existing
cash and cash equivalents to cover planned construction expenditures.

The bank credit facility includes non-financial covenants by us and
the Tribe of the type customarily found in loan agreements for similar transactions including requirements that:



| |  |  | the Tribe preserve its existence as a federally recognized Indian tribe;
| | - |  | ------------------------------------------------------------------------



| |  |  | the Tribe cause us to continually operate both the Mohegan Sun and Pocono Downs entities in compliance with all applicable laws; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | except under specific conditions, limit us from selling or disposing of our assets, limit the transfer of our assets to our non-guarantor subsidiary, limit the
incurrence by us and our guarantor subsidiaries of other debt or contingent obligations and limit our ability to extend credit, make investments or commingle our assets with assets of the Tribe.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of September 30, 2008, we and the Tribe were in compliance with all of our and their respective covenant requirements in the bank credit
facility.

On December 10, 2008, we amended and restated our bank credit
facility following the suspension of Project Horizon. Among other things, the amended bank credit facility reduced the overall size of the credit facility from $1.0 billion to $850.0 million, reduced the term loan from $300.0 million to $150.0
million and reduced the increase option from $250.0 million to $150.0 million. Factoring in the reduction in the size of our bank credit facility from $1.0 billion to $850.0 million, our borrowing capacity effectively was reduced to approximately
$542.8 million under the amended bank credit facility from approximately $692.8 million under the bank credit facility as of September 30, 2008, without taking into account covenants under the bank credit facility and amended bank credit facility,
as applicable, and note indentures. Pursuant to the amendment, we also obtained the right to use proceeds from the amended bank credit facility to repay our 63/8% $330.0 million senior subordinated notes at maturity on July 15, 2009, which is our current intention. In addition, our total leverage, senior leverage and minimum fixed charge coverage ratio covenants were
modified under the amendment to conform with the current construction plans for Project Horizon and recent operating trends.



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Accordingly, under the amendment, our minimum fixed charge coverage ratio (as defined in the amended bank
credit facility) is 1.05 to 1.00 for the fiscal quarters ending December 31, 2008 through March 31, 2010, and 1.10 to 1.00 for the fiscal quarters ending June 30, 2010 and thereafter. Also under the amendment, our maximum total
leverage ratio, or the ratio of Total Debt to Annualized EBITDA (as such terms are defined in the amended bank credit facility), is as follows:



|                                         |  |              
|---------------------------------------- |  | -------------
|Fiscal Quarters Ending                   |  | Maximum Ratio
|December 31, 2008 and March 31, 2009     |  | 7.75:1.00    
|June 30, 2009                            |  | 7.50:1.00    
|September 30, 2009 and December 31, 2009 |  | 7.25:1.00    
|March 31, 2010 and June 30, 2010         |  | 7.00:1.00    
|September 30, 2010 and December 31, 2010 |  | 6.75:1.00    
|March 31, 2011 and June 30, 2011         |  | 6.50:1.00    
|September 30, 2011                       |  | 6.25:1.00    
|December 31, 2011 and thereafter         |  | 6.00:1.00    

Our permitted senior leverage ratio under the amendment, or the ratio of Total Debt minus
Subordinated Obligations to Annualized EBITDA (as such terms are defined in the amended bank credit facility), is as follows:



|                                          |  |              
|----------------------------------------- |  | -------------
|Fiscal Quarters Ending                    |  | Maximum Ratio
|December 31, 2008 through June 30, 2009   |  | 3.50:1.00    
|September 30, 2009 through March 31, 2010 |  | 3.75:1.00    
|June 30, 2010 through December 31, 2010   |  | 3.50:1.00    
|March 31, 2011 through September 30, 2011 |  | 3.25:1.00    
|December 31, 2011 and thereafter          |  | 2.75:1.00    

However, in the event that we issue
subordinated indebtedness to refinance all or any part of our 63/8% $330.0 million senior subordinated notes at maturity, the
permitted senior leverage ratio is as follows:



|                                          |  |              
|----------------------------------------- |  | -------------
|Fiscal Quarters Ending                    |  | Maximum Ratio
|December 31, 2008 through June 30, 2009   |  | 3.50:1.00    
|September 30, 2009 and December 31, 2009  |  | 4.75:1.00    
|March 31, 2010                            |  | 4.50:1.00    
|June 30, 2010 through December 31, 2010   |  | 4.25:1.00    
|March 31, 2011 through September 30, 2011 |  | 4.00:1.00    
|December 31, 2011 and thereafter          |  | 3.50:1.00    

Factoring in the reduction in the size of our bank credit facility from $1.0 billion to $850.0
million, our borrowing capacity effectively was reduced to approximately $542.8 million under the amended bank credit facility from approximately $692.8 million under the bank credit facility as of September 30, 2008, without taking into
account covenants under the bank credit facility and the amended bank credit facility, as applicable, or our note indentures. The foregoing description of the amended bank credit facility is qualified in its entirety by the full text of the Third
Amended and Restated Loan Agreement, dated as of December 10, 2008, by and among us, the Tribe, the lenders named therein and Bank of America, N.A., as Administrative Agent, which is incorporated herein by reference to Exhibit 10.1 of our
periodic report on Form 8-K, dated December 15, 2008.

Line of Credit.We have a $25.0 million revolving loan agreement with
Bank of America, or the line of credit. Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of our Leverage Ratio, as each term is defined in the line of credit. Borrowings
under the



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line of credit are uncollateralized obligations. The line of credit was amended in March 2008 to extend the maturity date from March 31, 2008 to
March 31, 2009. As of September 30, 2008, we had $2.9 million in loans outstanding under the line of credit, which were based on a one-month Eurodollar rate of 2.486% plus an Applicable Margin of 1.775%. The line of credit subjects us to
certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under the bank credit facility. As of September 30, 2008, we were in compliance with all covenant requirements in the line of credit and had
$22.1 million of borrowing capacity thereunder.

Letters of Credit.As of September 30, 2008, we maintained five
uncollateralized letters of credit, three of which we maintained to satisfy potential workers compensation liabilities, overdue pari-mutuel wagering tax liabilities of the Pocono Downs entities and potential contractor and subcontractor
liabilities relating to Project Horizon, and two of which related to road work at the Pocono Downs entities. The letters of credit expire on various dates from January 2009 through September 2009, subject to renewals. As of September 30, 2008,
no amounts were drawn on the letters of credit.

Salishan-Mohegan Bank Credit Facility.In October 2006, Salishan-Mohegan entered
into a $25.0 million revolving loan agreement with Bank of America, or the Salishan credit facility, which matures on September 30, 2009. The revolving loan has no mandatory amortization provisions and is payable in full at maturity. At the
option of Salishan-Mohegan, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month or six-month Eurodollar rate, plus a spread of 1.250% for base rate loans and an Applicable
Rate, as defined in the Salishan credit facility, of 2.250% for Eurodollar loans. The base rate is the higher of Bank of Americas announced prime rate or the federal funds rate plus 0.500%. The Salishan credit facility is collateralized by a
lien on substantially all of the existing and future assets of Salishan-Mohegan. The obligations of Salishan-Mohegan under the Salishan credit facility are also guaranteed by the Tribe. The Salishan credit facility subjects Salishan-Mohegan to a
number of restrictive covenants, including financial and non-financial covenants customarily found in loan agreements for similar transactions.

As of September 30, 2008, Salishan-Mohegan had $21.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at September 30, 2008 were comprised of: (1) a $17.8 million loan
based on a one-month Eurodollar rate of 3.709% plus an Applicable Rate of 2.250%; (2) a $2.2 million loan based on a one-month Eurodollar rate of 2.488% plus an Applicable Rate of 2.250%; and (3) a $1.0 million loan based on a one-month
Eurodollar rate of 3.704% plus an Applicable Rate of 2.250%. The Applicable Rate for commitment fees was 0.50% as of September 30, 2008. As of September 30, 2008, Salishan-Mohegan had $4.0 million of borrowing capacity under the Salishan
credit facility.

Mohegan Tribe Promissory Note.In June 2008, the Tribe loaned MG&H $8.3 million,
which was used to fund MG&Hs portion of a Privilege Fee payment to the State of Kansas in connection with MG&Hs effort, ended in September 2008, to secure a gaming license for the development of a gaming facility to be located in
the State of Kansas. The promissory note executed by MG&H in favor of the Tribe, or the Mohegan Tribe promissory note, provided for the accrual of interest at an annual rate of 12.0% and was due to mature on October 15, 2008. In September
2008, MG&H repaid the $8.3 million outstanding on the Mohegan Tribe promissory note following a refund of the Privilege Fee payment as a result of the selection of another applicant by the Kansas Lottery Gaming Facility Review Board.

Capital Expenditures

Capital Expenditures Incurred

Capital expenditures totaled $383.7 million for the fiscal year ended
September 30, 2008, compared to $162.2 million for the fiscal year ended September 30, 2007. These capital expenditures were comprised of the following:



| |  |  | Capital expenditures at Mohegan Sun totaled $210.5 million and $103.7 million for the fiscal years ended September 30, 2008 and 2007, respectively. For the
fiscal year ended September 30, 2008, these
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | expenditures consisted primarily of $172.8 million in costs related to Project Horizon, including $3.5 million in capitalized interest, $26.3 million in
maintenance capital expenditures and $11.4 million in property renovation expenditures. For the fiscal year ended September 30, 2007, these expenditures consisted of $34.0 million in maintenance capital expenditures, $46.5 million in costs
related to Project Horizon, including $1.0 million in capitalized interest and $23.2 million in property renovation expenditures.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital expenditures at Pocono Downs totaled $173.2 million and $58.4 million for the fiscal years ended September 30, 2008 and 2007, respectively. For the
fiscal year ended September 30, 2008, these expenditures consisted primarily of $169.6 million in costs related to Project Sunrise, including $3.0 million in capitalized interest. For the fiscal year ended September 30, 2007, these
expenditures consisted primarily of construction costs for the Phase 1 slot facility and to begin construction on Project Sunrise of $56.4 million, including $638,000 in capitalized interest.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital expenditures for Corporate were minimal for each of the fiscal years ended September 30, 2008 and 2007.
| | - |  | ---------------------------------------------------------------------------------------------------------------

Expected Future Capital Expenditures

Capital expenditures for fiscal year 2009 at Mohegan Sun, exclusive of the Project Horizon spending, are forecast to be approximately $26.0 million in maintenance capital expenditures for the replacement and improvement of information
technology equipment, systems and software, replacement and enhancement of slot machines and purchase of new carpeting for the ballroom.

Revised costs for Project Horizon are currently estimated to be approximately $301.6 million, exclusive of capitalized interest. As of September 30, 2008, costs incurred for Project Horizon, inclusive of costs incurred for Sunrise
Square, the Casino of the Wind, Property Infrastructure, restoration of the Winter Parking Garage and the Earth Expansion, excluding capitalized interest, totaled $216.6 million. Remaining project costs are estimated to total approximately $85.0
million and are anticipated to be incurred in fiscal 2009.

Capital expenditures for fiscal year 2009 at Pocono Downs are forecasted to be
$8.1 million, of which $5.7 million relates to the construction of a new paddock for the harness racing facility.

Sources of Funding
for Capital Expenditures

We will rely primarily on cash generated from operations to finance maintenance capital expenditures at
Mohegan Sun and Pocono Downs. We plan to finance capital expenditures for Project Horizon through a combination of operating cash flows and draws under our amended bank credit facility.



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Interest Expense

For the fiscal years ended September 30, 2008, 2007 and 2006, we incurred the following in interest expense, net of capitalized interest (in thousands):



|                                                                          |  |                                         |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                          |  | For the Fiscal Years EndedSeptember 30, |       
|                                                                          |  | 2008                                    |        |   | 2007 |   |        | 2006 | 
|Bank credit facility                                                      |  | $                                       | 8,978  |   |      | $ | 2,799  |      |  | $ |       |  
|Prior bank credit facility                                                |  |                                         |       |   |      |   | 2,755  |      |  |   | 3,463  |  
|1999 81/8% senior
notes                                                   |  |                                         |       |   |      |   |       |      |  |   | 284    |  
|2005 61/8% senior
notes                                                   |  |                                         | 15,313 |   |      |   | 15,313 |      |  |   | 15,355 |  
|2001 83/8% senior
subordinated notes                                      |  |                                         | 1,369  |   |      |   | 1,369  |      |  |   | 1,369  |  
|2002 8% senior subordinated notes                                         |  |                                         | 20,000 |   |      |   | 20,000 |      |  |   | 20,000 |  
|2003 63/8% senior
subordinated notes                                      |  |                                         | 21,038 |   |      |   | 21,038 |      |  |   | 21,038 |  
|2004 71/8% senior
subordinated notes                                      |  |                                         | 16,031 |   |      |   | 16,031 |      |  |   | 15,987 |  
|2005 67/8% senior
subordinated notes                                      |  |                                         | 10,313 |   |      |   | 10,313 |      |  |   | 10,341 |  
|WNBA note                                                                 |  |                                         | 181    |   |      |   | 301    |      |  |   | 336    |  
|Line of credit                                                            |  |                                         | 388    |   |      |   | 641    |      |  |   | 515    |  
|Salishan-Mohegan bank credit facility                                     |  |                                         | 1,153  |   |      |   | 1,186  |      |  |   |       |  
|Mohegan Tribe promissory note                                             |  |                                         | 244    |   |      |   |       |      |  |   |       |  
|Capital lease                                                             |  |                                         | 47     |   |      |   |       |      |  |   |       |  
|Amortization of net deferred gain on settlement of derivative instruments |  |                                         | 455    |   |      |   | 455    |      |  |   | 444    |  
|Amortization of debt issuance costs                                       |  |                                         | 4,831  |   |      |   | 3,835  |      |  |   | 2,976  |  
|Capitalized interest                                                      |  |                                         | (6,548 | ) |      |   | (1,673 | )    |  |   | (1,180 | )
|                                                                          |  |                                         |        |   |      |   |        |      |  |   |        |  
|Total interest expense, net of capitalized interest                       |  | $                                       | 93,793 |   |      | $ | 94,363 |      |  | $ | 90,928 |  
|                                                                          |  |                                         |        |   |      |   |        |      |  |   |        |  

Sufficiency of Resources

We believe that existing cash balances, financing arrangements, including the December 2008 amendment to our bank credit facility, and operating cash
flows will provide us with sufficient resources to meet our existing debt obligations, relinquishment payments and foreseeable capital expenditure requirements with respect to current operations and distributions to the Tribe for at least the next
twelve months. We can, however, make no assurances in this regardsee Part I. Item 1A. Risk Factors for a discussion of the risks relating to our sufficiency of resources. Any future investments in Mohegan Sun and Pocono Downs are
anticipated to be funded through a combination of operating cash flows and draws under our amended bank credit facility. Factoring in the reduction in the size of our bank credit facility from $1.0 billion to $850.0 million, pursuant to the
amendment to our bank credit facility in December 2008, we had approximately $542.8 million of borrowing capacity under our amended bank credit facility, without taking into account covenants under the bank credit facility and the amended bank
credit facility, the line of credit and note indentures. Considering restrictive financial covenants under our amended bank credit facility and note indentures, the amount available for borrowings approximated $85.0 million under the bank credit
facility as of September 30, 2008. Distributions to the Tribe are forecasted to total approximately $82.5 million for fiscal year 2009.



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Contractual Obligations and Commitments

Our future payment obligations related to our debt and certain other material contractual obligations and the timing of those payments are set forth
below.



|                                        |  |       |           |                        |   |           |  |           |         |                  |   |           |  |   |        
|--------------------------------------- |  | ----- | --------- | ---------------------- | - | --------- |  | --------- | ------- | ---------------- | - | --------- |  | - | -------
|                                        |  |       |           | Payments due by period
|Contractual Obligations (in thousands)  |  | Total |           | Less than 1year (1)    |   | 1-3 years |  | 3-5 years |         | More than5 years
|Long-term debt (2)                      |  | $     | 1,548,883 |                        | $ | 27,938    |  | $         | 199,845 |                  | $ | 945,500   |  | $ | 375,600
|Interest payments on long-term debt (3) |  |       | 383,745   |                        |   | 99,759    |  |           | 149,864 |                  |   | 102,248   |  |   | 31,874 
|Construction obligations (4)            |  |       | 84,997    |                        |   | 84,997    |  |           |        |                  |   |          |  |   |       
|Procurement obligations (5)             |  |       | 75,394    |                        |   | 7,187     |  |           | 29,521  |                  |   | 25,394    |  |   | 13,292 
|Capital lease obligations (6)           |  |       | 7,307     |                        |   | 630       |  |           | 1,335   |                  |   | 1,441     |  |   | 3,901  
|                                        |  |       |           |                        |   |           |  |           |         |                  |   |           |  |   |        
|Total                                   |  | $     | 2,100,326 |                        | $ | 220,511   |  | $         | 380,565 |                  | $ | 1,074,583 |  | $ | 424,667
|                                        |  |       |           |                        |   |           |  |           |         |                  |   |           |  |   |        



|(1) | Amounts represent payment obligations from October 1, 2008 to September 30, 2009, exclusive of our 63/8% $330.0 million senior subordinated notes which mature on July 15, 2009, as we intend to refinance these notes with proceeds
from our amended bank credit facility, as described herein.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Long-term debt includes maturities scheduled as of September 30, 2008 for our senior notes and senior subordinated
notes, amounts required to be paid pursuant to the bank credit facility, and our other debt agreements, including the Salishan-Mohegan bank credit facility, but excludes interest payments. Long-term debt also assumes that proceeds from the amended
bank credit facility will be used to repay our 63/8% $330.0 million senior subordinated notes at maturity on July 15, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes interest payments expected to be paid on long-term debt as of September 30, 2008, pursuant to respective debt agreements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(4) | Amounts represent expenditures we must pay in connection with Project Horizon and other capital projects.
|--- | ---------------------------------------------------------------------------------------------------------

|(5) | Amounts represent expenditures we must pay in connection with agreements entered into with vendors for inventory and sundry items.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(6) | Amounts represent principal payments to the Tribe relating to property adjacent to the Tribes reservation that is currently used by Mohegan Suns employees for parking.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the contractual obligations described above, we have certain other contractual commitments as of
September 30, 2008 that require payments during the periods described below. The calculation of the estimated payments in the table below are based, in large part, on projections of future revenues over an extended period of time, as well as
other factors that are indicated more fully in the footnotes to the following table. Since there are estimates and judgments used with respect to calculating these liabilities, future events that affect such estimates and judgments may cause the
actual payments to differ from the estimates set forth below. The amounts included in the table are estimates and, while some agreements are perpetual in term, for the purposes of calculating these amounts, we have assumed that the table contains
information for only ten years.



|                                         |  |                        |         |           |   |           |  |            |         |  |   |          
|---------------------------------------- |  | ---------------------- | ------- | --------- | - | --------- |  | ---------- | ------- |  | - | ---------
|                                         |  | Payments due by period
|Contractual Commitments (in thousands)   |  | Less than 1year (1)    |         | 1-3 years |   | 3-5 years |  | 5-10 years
|Minimum Slot Win Contributions (2)       |  | $                      | 210,104 |           | $ | 431,417   |  | $          | 454,377 |  | $ | 1,260,719
|Relinquishment commitments (3)           |  |                        | 65,972  |           |   | 131,609   |  |            | 147,037 |  |   | 99,075   
|Priority distributions (4)               |  |                        | 17,796  |           |   | 37,127    |  |            | 39,271  |  |   | 108,393  
|Town of Montville commitment (5)         |  |                        | 500     |           |   | 1,000     |  |            | 1,000   |  |   | 2,500    
|Slot machine tax assessment payments (6) |  |                        | 132,354 |           |   | 269,122   |  |            | 281,808 |  |   | 781,907  
|Property tax litigation payments (7)     |  |                        | 1,731   |           |   | 4,471     |  |            | 4,826   |  |   | 5,610    
|                                         |  |                        |         |           |   |           |  |            |         |  |   |          
|Total                                    |  | $                      | 428,457 |           | $ | 874,746   |  | $          | 928,319 |  | $ | 2,258,204
|                                         |  |                        |         |           |   |           |  |            |         |  |   |          



|(1) | Amounts represent payment commitments from October 1, 2008 to September 30, 2009.
|--- | ---------------------------------------------------------------------------------



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|(2) | Slot win contributions are a portion of gross slot revenues that we must pay to the State of Connecticut pursuant to the Mohegan Compact. The slot win contribution is the lesser of
(a) 30% of gross slot revenues, or (b) the greater of (i) 25% of gross slot revenues or (ii) $80.0 million.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Relinquishment payments are made by us to TCA under a relinquishment agreement. Relinquishment payments are 5.0% of revenues, as defined in the relinquishment agreement. The
payments due reflect our estimates of amounts to be paid under the relinquishment agreement based on our estimated future revenues subject to the relinquishment agreement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Priority distributions are monthly payments required to be made by us to the Tribe pursuant to the priority distribution agreement. The payments are calculated based on our net cash
flows, as defined in the priority distribution agreement, and are limited to a maximum amount of $14.0 million pursuant to the priority distribution agreement, as adjusted annually based on the Consumer Price Index, or CPI. For the purposes of
calculating these amounts, we have assumed that we will pay the maximum amount in each of the years covered by the table, as adjusted by an annual CPI adjustment of 2.85%.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | We have an agreement with the Town of Montville to pay the town an annual payment of $500,000 to minimize the impact on the town resulting from the decreased tax revenues on
reservation land held in trust.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Slot machine tax assessment payments are a portion of gross slot revenues that Downs Racing must pay to the PGCB on a daily basis, which includes local share assessments to be paid
to host cities and municipalities. The current assessment of the amount payable to the PGCB on a daily basis is 55% of gross slot revenues. The local share assessment is equal to the greater of 2.0% of annual gross slot revenues or $10.0 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Pursuant to the Pennsylvania Property Tax Litigation settlement, Downs Racing will continue to make agreed upon annual payments to the Wilkes-Barre Area School District for each tax
year through 2015.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical Accounting Policies and Estimates

Management has identified the following critical accounting policies that affect our more significant judgments and estimates used in the preparation of
our consolidated financial statements. The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that
affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, management evaluates those estimates, including those related to asset impairment,
relinquishment liability, accruals for unredeemed Players Club points, self-insurance, revenue recognition, allowance for doubtful accounts, contingencies and litigation. These estimates are based on the information that is currently available
to us and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could vary from those estimates.

We believe that the following critical accounting policies affect significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue Recognition

We
recognize gaming revenues as amounts wagered less prizes paid out. Revenues from food and beverage, hotel, retail, entertainment and other services are recognized at the time the service is performed. Minimum rental revenues are recognized on a
straight-line basis over the terms of the related leases. Percentage rents are recognized in the period in which the tenants exceed their respective percentage rent thresholds.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our patrons to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by
continually evaluating individual patron receivables, considering the patrons financial



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condition, credit history and current economic conditions. If the financial condition of patrons were to deteriorate, resulting in an impairment of their
ability to make payments, additional allowances may be required.

We also maintain allowances for doubtful accounts for reimbursable costs
and expenses incurred by Salishan-Mohegan and WTG for the development of the Cowlitz Project in Clark County, Washington and the Menominee Project in Kenosha, Wisconsin, respectively, to be owned by the Cowlitz Tribe and Menominee Tribe,
respectively. Due to the inherent uncertainty in the development of the Cowlitz Project, we maintain a reserve based on managements estimate of the probability that the receivables will be collected. Future complications in the receipt of
financing, the relevant land being taken into trust or other matters affecting the Cowlitz Project could affect the collectibility of the receivables and may lead to changes in the allowance for doubtful accounts. The WTG receivables were fully
reserved at September 30, 2008.

Unredeemed Players Club Points

We maintain an accrual for unredeemed Players Club points. The accrual is based on the estimated cost of the points expected to be redeemed as of
the respective balance sheet date. Management determines the adequacy of this accrual by periodically evaluating the historical redemption experience and projected trends related to this accrual.

Self-insurance Accruals

We
are self-insured up to certain limits for costs associated with workers compensation, general liability and employee medical coverage. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as
accruals of estimates of incurred but not reported claims. In estimating these costs, we consider historical loss experience and make judgments about the expected levels of costs per claim. We also use information provided by independent consultants
to assist in the determination of estimated accruals. These claims are accounted for based on estimates of the undiscounted claims, including those claims incurred but not reported. We believe the use of these estimates to account for these
liabilities provides a consistent and effective way to measure these accruals; however, changes in health care costs, accident frequency and severity and other factors can materially affect the estimate for these liabilities. We continually monitor
the potential changes in future estimates, evaluate insurance accruals and make adjustments when necessary.

Relinquishment Liability

In accordance with SFAS No. 5, we have recorded a relinquishment liability of the estimated present value of our obligations under
the relinquishment agreement. We reassess projected revenues and consequently the relinquishment liability: (i) annually in conjunction with our budgeting process, or (ii) when necessary to account for material increases or decreases in
projected revenues over the relinquishment period. If the reassessment causes an overall increase to the projected revenues over the relinquishment period, the relinquishment liability will be increased by 5.0% of such increase in revenues,
discounted at our risk-free rate of investment, which is an incremental layer. If the reassessment causes an overall decrease to the projected revenues over the relinquishment period, the relinquishment liability will be decreased by 5.0% of such
decrease in revenues, discounted based upon a weighted-average discount rate, which is a decremental layer. The weighted-average discount rate is defined as the average discount rate used to discount all the previous incremental layers weighted by
the amount of each such incremental layer. Further, we record a quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimates and judgments used with respect to
calculating this liability, future events that affect such estimates and judgments may cause the actual liability to differ significantly from the estimate.



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Property and Equipment

Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets, other than land, using the
straight-line basis. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the improvements. Useful life estimates of asset categories are as follows:



|                                |  |          
|------------------------------- |  | ---------
|Buildings and land improvements |  | 40 years 
|Furniture and equipment         |  | 3-7 years

The costs of significant improvements are capitalized. Costs of normal repairs and maintenance are
charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the determination of net income.

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the carrying value of our assets is reviewed when events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If it is determined that an impairment loss has occurred based on current and future levels of income and expected future cash flows, as well as other factors, then an impairment loss is recognized in the respective
consolidated statement of income.

Goodwill

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the goodwill associated with the acquisition of the Pocono Downs entities is not subject to amortization but is tested at least
annually for impairment by comparing the fair value of the recorded assets to their carrying amount. If the carrying amount of the goodwill exceeds its fair value, an impairment loss will be recognized immediately. We assessed the goodwill for
impairment using an income approach and determined that no impairment existed at September 30, 2008 and 2007. The income approach requires us to make assumptions regarding future revenues and expenses, discount rates and the terminal value of
the Pocono Downs entities. As a result of a reduction in estimated future revenues and associated cash flows due to the current economic conditions, and an increase in the weighted average cost of capital, the amount by which the estimated fair
value of the Pocono Downs entities exceeds its book value has decreased from the prior fiscal year. If estimates of projected cash flows of the Pocono Downs entities are not met, the goodwill may be impaired and subject to a non-cash write-down,
which could have a material adverse impact on the accompanying consolidated financial statements.

Intangible Assets

Our trademark for Mohegan Sun is no longer subject to amortization as it has been deemed to have an indefinite useful life. The
trademark is evaluated periodically for impairment by applying a fair-value based test pursuant to SFAS 142 and, if impairment occurs, the amount of the impairment will be written off immediately. The intangible assets associated with the
acquisitions of the Pocono Downs entities, the WNBA franchise and the assets of PCC are also assessed periodically for impairment pursuant to appropriate accounting standards. Pursuant to SFAS 142, the Menominee Project development rights intangible
asset were determined to be fully impaired following the issuance of new guidance by the Bureau of Indian Affairs on its policy for taking off-reservation land into trust for gaming purposes and an unfavorable decision by the United States
Department of the Interior to reject the Menominee Tribes request to suspend review of the Menominee Tribes application to take off-reservation land into trust in connection with the Menominee Project and a federal courts
subsequent refusal to issue a temporary restraining order to prevent the United States Department of the Interior from taking further action on the application. The $3.7 million loss associated with the write-off is included in depreciation and
amortization expense in the accompanying consolidated statement of income for the fiscal year ended September 30, 2008.



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Litigation

We are subject to various claims and legal actions in the ordinary course of business. Some of these matters relate to personal injuries to customers and damage to customers personal assets. Management estimates
guest claims expense and accrues for such liabilities based upon historical experience in other current liabilities in our accompanying consolidated balance sheets.

Impact of Inflation

Absent changes in competitive and economic conditions or in specific prices
affecting the hospitality and gaming industry, we do not expect that inflation will have a significant impact on our operations. Changes in specific prices, such as fuel and transportation prices, relative to the general rate of inflation may have a
material adverse effect on the hospitality and gaming industry in general.

New Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This standard does not require any new fair value measurements. SFAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. However, the FASB did provide a one year deferral for the implementation of SFAS 157 for non-financial assets and liabilities that are
recognized or disclosed at fair value in the financial statements on a non-recurring basis. We do not believe the adoption of this standard will have a material impact on our financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS
159). SFAS 159 provides entities with the option to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value and also establishes presentation and disclosure
requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This standard is intended to expand the use of fair value measurement but does not require any
new fair value measurements. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. We do not believe the adoption of this standard will have a material impact on our financial position,
results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS
141(R)) and SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements (SFAS 160). SFAS 141(R) requires the acquiring entity in a business combination to record all assets acquired and liabilities
assumed at their respective acquisition-date fair values and changes other practices under SFAS 141. SFAS 141(R) also requires additional disclosure of information surrounding a business combination, such that users of the entitys financial
statements can fully understand the nature and financial impact of the business combination. SFAS 160 requires entities to report non-controlling (minority) interests in subsidiaries as equity in the consolidated financial statements. We are
required to adopt SFAS 141(R) and SFAS 160 simultaneously in our fiscal year beginning October 1, 2009. The provisions of SFAS 141(R) will only impact us if we are party to a business combination after the pronouncement has been adopted. We are
currently evaluating the potential impact that SFAS 160 may have on our financial position, results of operations and cash flows.

In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161)an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS 133). SFAS 161 requires enhanced disclosures for derivative instruments and hedging activities, including disclosures regarding how: (i) an entity uses derivative instruments; (ii) derivative instruments
and related hedged items are accounted for under SFAS 133; and (iii) derivative instruments and



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related hedged items affect an entitys financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008. We are currently evaluating the potential impact, if any, that SFAS 161 may have on our financial position, results of operations and cash flows.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162
identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting
principles in the United States. SFAS 162 is effective 60 days following the Securities and Exchange Commissions approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly
in Conformity with Generally Accepted Accounting Principles. We are currently evaluating the potential impact, if any, that SFAS 162 may have on our financial position, results of operations and cash flows.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and
commodity prices. Our primary exposure to market risk is interest rate risk associated with our amended bank credit facility in which interest will accrue on the basis of a base rate formula or a Eurodollar-based formula, plus Applicable Rates, as
defined in the amended bank credit facility. As of September 30, 2008, we had $300.0 million drawn on the bank credit facility.

We
attempt to manage our interest rate risk through a controlled mix of our long-term fixed rate borrowings and variable rate borrowings in accordance with established policies and procedures. We do not hold or issue financial instruments for
speculative or trading purposes.

The following table provides information as of September 30, 2008 about our current financial
instruments, or debt obligations, that are sensitive to changes in interest rates. The table presents principal payments and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied
forward rates in respective yield curves, which should not be considered to be precise indicators of actual future interest rates. Fair values for variable-rate debt instruments are considered to approximate their carrying amounts and fair values
for fixed-rate debt instruments, which are publicly traded, are based on quoted market prices as of September 30, 2008.



|                                                                           |  |                        |        |   |      |   |        |      |  |   |         |   |  |      |         |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|-------------------------------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | - |  | ---- | ------- | - | ---------- | - | ------- | ----- |  | - | ---------- | - |  | - | --------- | - |  | - | ---------
|                                                                           |  | Expected Maturity Date |        |   |      |   |        |     
|                                                                           |  | 2009                   |        |   | 2010 |   |        | 2011 |  |   | 2012    |   |  | 2013 |         |   | Thereafter |   |         | Total |  |   | Fair Value
|Liabilities (in thousands)                                                 |  |                        |        |   |      |   |        |      |  |   |         |   |  |      |         |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|Long-Term Debt and Capital Lease Obligations (including current portions): |  |                        |        |   |      |   |        |      |  |   |         |   |  |      |         |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|Fixed Rate                                                                 |  | $                      | 630    |   |      | $ | 654    |      |  | $ | 17,025  |   |  | $    | 580,707 |   |            | $ | 250,734 |       |  | $ | 378,902    |   |  | $ | 1,228,652 |   |  | $ | 1,011,933
|Average interest rate                                                      |  |                        | 3.9    | % |      |   | 3.9    | %    |  |   | 8.2     | % |  |      | 7.1     | % |            |   | 6.1     | %     |  |   | 7.0        | % |  |   | 6.9       | % |  |   |          
|Variable Rate                                                              |  | $                      | 27,938 |   |      | $ | 62,500 |      |  | $ | 121,000 |   |  | $    | 115,500 |   |            | $ |        |       |  | $ | 600        |   |  | $ | 327,538   |   |  | $ | 327,538  
|Average interest rate (1)                                                  |  |                        | 4.9    | % |      |   | 3.6    | %    |  |   | 4.2     | % |  |      | 4.7     | % |            |   |        |       |  |   |           |   |  |   | 4.3       | % |  |   |          



|(1) | A 100 basis point change in average interest rate would impact interest expense by approximately $3.3 million.
|--- | --------------------------------------------------------------------------------------------------------------

Item 8. Financial Statements and Supplementary Data.

Our consolidated financial statements and notes thereto, referred to in Item 15(A)(1) of this Form 10-K, are filed as part of this report and appear in this Form 10-K beginning on page F-1.



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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure

None.

Item 9A(T). Controls and Procedures.

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls
and procedures as of September 30, 2008. The term disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, means controls and other procedures of a company that
are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of
the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under
the Exchange Act is accumulated and communicated to the companys management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that
any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2008, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures
were effective at the reasonable assurance level.

Management Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Authority. Internal control over
financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected
by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures that:



| |  |  | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material
effect on the financial statements.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of
September 30, 2008. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.



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Based on our assessment, management concluded that, as of September 30, 2008, our internal control
over financial reporting is effective based on those criteria.

This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting. Our internal control over financial reporting was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only managements report in this annual report.

This management report shall not be
deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section unless we specifically state that this report is to be considered filed under the Exchange Act or incorporate
it by reference into a filing under the Securities Act of 1933 or the Exchange Act.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) that occurred during the quarter ended September 30, 2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.



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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

We are governed by a
nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board. The
members and their terms are as follows: Bruce S. Bozsum, Marilynn R. Malerba, William Quidgeon, Jr., Ralph James Gessner, Jr. and Mark W. Hamilton are each serving four-year terms expiring in October 2009, while Allison D. Johnson, Mark F. Brown,
Cheryl A. Todd and Thayne D. Hutchins, Jr. are each serving four-year terms expiring in October 2011. Upon expiration of their respective terms, the eligible voters of the Tribe may reelect current Tribal Council members who choose to run for
reelection or elect new Tribal Council members. See Part I. Item 1. BusinessMohegan Tribe of Indians of Connecticut and Part I. Item 1. BusinessMohegan Tribal Gaming Authority.

Management Board and Executive Officers

The following table provides information with respect to (i) the members of the Management Board and (ii) each of the executive officers of Mohegan Tribal Gaming Authority, Mohegan Sun and the Pocono Downs
entities.



|                          |  |     |  |                                                                   
|------------------------- |  | --- |  | ------------------------------------------------------------------
|Name                      |  | Age |  | Position                                                          
|Bruce S. Bozsum           |  | 48  |  | Chairman and Member, Management Board                             
|Marilynn R. Malerba       |  | 55  |  | Vice Chairwoman and Member, Management Board                      
|Allison D. Johnson        |  | 38  |  | Recording Secretary and Member, Management Board (1)              
|Ralph James Gessner, Jr.  |  | 39  |  | Corresponding Secretary and Member, Management Board (1)          
|William Quidgeon, Jr.     |  | 46  |  | Treasurer and Member, Management Board (1)                        
|Mark F. Brown             |  | 51  |  | Member, Management Board (1)                                      
|Mark W. Hamilton          |  | 55  |  | Member, Management Board (1)                                      
|Cheryl A. Todd.           |  | 48  |  | Member, Management Board                                          
|Thayne D. Hutchins, Jr.   |  | 37  |  | Member, Management Board                                          
|Mitchell Grossinger Etess |  | 50  |  | Chief Executive Officer, Mohegan Tribal Gaming Authority          
|Jeffrey E. Hartmann       |  | 46  |  | Chief Operating Officer, Mohegan Tribal Gaming Authority          
|Leo M. Chupaska           |  | 60  |  | Chief Financial Officer, Mohegan Tribal Gaming Authority          
|Robert J. Soper           |  | 36  |  | President and Chief Executive Officer of the Pocono Downs entities



|(1) | Designates a member of the Audit Committee.
|--- | -------------------------------------------

Bruce S.
BozsumMr. Bozsum was first seated on the Tribal Council and the Management Board effective October 4, 2004. He was re-elected in October 2005, at which time he was elected Chairman of the Management Board. Mr. Bozsum previously
served as the Manager of Cultural and Community Programs for the Tribe from 2000 to 2004, and was responsible for educational outreach programs, the annual Wigwam Festival and Cultural Week. Previously, he worked as a Floor Supervisor for the
Tribes High Stakes Bingo operation.

Marilynn R. MalerbaMs. Malerba was first seated on the Tribal Council and the
Management Board and was elected Vice-Chairwoman of the Management Board in October 2005. Ms. Malerba served as the Director and later Executive Director of the Tribes Health and Human Services Department from 1997 until 2005.



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Ms. Malerba was responsible for the development of the programs that directly benefit the Tribes membership. Prior to her employment with the
Tribe, Ms. Malerba held director and manager positions with Lawrence & Memorial Hospital in New London, Connecticut, and currently serves on its Board of Directors.

Allison D. JohnsonMs. Johnson was seated on the Tribal Council and the Management Board in October 2005. Ms. Johnson served as a Human
Resources Manager and Human Resource Generalist for the Tribal government from June 2003 to October 2005. Ms. Johnson worked in the Human Resource department at Mohegan Sun from 2000 to 2003, serving as Benefits Manager prior to her employment
with the Tribe. Ms. Johnson has held management positions in commercial leasing and retail sales and support. Ms. Johnson served as an Alternate Commissioner for the Tribal Employment Rights Commission. She is a graduate of San Diego
Miramar College in California with a degree in liberal arts.

Ralph James Gessner, Jr.Mr. Gessner brings nine years of casino
experience to his first term on the Management Board. Prior to being seated on the Tribal Council and the Management Board in October 2005, Mr. Gessner served as Executive Host at Mohegan Sun beginning in 1997, was promoted to Manager and then
Director of Executive Hosts and finally to Vice President of Casino Marketing. Mr. Gessner holds a bachelors degree in hotel and restaurant management from the University of Southwestern Louisiana.

William Quidgeon, Jr.Mr. Quidgeon was first seated on the Tribal Council and the Management Board in October 2005, after serving in several
capacities for the Tribal government and Mohegan Sun. Mr. Quidgeon served as Senior Project Manager for the Mohegan Tribal Development Department from 1999 to 2005 where he was responsible for renovations and construction within the casino and
Tribal government. He also served as Board Chairman of Mohegan Information Technology Group, a limited liability company majority-owned by the Tribe.

Mark F. BrownMr. Brown has been a member of the Tribal Council and the Management Board since October 1995. He served as Chairman of the Management Board and the Tribal Council from October 2000 until
October 2005. Mr. Brown worked with the Tribes historian during the period in which the Tribe was working to obtain federal recognition and also served on the Tribal Constitutional Review Board from 1993 to 1995. Mr. Brown served as
a law enforcement officer for over twelve years.

Mark W. HamiltonMr. Hamilton served as Mohegan Suns General
Counsel/Vice President for nine years prior to being seated on the Tribal Council and the Management Board in October 2005. Prior to his employment with Mohegan Sun, Mr. Hamilton worked as an attorney in a private practice.

Cheryl A. ToddMs. Todd was first seated on the Tribal Council and the Management Board in March 2007, after serving as Executive Assistant
to the Chairman of the Management Board for 11 years. As Executive Assistant to the Chairman, she participated in the daily operations of the Tribe, interacting with every department within the government and Mohegan Sun; federal, state and local
government representatives; officials from other Indian Nations; and corporate and financial executives. In addition to her work experience with the Tribe, Ms. Todd also served on the Mohegan Strategic Planning Committee and the Mohegan
Election Committee. Prior to her employment with the Tribe, Ms. Todd held multiple positions at the Naval Submarine Base in Groton, Connecticut.

Thayne D. Hutchins, Jr.Mr. Hutchins was first seated on the Tribal Council and the Management Board in October 2007, after serving as a staff accountant in the finance department of the Tribe for six
years. Mr. Hutchins graduated Magna Cum Laude from Eastern Connecticut State University holding a B.A. in Economics with a concentration in accounting.

Mitchell Grossinger EtessMr. Etess assumed the role of Chief Executive Officer of the Authority in May 2006, while continuing in his current role as President and Chief Executive Officer of Mohegan Sun.
Mr. Etess



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has served as the President and Chief Executive Officer of Mohegan Sun since August 2004. Prior to that, Mr. Etess served as Executive Vice President of
Marketing of the Authority. Mr. Etess served as the Authoritys Executive Vice President of Marketing from October 1999 to August 2004 and served as its Senior Vice President of Marketing from November 1995 to October 1999. Prior to his
employment with Mohegan Sun, Mr. Etess was Vice President of Marketing at Players Island and, from 1989 to 1994, was Senior Vice President of Marketing and Hotel Operations at Trump Plaza Hotel and Casino. Prior thereto, Mr. Etess held
various management positions in the hospitality and advertising industries.

Jeffrey E. HartmannMr. Hartmann assumed the role
of Chief Operating Officer of the Authority in May 2006, while continuing in his current role as Executive Vice President and Chief Operating Officer of Mohegan Sun. Mr. Hartmann has served as the Executive Vice President and Chief Operating
Officer of Mohegan Sun since August 2004. Prior to that, Mr. Hartmann served as Executive Vice President, Finance and the Chief Financial Officer of the Authority. Mr. Hartmann has 15 years of experience in the casino and hotel industry.
Mr. Hartmann served as the Authoritys Executive Vice President of Finance and Chief Financial Officer from October 1999 through August 2004 and served as its Senior Vice President of Finance and Chief Financial Officer from December 1996
to October 1999. Prior to joining the Authority, Mr. Hartmann worked for Foxwoods from August 1991 to December 1996, including as Vice President of Finance for Foxwoods Management Company. Mr. Hartmann was employed by Coopers &
Lybrand, LLP, an independent public accounting firm, as an Audit Manager from 1984 to 1991. Mr. Hartmann is a certified public accountant.

Leo M. ChupaskaMr. Chupaska was named Chief Financial Officer of the Authority in August 2004. Mr. Chupaska also served as Chief Financial Officer of Mohegan Sun from May 2006 to June 2007. Prior to his position at the
Authority, Mr. Chupaska served as Chief Financial Officer of the Tribe from September 1996 through August 2004, and was a member of the Financial Advisory Committee of the Authoritys Audit Committee. Prior to joining the Tribe,
Mr. Chupaska served as Director of Financial Services for Lawrence & Memorial Hospital in New London, Connecticut. Mr. Chupaska is a certified public accountant.

Robert J. SoperMr. Soper has served as the President and Chief Executive Officer of the Pocono Downs entities since January 2005. Prior to
assuming this position, Mr. Soper served as Senior Vice President of Administration at Mohegan Sun from 2001 to 2005 and Senior Attorney for the Tribe from 1997 to 2001.

Audit Committee

We have a
separately-designated standing Audit Committee established in accordance with applicable provisions of the Exchange Act. The Audit Committee is comprised of members from the Management Board. All members of our Audit Committee are able to read and
understand fundamental financial statements, including a balance sheet, income statement and cash flow statement. The Management Board has determined that none of its members, and accordingly no member of the Audit Committee, is a financial expert,
meaning that no person has past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background, which results in the individuals financial sophistication,
including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. However, the Audit Committee is advised on financial matters through a Financial Advisory Committee,
comprised of one or more financial experts independent from the Authority.

Code of Ethics

We have adopted a code of ethics that applies to all of our executive officers, including our principal executive officer and principal financial officer.
Our code of ethics is available on our website at www.mtga.comunder Corporate Governance.

If we make any substantive
amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the code of ethics to our principal executive or principal financial and accounting officer, we will disclose the nature of such amendment or
waiver on our website and in a report on Form 8-K.



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Item 11. Executive Compensation.

Compensation Discussion and Analysis

Executive Compensation Objectives

The Authority operates in an extremely competitive environment, and believes that
its current and future success is closely correlated with the retention of highly talented employees and a strong management team. Accordingly, the Authoritys executive compensation program is intended to meet three principal objectives:
(1) attract, reward and retain senior management employees; (2) motivate these individuals to achieve short-term and long-term corporate goals that enhance the value of the Mohegan Sun brand; and (3) promote internal pay equity and
external competitiveness.

The Authoritys philosophy relating to executive compensation is to attract and retain highly qualified
people by offering base salaries, cash-based incentive compensation opportunities and other employee benefits at levels that will enable the Authority to offer its executives total compensation opportunities in line with those offered to executives
of its peer gaming and hospitality companies. The Authority faces special challenges in designing executive compensation programs because, as an instrumentality of the Tribe, it cannot offer equity-based compensation to its executives, unlike many
of its industry peers. As a result, the Authority strives to design cash-based compensation programs that will reward its executives with externally competitive compensation while providing proper incentives to management to achieve its financial
and operational objectives at the business unit and company-wide level. Finally, the Authority strives to ensure that its compensation program is straightforward, transparent and understandable.

Role of the Compensation Committee and Senior Management

The Management Board, made up of the nine members of the Mohegan Tribal Council, serves as the Compensation Committee of the Mohegan Tribal Gaming Authority and has final authority over the design, negotiation and
implementation of all executive compensation programs. As more fully described below, Mr. Etess, along with the Senior VP/Casino Operations and VP/Human Resources of Mohegan Sun, have taken the leading roles in program design. In addition,
acting within the boundaries of the annual budget approved by the Management Board, Mr. Etess sets the salaries of, and exercises discretion subject to Management Board approval, with respect to bonus and non-equity incentive compensation paid
to, our executive officers.

Elements of Compensation

Historically, the compensation program offered by the Authority to its named executive officers, or NEOs, consisted of annual compensation, in the form of
base salary and employee benefits/perquisites, and incentive compensation, in the form of annual cash bonus opportunity. We also offer our executive officers the opportunity to defer all or a portion of their cash compensation under a deferred
compensation plan sponsored by the Mohegan Tribe, and also permit them to participate in retirement and 401(k) plans also sponsored by the Tribe.

During fiscal year 2006, a thorough review of the Authoritys executive compensation program was undertaken with the assistance of Mercer Human Resources Consulting, or Mercer, a nationally recognized compensation consulting firm.
Based on the Mercer study, Mr. Etess, along with the Senior VP/Administration and VP/Human Resources of Mohegan Sun, designed a new cash-based annual incentive compensation program, titled the Mohegan Sun Executive Compensation Performance
Reward Program, or PRP. Additional information about the PRP, and each other element of compensation offered to our NEOs in 2008, is set forth below.

Annual Compensation

Annual compensation consists of base salaries and employee benefits. These
elements are intended to provide some degree of compensation certainty to the NEOs by providing compensation that, unlike incentive compensation, is not at-risk based upon our performance.



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Base Salaries

We believe that a competitive base salary is an important component of compensation as it provides a degree of financial stability for our executives, a critical factor in recruiting and retaining our executives. Base
salary also is designed to recognize the scope of responsibilities placed on each executive officer and reward each executive for his unique leadership skills, management experience and contributions to the organization.

In making base salary determination levels, we take into consideration economic and industry conditions and company performance. We do not assign
relative weights to company and individual performance, but instead make a subjective determination after considering such measures collectively. Base salaries also are evaluated relative to other components of our compensation program to ensure the
executives total compensation and mix of components is consistent with our overall compensation objectives and philosophies.

During
fiscal year 2006, we entered into employment agreements with Messrs. Etess, Hartmann and Chupaska with base salaries and guaranteed bonus amounts that, when combined, provide annual compensation amounts reflecting our need to compete for and retain
management talent in a competitive environment. Recognizing the negative impact of the current economic conditions on our business, although their respective agreements provide for annual base salary increases effective January 1 of each year
of not less than 5% of the executives prior base salary, Messrs. Etess, Hartmann and Chupaska have elected to forego any annual increase consideration for fiscal year 2009. The Management Board and Mr. Soper are negogioting a new
employment agreement that is expected to include a minimum base salary provision. We entered into an employment agreement with our fifth NEO, Mr. Patrone, during fiscal year 2006. Mr. Patrones employment agreement provides a
competitive salary and bonus eligibility, as well as an annual 4% increase to base salary.

Employee Benefits

The NEOs receive certain employee benefits. For fiscal 2008, these benefits included health insurance, dental and vision coverage, prescription drug
plans, flexible spending accounts, long-term disability and the opportunity to participate in the Tribes deferred compensation, retirement and 401(k) plans. In addition, we offer Messrs. Etess, Hartmann and Chupaska perquisites that consist of
our payment of premiums on life insurance policies for which such NEO is the owner. All of our NEOs receive employer contributions and our other contributions on the NEOs behalf to the Tribes retirement and 401(k) plan, our payment of
premiums for supplemental long-term disability policies and complementary tickets to events and performances held at Mohegan Sun Arena as selected by each NEO.

Incentive Compensation

In fiscal 2008, the Authority offered its NEOs the opportunity to earn
additional incentive compensation in the form of cash bonuses under the PRP. Messrs. Etess, Hartmann and Chupaska elected to forgo such consideration under this program for fiscal year 2008. The bonus awarded to Mr. Soper for fiscal 2008 was
recommended by Mr. Etess based on his assessment of the role played by Mr. Soper in the financial performance of Mohegan Sun at Pocono Downs, , and approved by the Management Board. The bonus awarded to Mr. Patrone for fiscal 2008 was
determined by Mr. Etess based on his assessment of the achievements made toward the stated goals and objectives by Mr. Patrone, as described below.

Mohegan Sun Executive Compensation Performance Reward Program

Background. In fiscal 2006,
Mercer conducted a market pricing assessment of the relative competitiveness of the total cash compensation paid by the Authority to its NEOs, other than Mr. Soper, and 25 other senior executives. For the NEOs other than Mr. Soper, Mercer
compared the compensation of these executives to that paid to executives in similar positions in publicly traded companies with similar annual revenues as well as companies in the leisure, hospitality and gaming industries.



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The data reviewed by Mercer included base salary
compensation, cash bonuses and the present value associated with long-term incentive compensation, such as stock options and shares of restricted stock, paid by the comparator companies. The market data showed that the base salary paid by the
Authority to Messrs. Etess, Hartmann and Chupaska exceeded the 75thpercentile of the salaries paid by their comparator companies, and the base
salary paid to Mr. Patrone exceeded the 50thpercentile. Total cash compensation paid by the Authority, in the form of base salary plus annual
cash bonus amounts, to these officers was at or above the 50thpercentile, in the case of Messrs. Etess and Patrone, and above the 75thpercentile, in the case of Messrs. Hartmann and Chupaska. On the other hand, due to the Authoritys inability to offer equity-based compensation, the
total direct compensation for all four of the measured NEOs was substantially behind market, lagging behind the 25thpercentile in the case of
Messrs. Etess and Patrone, and behind the 50thpercentile, in the case of Messrs. Hartmann and Chupaska. These findings were replicated at all
positions that were measured by Mercer. Accordingly, the Mercer study concluded that the absence of any long-term compensation opportunities negatively affected the level of competitiveness of the total direct compensation afforded to the
Authoritys senior management team measured by the Mercer study.

To attempt to bridge the gap in total direct compensation identified
by the Mercer study, a new cash-based incentive compensation program was developed and implemented for corporate officers of the Authority, including four of our five NEOs, in the 2007 fiscal year and was again offered in the 2008 fiscal year. The
PRP was not extended to executives serving at Mohegan Sun at Pocono Downs, so Mr. Soper did not participate in the PRP during fiscal 2008. The Authority is in the process of establishing the fiscal year 2009 performance targets for the PRP, and
it is expected that this program will be extended to Mr. Soper and other senior executives at Pocono Downs at that time.

Overview
of the PRP.The PRP was designed to focus participants toward the successful attainment of formal goals that are tied to the strategic vision and business missions of the Authority, as approved by the Management Board. The program highlights the
following:



| |  |  | to properly align our executive compensation system with competitive markets;
| | - |  | -----------------------------------------------------------------------------



| |  |  | to establish defined pay practices within the organization and facilitate internal pay equity comparisons and analysis; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | to move bonus compensation decisions toward an at risk model, where payout levels are determined by individual and company-wide performance as measured
against pre-defined goals.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The PRP established three levels of awards, two of which impact NEO compensation:



| |  |  | Chief Executive Level: Defined as those positions which oversee and are ultimately accountable for companywide performance, provide policy level direction across
department and enterprise lines, direct the development of strategic business plans across all departmental lines and are charged with overall business strategy and tactical planning and delivery of operational results. Their actions or failure to
act have the highest consequence of error on overall operations. Mr. Etess, Mr. Hartmann and Mr. Chupaska are the only executives whose awards are set at this level.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior Executive Level: Defined as those positions charged with delivering focused strategic business plans throughout their enterprise and the departments that
they are charged to oversee. As a group they are charged with directing the development of strategic business plans to achieve the approved business strategies of the Authority and ultimately prompt the delivery of successful performance of all
departments and enterprises. Their individual or collective actions or failure to act have the second highest consequence of error on overall operations. Mr. Patrone is the only NEO whose award is set at this level.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Both the Chief Executive Officer and Senior Executive levels were established with an at risk bonus amount
of 60% of base salary so as to afford the executives at these levels total compensation potential at a level equal to 90% of the 50th percentile of total direct compensation paid by comparator companies to executives in similar positions, according
to the Mercer market data.



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The PRP is intended to compensate executives based on their performance over four primary measurement
areas during each fiscal year, including financial performance, customer service, organizational and learning and growth. The measurement areas are derived from the guiding principles of the organization since Mohegan Suns establishment in
1996. The financial performance area, which for the 2008 fiscal year measured the Adjusted EBITDA of Mohegan Sun in relation to a target established prior to the beginning of the fiscal year as part of the Authoritys budgeting process,
accounts for 50% of the at risk pool. For this purpose, Adjusted EBITDA or earnings before interest, income taxes, depreciation and amortization, pre-opening costs and expenses, reassessment and accretion of discount to the
relinquishment liability, write-off of debt issuance costs, income (loss) from discontinued operations and other non-operating income and expense. Adjusted EBITDA is not a measure of performance calculated in accordance with accounting principles
generally accepted in the United States of America, or GAAP,.but the Authority historically has evaluated its operating performance with Adjusted EBITDA. Although EBITDA it is not a measure of performance calculated in accordance with generally
accepted accounting principals, it is the most important metric we use in evaluating our financial performance.

The actual targets used,
and the extent of the at risk pool each of the areas comprises, are determined following the annual strategic planning process in the discretion of Mr. Etess in conjunction with the Senior VP/Casino Operations, Senior VP/Finance and
CFO and VP/Human Resources of Mohegan Sun.

Compensation Committee Report

The MTGA Management Board, made up of the nine member Mohegan Tribal Council, serves as the Compensation Committee of the Mohegan Tribal Gaming Authority.
The Management Board met with management to review and discuss the preceding Compensation Discussion and Analysis. Based on such review and discussion, the Management Board approved that this Compensation Discussion and Analysis be included in the
Authoritys Form 10-K for its 2008 fiscal year.

Management Board

Bruce S. Bozsum

Marilynn R. Malerba

Allison D. Johnson

Ralph
James Gessner, Jr.

William Quidgeon, Jr.

Mark F. Brown

Mark W. Hamilton

Cheryl A. Todd

Thayne D. Hutchins, Jr.



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Summary Compensation Table



|                                       |  |             |  |           |  |          |  |                                         |  |                              |  |          
|-------------------------------------- |  | ----------- |  | --------- |  | -------- |  | --------------------------------------- |  | ---------------------------- |  | ---------
|Name and Principal Position            |  | Fiscal Year |  | Salary($) |  | Bonus($) |  | Non-EquityIncentive PlanCompensation($) |  | All OtherCompensation (1)($) |  | Total($) 
|Mitchell Grossinger Etess              |  | 2008        |  | 1,182,899 |  | 372,035  |  |                                        |  | 60,537                       |  | 1,615,471
|Chief Executive Officer,               |  | 2007        |  | 1,118,879 |  | 372,960  |  | 164,775                                 |  | 58,079                       |  | 1,714,693
|Mohegan Tribal Gaming Authority        |  |             |  |           |  |          |  |                                         |  |                              |  |          
|Jeffrey E. Hartmann                    |  | 2008        |  | 1,079,077 |  | 351,738  |  |                                        |  | 50,119                       |  | 1,480,934
|Chief Operating Officer,               |  | 2007        |  | 1,028,773 |  | 342,924  |  | 165,475                                 |  | 48,203                       |  | 1,585,375
|Mohegan Tribal Gaming Authority        |  |             |  |           |  |          |  |                                         |  |                              |  |          
|Leo M. Chupaska                        |  | 2008        |  | 655,093   |  | 201,424  |  |                                        |  | 37,330                       |  | 893,847  
|Chief Financial Officer,               |  | 2007        |  | 612,821   |  | 204,274  |  | 86,103                                  |  | 30,480                       |  | 933,678  
|Mohegan Tribal Gaming Authority        |  |             |  |           |  |          |  |                                         |  |                              |  |          
|Robert J. Soper                        |  | 2008        |  | 343,624   |  | 127,101  |  |                                        |  | 6,750                        |  | 477,475  
|President and Chief Executive Officer, |  | 2007        |  | 347,164   |  | 161,338  |  |                                        |  | 6,774                        |  | 515,276  
|Mohegan Sun at Pocono Downs            |  |             |  |           |  |          |  |                                         |  |                              |  |          
|Anthony Patrone                        |  | 2008        |  | 366,588   |  |         |  | 52,945                                  |  | 10,203                       |  | 429,736  
|Senior Vice President of Marketing,    |  | 2007        |  | 332,747   |  |         |  | 144,472                                 |  | 11,308                       |  | 488,527  
|Mohegan Sun                            |  |             |  |           |  |          |  |                                         |  |                              |  |          



|(1) | Below is a breakdown of All Other Compensation.
|--- | -------------------------------------------------



|                          |  |             |  |               |  |                      |  |                                              |  |                   |  |                            |  |         
|------------------------- |  | ----------- |  | ------------- |  | -------------------- |  | -------------------------------------------- |  | ----------------- |  | -------------------------- |  | --------
|Name                      |  | Fiscal Year |  | 401(K) (1)($) |  | LifeInsurance (2)($) |  | IncomeTaxes for LifeInsuranceBenefits (3)($) |  | Retirement(4) ($) |  | Long-TermDisability (5)($) |  | Total($)
|Mitchell Grossinger Etess |  | 2008        |  | 6,900         |  | 30,035               |  | 13,780                                       |  | 636               |  | 9,186                      |  | 60,537  
|                          |  | 2007        |  | 6,750         |  | 30,035               |  | 13,780                                       |  | 624               |  | 6,890                      |  | 58,079  
|Jeffrey E. Hartmann       |  | 2008        |  | 6,900         |  | 24,299               |  | 11,148                                       |  | 636               |  | 7,136                      |  | 50,119  
|                          |  | 2007        |  | 6,750         |  | 24,299               |  | 11,178                                       |  | 624               |  | 5,352                      |  | 48,203  
|Leo M. Chupaska           |  | 2008        |  | 6,900         |  | 2,086                |  | 957                                          |  | 636               |  | 26,751                     |  | 37,330  
|                          |  | 2007        |  | 6,750         |  | 2,086                |  | 957                                          |  | 624               |  | 20,063                     |  | 30,480  
|Robert J. Soper           |  | 2008        |  | 6,750         |  |                     |  |                                             |  |                  |  |                           |  | 6,750   
|                          |  | 2007        |  | 6,750         |  |                     |  |                                             |  | 24                |  |                           |  | 6,774   
|Anthony Patrone           |  | 2008        |  | 6,900         |  |                     |  |                                             |  | 636               |  | 2,667                      |  | 10,203  
|                          |  | 2007        |  | 8,861         |  |                     |  |                                             |  | 624               |  | 1,823                      |  | 11,308  



|(1) | Employee 401(k) matching contributions.
|--- | ---------------------------------------

|(2) | Premium payments on life insurance policies owned by individual.
|--- | ----------------------------------------------------------------

|(3) | Reimbursements for the payment of income taxes pertaining to certain life insurance benefits.
|--- | ---------------------------------------------------------------------------------------------

|(4) | Employer retirement contributions.
|--- | ----------------------------------

|(5) | Premium payments on a long-term disability policies.
|--- | ----------------------------------------------------



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Grants of Plan-Based Awards



|                          |  |            |  |                                                                  
|------------------------- |  | ---------- |  | -----------------------------------------------------------------
|Name                      |  | Grant Date |  | Estimated Future PayoutsUnder-Non Equity PlanAwards (1)Target ($)
|Mitchell Grossinger Etess |  | 1/16/2008  |  | 315,834                                                          
|Jeffrey E. Hartmann       |  | 1/16/2008  |  | 288,114                                                          
|Leo M. Chupaska           |  | 1/16/2008  |  | 174,910                                                          
|Robert J. Soper           |  |           |  |                                                                 
|Anthony Patrone           |  | 1/16/2008  |  | 219,953                                                          



|(1) | The amounts shown in the table above are attributable to the participation of the NEOs, other than Mr. Soper, in the PRP. Target level payouts assume the Authority had achieved
100% of each performance target for fiscal 2008. The target amounts for Messrs. Etess, Hartmann and Chupaska were reduced from 60% of base salary to 26.7% of base salary by virtue of contractual provisions entitling them to receive 33.3% of base
salary annually. Messrs. Etess, Hartmann and Chupaska elected to forgo such consideration under this program for fiscal year 2008. See the Narrative disclosure below for a more thorough explanation of the 2008 PRP targets and payouts
awarded to each NEO. Threshold and Maximum columns have not been presented in this table because Mr. Etess possesses discretion under the PRP to make awards even if none of the targets are achieved, subject to
ratification by the Management Board. Similarly, maximum level payouts cannot be determined. Under the PRP for fiscal 2008, in the event the Authority were to have exceeded its Adjusted EBITDA target, 20% of the dollar amount by which such target
was exceeded would have been added to the overall pool established for the PRP, and each NEO would have been eligible to receive a portion of the added amount as determined by Mr. Etess in his discretion.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

The employment agreements for each of Messrs. Etess, Hartmann and Chupaska provide that each of them will receive an annual bonus that is not to be less
than 33.3% of the executives annual base salary. The amount of these guaranteed bonuses reduces amounts otherwise potentially payable to these executives under the PRP. As a result, even though the PRP generally would provide for these
executives to be required to have at risk incentive compensation in the amount of 60% of base salary, the effective at risk amounts constituted 26.7% of base salary for each of them. For these three officers, these
contractual bonus payments are reported in the bonus column of the Summary Compensation Table, whereas the amounts earned under the PRP are set forth under the non-equity incentive compensation column.



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The following table shows the criteria and weightings set for the participating NEOs under the PRP for
fiscal 2008:



|                                                              |  |                                                                                                                                                                                                              |  |                                                                                                                                                                                                                                         |  |                            
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------
|Measurement Area                                              |  | Why We Used This Area                                                                                                                                                                                        |  | 2008 Goal(s)                                                                                                                                                                                                                            |  | Percentage ofAt Risk Pool
|Bottom-line Financial Performance PerspectiveAdjusted EBITDA |  | Mohegan Suns Adjusted EBITDA is the single most important measure of our financial performance.                                                                                                             |  | $370.1 million of Adjusted EBITDA for Mohegan Sun, with no awards payable under this area if recorded Adjusted EBITDA did not meet or exceed 95% of this amount.                                                                        |  | 50                         
|                                                              |  |                                                                                                                                                                                                              | 
|Customer Relations Perspective                                |  | Our ability to deliver superior customer service and ensure future patronage directly affects results.                                                                                                       |  | Maintain or exceed a 2% increase over prior year of excellent ratings for customer service in surveys returned to Sterling, a third party marketing firm, by former patrons of Mohegan
Sun.                                           |  | 20                         
|                                                              |  |                                                                                                                                                                                                              | 
|Internal Business Perspectives                                |  | It required management to undertake organizational and operational development initiatives, with a focus on internal processes that relate directly to strategic business plans.                             |  | 1.      Develop specific Action Plans that address organizational effectiveness in departments,
improvements to significant business processes, operational efficiency, revenue/expense management and service delivery enhancements. |  | 10                         
|                                                              |  |                                                                                                                                                                                                              |  | 2.      Achieve a 50% reduction in internal audit repetitive findings                                                                                                                                                                   |  | 10                         
|                                                              |  |                                                                                                                                                                                                              | 
|Learning and Growth Perspectives                              |  | It encouraged management to enhance their leadership abilities and attain personal and career development goals through specific development actions as identified within the performance
evaluation system. |  | Completion of individually designed leadership development actions                                                                                                                                                                      |  | 10                         

The actual payouts for the 2008 fiscal year, shown in the Summary Compensation Table, reflected
that the Authority did not achieve the Adjusted EBITDA target and that certain other components measured by the PRP were fully satisfied by each participating executive officer. Mr. Etess, in conjunction with the Authoritys Senior
VP/Casino Operations, Senior VP Finance and Chief Financial Officer and VP/Human Resources, reviewed these financial and other results and exercised his discretion to reduce the payouts under the PRP to approximately 14.8% of the initial targeted
amount for Mr. Patrone. No cash payments were made in this program for Messrs. Etess, Hartmann and Chupaska as these NEOs elected to forgo such consideration under this program for the fiscal year 2008. The Management Board approved the payment
to Mr. Patrone.



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Nonqualified Deferred Compensation

The Authority offers the NEOs the opportunity to participate in a deferred compensation plan, or DCP, sponsored by the Tribe. The DCP is a non-qualified
plan that allows the Authoritys executives to defer all or a portion of their compensation. The Company does not make contributions on behalf of its executive officers to the DCP.



|                          |  |                                              |  |                                               |  |                                          |   |  |                                       |   |  |                                            
|------------------------- |  | -------------------------------------------- |  | --------------------------------------------- |  | ---------------------------------------- | - |  | ------------------------------------- | - |  | -------------------------------------------
|Name                      |  | ExecutiveContributions inLast Fiscal Year($) |  | RegistrantContributions inLast Fiscal Year($) |  | Aggregate Earningsin Last Fiscal Year($) |   |  | AggregateWithdrawals/Distributions($) |   |  | Aggregate Balance atLast Fiscal Year End($)
|Mitchell Grossinger Etess |  | 729,397                                      |  |                                              |  | (341,086                                 | ) |  |                                      |   |  | 2,868,097                                  
|Jeffrey E. Hartmann       |  | 635,950                                      |  |                                              |  | (693,516                                 | ) |  |                                      |   |  | 3,515,912                                  
|Leo M. Chupaska           |  | 108,290                                      |  |                                              |  | (124,558                                 | ) |  |                                      |   |  | 1,605,476                                  
|Robert J. Soper           |  |                                             |  |                                              |  | (3,983                                   | ) |  | (15,552                               | ) |  | 16,111                                     
|Anthony Patrone           |  |                                             |  |                                              |  |                                         |   |  |                                      |   |  |                                           

The named executive officers may elect to defer all or a portion of their compensation under the
DCP. The amounts deferred by each named executive officer will be deemed invested in the fund or funds designated by such named executive officer from among a number of funds offered under the DCP. Officers may change their deemed investments from
time to time. The following twenty-three funds were available for investment under the DCP through August 31, 2008:

Fund Name

Merrill Lynch Institutional

Davis New York Venture Y

Oppenheimer Small & Mid Cap Value Y

American
FundsGrowth Fund of America R5

Oakmark International I

Eaton Vance Dividend Builder A

Janus Advisor Forty A

PIMCO Total Return Instl

BlackRock Healthcare I

BlackRock Global Allocation I

Lazard Emerging Markets Open

BlackRock Eurofund I

Hotchkis & Wiley Large Cap Value I

Seligman Communications & Information I

DWS RREEF Real Estate Sec A

BlackRock S&P 500 Index I

Neuberger Berman Partners Trust

Franklin Small-Mid Cap Growth Advisor

John Hancock High Yield Bond A

Allianz OCC Renaissance Admin

PIMCO Real Return Instl

Fidelity Advisor Small Cap A

MainStay Small Cap Opportunity I

Effective September 1, 2008 administration of the DCP was transferred to a different administrator, providing the availability of the
following seventeen funds for investment under the DCP:

Fund Name

Schwab Value Advantage Money Fund (Select)

PIMCO Total Return (Instl)

Blackrock Global Allocation (I)



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American Beacon Large Cap Value (Pin)

Schwab S&P Index (Sel)

Davis New York Venture Fund (A)

American Funds Growth Fund R4

Columbia Mid Cap Value (Z)

Morgan Stanley Ins Mid Growth (I)

Columbia Small Cap Value II (Z)

WF Adv Small Cap Growth (Adm)

Thornburg International Value (I)

Lazard Emerging Markets (Inst)

Cohen & Steers Real

JennDry Jenn Utility (A)

T. Rowe Price Health

Allianz RCM Tech

In accordance with federal law, elections
to defer compensation generally must be made prior to the year in which the services to which the compensation relates will be performed. Once made, an election to defer compensation to be earned in the upcoming year is irrevocable. At the time a
deferral election is made, the NEO chooses the date on which payment of the amount of compensation for the upcoming year credited to the DCP is to commence, as well as whether to receive the payments either in a lump sum or in up to fifteen annual
installments. NEOs may change the form and timing of payments elected with respect to particular deferrals, subject to compliance with the terms of the DCP then in effect, including any grandfathered terms resulting from changes in applicable U.S.
federal income tax laws or regulations.



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Potential Payments and Benefits upon Termination or Change in Control

The table below reflects potential payments to our named executive officers in the event of a termination of employment based on the terms of employment
agreements as described above. The amounts shown represent our reasonable estimates of the amounts which would be paid to the named executive officers upon their termination, assuming in each case that the termination occurred on September 30,
2008, the last business day of our last fiscal year. The actual amounts to be paid can only be determined at the time of the named executive officers separation from the Authority. Due to the sovereignty of the Authority, potential
payments upon change in control is not included within the table below as these are not applicable.



|                                          |  |           |  |                 |  |                                    |  |                       |  |                       |  |          
|----------------------------------------- |  | --------- |  | --------------- |  | ---------------------------------- |  | --------------------- |  | --------------------- |  | ---------
|                                          |  | Salary($) |  | Target Bonus($) |  | Continuation ofMedical Benefits($) |  | PenaltyPayment (2)($) |  | RelocationExpenses($) |  | Total ($)
|Mitchell Grossinger Etess                 |  |           |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 4,421,832 |  | 1,473,943       |  | 15,195                             |  | 500,000               |  |                      |  | 6,410,970
|Termination due to medical disability (1) |  | 636,548   |  |                |  | 1,002,562                          |  |                      |  |                      |  | 1,639,110
|Jeffrey E. Hartmann                       |  |           |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 4,033,731 |  | 1,344,576       |  | 15,195                             |  | 500,000               |  |                      |  | 5,893,502
|Termination due to medical disability (1) |  | 580,678   |  |                |  | 914,569                            |  |                      |  |                      |  | 1,495,247
|Leo M. Chupaska                           |  |           |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 1,507,938 |  | 502,645         |  | 10,581                             |  |                      |  |                      |  | 2,021,164
|Termination due to medical disability (1) |  | 332,874   |  |                |  | 498,829                            |  |                       |  |                       |  | 831,703  
|Robert J. Soper                           |  |           |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 343,624   |  |                |  |                                   |  |                      |  | 25,000                |  | 368,624  
|Anthony Patrone                           |  |           |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 366,588   |  |                |  |                                   |  |                      |  | 25,000                |  | 391,588  



|(1) | Pursuant to the agreement, for termination without cause, the continuation of medical benefits shall be provided by the Authority for a period of one year. For termination due to
medical disability, pursuant to the agreement, the Authority is required to provide the Executives base compensation for a period of 180 days, thereafter if the Authority, at its option, ceases the agreement, shall provide for disability
insurance coverage providing for payment of 50% of the Executives Base salary for a period of two years commencing at the termination of the agreement.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | For termination without cause, pursuant to the agreement, and if the Executive agrees to the early withdraw of his deferred compensation balance, at which time the Authority shall
pay the penalty for early withdrawal, including the necessary gross up for income taxes. The above payment is assuming the Executive withdraws his deferred compensation on or before December 31, 2008, in which case the Authority will pay the
lesser of the actual penalty or $500,000,
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Messrs. Etess and Hartmann.Under our employment agreements with each of these executives, we may
terminate the executives employment for cause, defined as (1) the executives violation of the non-competition, non-solicitation and non-disclosure covenants contained in the agreement, (2) the loss or suspension by
the State of Connecticut of the executives license for Class III gaming for a period of thirty (30) consecutive days, (3) conviction of any crime committed by the executive involving fraud, theft or moral turpitude, or (4) an
intentional material breach of the executives obligations under the agreement. In the event that we terminate either executive for cause, he is not entitled to any further compensation from and after the date of termination, except as
described in the last sentence of this paragraph. In the event of termination other than for cause, the executive is entitled to receive a severance payment in the amount of his base annual salary plus an annual bonus equal to 33.3% of the base
annual salary from the date of termination to the expiration date of this agreement in the same amount and at the same intervals as would have been paid had his employment continued. Should we terminate his employment other than for cause, the
executive may withdraw his deferred compensation and in turn we have agreed, under certain circumstances outlined in the agreement, to pay the penalty for early withdrawal of the deferred compensation, in amounts not to exceed the maximum balances
outlined in the agreement. Additionally in the event of termination other than for cause, we have agreed to pay the amount, if any, of income taxes payable by him in connection with any penalty payments made by the Authority in amounts not to exceed
the maximum balances outlined in the agreement.

Mr. Chupaska.Under our employment agreement with Mr. Chupaska, we may
terminate his employment for cause, as defined above. In the event that we terminate Mr. Chupaska for cause, he is not entitled to any further compensation from and after the date of termination. In the event of termination other than for
cause, Mr. Chupaska is entitled to receive a severance payment in the amount of his base annual salary plus an annual bonus equal to 33.3% of the base annual salary from the date of termination to the expiration date of this agreement in the
same amount and at the same intervals as would have been paid had his employment continued.

Mr. Patrone.Under our employment
agreement with Mr. Patrone, we may terminate his employment for cause,which is defined in Mr. Patrones agreement as (1) conviction of a criminal offense, (2) violation of the Authoritys standards and policies
for personal conduct, (3) breach by Mr. Patrone of the covenants contained in his agreement, including his covenant not to compete, (4) Mr. Patrone aiding, abetting or assisting any other person to breach a covenant not to
compete, (5) suspension of Mr. Patrones gaming license, (6) Mr. Patrones engagement, directly or indirectly, in a conflict of interest, (7) failure by Mr. Patrone to perform his duties, or (8) other
serious misconduct by Mr. Patrone. In the event that we terminate Mr. Patrone for cause he is not entitled to any further compensation from and after the date of termination. In the event of termination other than for cause,
Mr. Patrone is entitled to receive a severance payment in the amount of one year of his base annual salary plus a lump sum of $25,000 for relocation expenses.

Mr. Soper.We are party to an employment agreement with Mr. Soper that contains provisions substantially identical to that of Mr. Patrone. The Authority and Mr. Soper are negogiating a new
employment agreement reflecting his expanded duties and leadership role at Pocono Downs.



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Compensation of the Management Board

The following table provides compensation information for fiscal year 2008 for each member of our Management Board.



|                         |  |                |  |                              |  |         
|------------------------ |  | -------------- |  | ---------------------------- |  | --------
|Name                     |  | Fees Earned($) |  | All OtherCompensation (1)($) |  | Total($)
|Bruce S. Bozsum          |  | 186,051        |  | 289                          |  | 186,340 
|Marilynn R. Malerba      |  | 169,137        |  | 262                          |  | 169,399 
|Allison D. Johnson       |  | 135,309        |  | 210                          |  | 135,519 
|Ralph James Gessner, Jr. |  | 135,309        |  | 210                          |  | 135,519 
|William Quidgeon, Jr.    |  | 135,309        |  | 210                          |  | 135,519 
|Mark F. Brown            |  | 183,023        |  | 518                          |  | 183,541 
|Mark W. Hamilton         |  | 135,309        |  | 210                          |  | 135,519 
|Cheryl A. Todd           |  | 135,309        |  | 210                          |  | 135,519 
|Thayne D. Hutchins, Jr.  |  | 135,309        |  | 210                          |  | 135,519 



|(1) | Represents payment of premiums on life insurance policies for which the member is the owner.
|--- | --------------------------------------------------------------------------------------------

Members of the Management Board are paid annual salaries by the Tribe for their services as members of the Tribal Council. Because of the dual role
played by these individuals in the governance of the Authority as well as the Tribe itself, under the terms of an arrangement established at the time Mohegan Sun opened, the Authority is allocated the responsibility to fund a portion of the
compensation paid to them. For fiscal 2008, the Authority was allocated 60% of these payment obligations, based on consideration of the amount of time that the Tribal Council functions in its capacity as the Management Board as opposed to its
capacity as the Tribal Council, including participation in weekly Board meetings (and related preparation), weekly breakfast meetings with the MTGA executive team, bi-weekly executive committee meetings and, from October 2006 through September 2008,
bi-weekly meetings relating to Project Horizon. In addition, certain members of the Tribal Council participate at the monthly board meetings relating to our diversification efforts, and make periodic trips to Mohegan Sun at Pocono Downs. Because we
believe that the 2009 activities of the Council will be consistent with their 2008 activities, we expect the Authority also will fund 60% of the compensation of these individuals for fiscal 2009.

Compensation Committee Interlocks and Insider Participation

As noted above, the entire Management Board serves as the compensation committee of the Authority.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

We have no
outstanding equity securities.



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Item 13. Certain Relationships and Related Transactions, and Director Independence.

Procedure for Review of Related Party Transactions

Potential conflicts of interest, including related party transactions reportable under SEC rules, must be approved in advance. We have a code of ethics, located on our website at www.mtga.com, which
applies to our Chief Executive Officer, or principal executive officer, our Chief Financial Officer, or principal financial officer, and all other executive officers, whom we collectively refer to as our principal officers and specifically addresses
conflicts of interest. Pursuant to the code ethics, principal officers with an actual or potential conflict of interest must disclose such conflict to the Director of Regulation, his designee or to the Chairman of the Management Board. Consistent
with our practice, only the Management Board may waive a provision of this code of ethics for our principal officers.

The Management Board
reviews all transactions between us and any of our principal officers. In addition, our corporate governance practices include procedures for discussing and assessing relationships, including business, financial and family member, among us and our
principal officers, to the extent that they may arise. The Management Board reviews any transaction with a principal officer to determine, on a case-by-case basis, whether a conflict of interest exists. The Management Board ensures that all
directors voting on such a matter have no interest in the matter and discusses the transaction with counsel as deemed necessary.

Transactions between
the Tribe, the Authority and the Authoritys Subsidiaries

In August 2006, we purchased a 5.00% membership interest in
Salishan-Mohegan from Mohegan Ventures-NW and sold such 5.00% interest to the Tribe for approximately $351,000, reflecting the carrying value of such interest. In October 2006, a 2.85% membership interest in Salishan-Mohegan was transferred from
Salishan Company to the Tribe, in exchange for the Tribes guarantee of the Salishan credit facility. The amount of the membership interest transferred was approximately $197,000, reflecting the carrying value of the 2.85% interest. Subsequent
to this transaction, Mohegan Ventures-NW holds a 49.15% membership interest, the Tribe holds a 7.85% membership interest and Salishan Company holds a 43.00% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Tribe continue to each
hold one of four seats on the Board of Managers of Salishan-Mohegan.

In March 2007, we formed WTG to participate in the development of the
Menominee Project to be owned by the Menominee Tribe. WTG consists of two members, our wholly-owned subsidiary, MVW, which holds an 85.40% membership interest, and a wholly-owned subsidiary of the Mohegan Tribe, MV, which holds the remaining 14.60%
membership interest. Following formation in March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC for consideration of $6.4
million.

In March 2008, MTGA Gaming and the Tribe formed MG&H. The Tribe holds a 51.00% membership interest in MG&H and MTGA
Gaming holds the remaining 49.00% interest. In June 2008, the Tribe loaned MG&H $8.3 million, which was used to fund MG&Hs portion of a Privilege Fee payment to the State of Kansas in connection with MG&Hs unsuccessful
effort, ended in September 2008, to secure a gaming license for the development of a gaming facility to be located in the State of Kansas. The promissory note executed by MG&H in favor of the Tribe, or the Mohegan Tribe promissory note provided
for the accrual of interest at an annual rate of 12.0% and was due to mature on October 15, 2008. In September 2008, MG&H repaid the $8.3 million outstanding on the Mohegan Tribe promissory note following a refund of the Privilege Fee
payment as a result of the selection of another applicant by the Kansas Lottery Gaming Facility Review Board. During the fiscal year ended September 30, 2008, MG&H incurred $244,000 of interest expense on the Mohegan Tribe promissory note.

Services Provided by the Tribe to the Authority

The Tribe provides governmental and certain administrative services to us in conjunction with the operation of Mohegan Sun. During the fiscal years ended
September 30, 2008, 2007 and 2006, we incurred $23.9 million, $21.5 million and $19.5 million, respectively, of expenses for such services.



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We purchase the majority of its utilities, including electricity, gas, water and waste water services,
from an instrumentality of the Tribe, the Mohegan Tribal Utility Authority. During the fiscal years ended September 30, 2008, 2007 and 2006, we incurred costs of $23.6 million, $23.7 million and $19.7 million, respectively, for such utilities.

The Tribe previously provided services through its Development Department for projects related to Mohegan Sun. The Development Department
of the Tribe, including personnel assigned to the department, was transferred to us during the fiscal year ended September 30, 2007. Prior to this transfer, we recorded $53,000 and $2.8 million of capital expenditures associated with the
Tribes Development Department for the fiscal years ended September 30, 2007 and 2006, respectively

Leases by the
Authority to the Tribe

We had a lease agreement with Little People, LLC, an entity owned by the Tribe, whereby Little People, LLC
leased retail space located in The Shops at Mohegan Sun from us. In June 2006, the lease agreement was terminated, and we purchased the furniture and fixtures, inventory and various outstanding accounts receivable pertaining to these retail
operations from Little People, LLC for approximately $687,000. This retail outlet is now owned and operated by us.

Leases by the
Tribe to the Authority

We lease the land on which Mohegan Sun is located from the Tribe pursuant to a long-term lease. We are
required to pay to the Tribe a nominal annual rental fee under the lease. The lease has an initial term of 25 years and is renewable for an additional 25-year term upon expiration.

The Tribe has entered into various land lease agreements with us for access, parking and related purposes for Mohegan Sun. We expensed $209,000, $262,000
and $262,000 relating to these land lease agreements for the fiscal years ended September 30, 2008, 2007 and 2006, respectively. In July 2008, we entered into an additional land lease agreement with the Tribe relating to property located
adjacent to the Tribes reservation that is currently used by Mohegan Suns employees for parking. The land lease agreement requires us to make monthly payments equaling $75,000 until maturity on June 30, 2018. We have classified this
lease as a capital lease for financial reporting purposes due to the existence of a bargain purchase option at the expiration of the lease.

Distributions by the Authority to the Tribe

In August 2001, we entered into an agreement with the Tribe, or the
priority distribution agreement, which obligates us to make monthly payments to the Tribe to the extent of our net cash flow, as defined in the priority distribution agreement. The priority distribution agreement, which has a perpetual term, limits
the maximum aggregate payments by us to the Tribe in each calendar year to $14.0 million, as adjusted annually in accordance with the formula specified in the priority distribution agreement to reflect the effects of inflation. However, payments
pursuant to the priority distribution agreement do not reduce our obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other agreements with the Tribe. The monthly payments
under the priority distribution agreement are limited obligations payable only to the extent of our net cash flow and are not secured by a lien or encumbrance on any of our assets or property. Our consolidated financial statements reflect payments
associated with the priority distribution agreement of $17.3 million, $16.8 million and $16.3 million for the fiscal years ended September 30, 2008, 2007 and 2006, respectively.

In compliance with the restrictive covenants of our bank credit facility and indentures, we distributed to the Tribe $58.2 million, $62.7 million and
$72.6 million, net of $16.8 million, $16.8 million and $16.3 million, respectively, relating to priority distribution payments for the fiscal years ended September 30, 2008, 2007 and 2006, respectively.



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Mohegan Tribal Employment Rights Ordinance

In September 1995, the Tribe adopted the Mohegan Tribal Employment Rights Ordinance, as amended from time to time, or the TERO, which sets forth hiring
and contracting preference requirements for employers and entities conducting business on Tribal lands on or adjacent to the Mohegan Reservation. Pursuant to the TERO, we and other covered employers are required to give hiring, promotion, training,
retention and other employment-related preferences to Native Americans who meet the minimum qualifications for the applicable employment position. However, this preference requirement does not apply to key employees, as such persons are defined in
the TERO.

Similarly, any entity awarding a contract or subcontract valued up to $200,000 to be performed on Tribal lands must give
preference, first, to certified Mohegan entities submitting commercially responsible bids, and second, to other certified Native American entities. This contracting preference is conditioned upon the bid by the preferred certified entity being
within 5% of the lowest bid by a non-certified entity. Contracts in excess of $200,000 are awarded to the lowest commercially responsible bidder, on a competitive basis, with preference to certified Mohegan entities and then other certified Native
American entities in the event of a matching bid. The TERO establishes procedures and requirements for certifying Mohegan entities and other Native American entities. Certification is based largely on the level of ownership and control exercised by
the members of the Tribe or other Native American tribes, as the case may be, over the entity bidding on a contract.

As of
September 30, 2008, approximately 130 employees of the Authority were members of the Tribe.

Corporate Governance and Management
Board Independence

We are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the
governing body of the Tribe). Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board. The registered voters of the Tribe elect all members of the Tribal Council. Upon election, the
Tribal Council and Management Board members each serve for a four year term on a staggered basis. Incumbent members of the Tribal Council do not nominate candidates for election. Accordingly, the Tribal Council and Management Board do not maintain a
nominating committee, nor do they utilize any procedures to screen candidates for election. Instead, the registered voters of the Tribe elect all members of the Tribal Council. In order to qualify for, and seek election to a position on the Tribal
Council, a person: (a) must be at least 21 years of age prior to the date of the election; (b) must be a registered voting member of the Tribe in good standing; (c) must not have been convicted of any violation of the Tribal Election
Ordinance; and (d) must not have been convicted of either a felony or a misdemeanor involving moral integrity, such as forgery or bribery.

As described above, all members of the Management Board are also members of the Tribal Council and the Tribe. Due to the relationships between the Tribe and the Authority described above, none of the Management Board members would qualify
as independent directors within the rules of The New York Stock Exchange or the NASDAQ Stock Market.



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Item 14. Principal Accountant Fees and Services.

The following table sets forth the aggregate fees paid or accrued for professional services rendered by PricewaterhouseCoopers LLP for the audit of our
annual financial statements for fiscal year 2008 and fiscal year 2007 and the aggregate fees paid or accrued for audit-related services and all other services rendered by PricewaterhouseCoopers LLP for fiscal year 2008 and fiscal year 2007.



|                   |  |                 |         |                 |   |        
|------------------ |  | --------------- | ------- | --------------- | - | -------
|                   |  | Fiscal Year2008 |         | Fiscal Year2007
|Audit fees         |  | $               | 757,159 |                 | $ | 806,981
|Audit-related fees |  |                 |        |                 |   | 72,941 
|Tax fees           |  |                 | 4,250   |                 |   | 7,400  
|All other fees     |  |                 | 3,000   |                 |   | 3,000  
|                   |  |                 |         |                 |   |        
|Total              |  | $               | 764,409 |                 | $ | 890,322
|                   |  |                 |         |                 |   |        

The category of Audit fees includes fees for our annual audit, quarterly reviews and
services rendered in connection with regulatory filings with the SEC, such as the issuance of comfort letters and consents.

The category
of Audit-related fees includes employee benefit plan audits, internal control reviews and accounting consultation.

The
category of Tax fees includes consultation related to Corporate development activities and the preparation of tax returns for certain subsidiaries.

The category of All other fees includes the licensure of accounting and finance research technology owned by PricewaterhouseCoopers LLP.

All above audit services, audit-related services and tax services were pre-approved by the Audit Committee, which concluded that the provision of such
services by PricewaterhouseCoopers LLP was compatible with the maintenance of that firms independence in the conduct of its auditing functions. The Audit Committees outside auditor independence policy provides for pre-approval of all
services performed by the outside auditors.



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PART IV

Item 15. Exhibits, Financial Statement Schedules.

A(1). Financial Statements

The following financial statements and reports appear in this Form 10-K beginning on page F-2 and are incorporated by reference in Part II, Item 8:



|                                                                                                                                                  |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|Report of Independent Registered Public Accounting Firm                                                                                           |  | 
|                                                                                                                                                  | 
|Consolidated Balance Sheets of the Mohegan Tribal Gaming Authority as of September 30, 2008 and 2007                                              |  | 
|                                                                                                                                                  | 
|Consolidated Statements of Income of the Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2008, 2007 and 2006             |  | 
|                                                                                                                                                  | 
|Consolidated Statements of Changes in Capital of the Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2008, 2007
and 2006 |  | 
|                                                                                                                                                  | 
|Consolidated Statements of Cash Flows of the Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2008, 2007 and 2006         |  | 
|                                                                                                                                                  | 
|Notes to Consolidated Financial Statements of the Mohegan Tribal Gaming Authority                                                                 |  | 

A(2). Financial Statement Schedules



|                                                                                                                       
|-----------------------------------------------------------------------------------------------------------------------
|The following schedule appears on page S-1 of this Form 10-K and is incorporated by reference herein:                  
|                                                                                                                       
|Schedule IIValuation and Qualifying Accounts and Reserves for the Fiscal Years Ended September 30, 2008, 2007 and 2006

Schedules other than that listed above are omitted because they are not required or are not
applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.

A(3).
Exhibits

The exhibits to this Form 10-K are listed on the exhibit index, which appears elsewhere herein and is incorporated herein by
reference.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Mohegan Tribal Gaming Authority has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized, on December 29, 2008.



MOHEGAN TRIBAL GAMING AUTHORITYBy:

/S/    BRUCE S. BOZSUMBruce S. Bozsum Chairman, Management Board


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Mohegan Tribal Gaming Authority and in the capacities indicated on December 29, 2008.



|                                                           |  |                                                                                                      
|---------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------
|Signature                                                  |  | Title                                                                                                
|                                                           | 
|/s/    BRUCE S.
BOZSUM Bruce S. Bozsum                     |  | Chairman and Member, Management Board                                                                
|                                                           | 
|/s/    MARILYNN R.
MALERBA Marilynn R. Malerba             |  | Vice Chairman and Member, Management Board                                                           
|                                                           | 
|/s/    MITCHELL GROSSINGER
ETESS Mitchell Grossinger Etess |  | Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive Officer)               
|                                                           | 
|/s/    LEO M.
CHUPASKA Leo M. Chupaska                     |  | Chief Financial Officer, Mohegan Tribal Gaming Authority (Principal Financial and Accounting Officer)
|                                                           | 
|/s/    ALLISON D.
JOHNSON Allison D. Johnson               |  | Recording Secretary and Member, Management Board                                                     
|                                                           | 
|/s/    RALPH JAMES GESSNER
JR. Ralph James Gessner Jr.     |  | Corresponding Secretary and Member, Management Board                                                 
|                                                           | 
|/s/    WILLIAM QUIDGEON
JR. William Quidgeon Jr.           |  | Treasurer and Member, Management Board                                                               
|                                                           | 
|/s/    MARK F.
BROWN Mark F. Brown                         |  | Member, Management Board                                                                             
|                                                           | 
|/s/    MARK W.
HAMILTON Mark W. Hamilton                   |  | Member, Management Board                                                                             
|                                                           | 
|/s/    CHERYL A.
TODD Cheryl A. Todd                       |  | Member, Management Board                                                                             
|                                                           | 
|/s/    THAYNE D. HUTCHINS
JR. Thayne D. Hutchins Jr.       |  | Member, Management Board                                                                             

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

The registrant
has not sent an annual report or proxy statement to security holders. The registrant will not be sending an annual report or proxy statement to its security holders subsequent to the filing of this Form 10-K.



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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                               |  |    
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Report of Independent Registered Public Accounting Firm                                                                                        |  | F-2
|                                                                                                                                               | 
|Consolidated Balance Sheets of Mohegan Tribal Gaming Authority as of September 30, 2008 and
2007                                               |  | F-3
|                                                                                                                                               | 
|Consolidated Statements of Income of Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 
30, 2008, 2007 and 2006             |  | F-4
|                                                                                                                                               | 
|Consolidated Statements of Changes in Capital of Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30,
 2008, 2007 and 2006 |  | F-5
|                                                                                                                                               | 
|Consolidated Statements of Cash Flows of Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 
30, 2008, 2007 and 2006         |  | F-6
|                                                                                                                                               | 
|Notes to Consolidated Financial Statements of Mohegan Tribal Gaming Authority                                                                  |  | F-7



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

To the Management Board

of the Mohegan Tribal Gaming Authority

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects,
the financial position of Mohegan Tribal Gaming Authority and its subsidiaries (the Authority) at September 30, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended
September 30, 2008 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents
fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the
Authoritys management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

/s/    PricewaterhouseCoopers LLP

Hartford, Connecticut

December 29, 2008



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED BALANCE SHEETS

(in
thousands)



|                                                 |  |                   |           |                   |   |          
|------------------------------------------------ |  | ----------------- | --------- | ----------------- | - | ---------
|                                                 |  | September 30,2008 |           | September 30,2007
|ASSETS                                           |  |                   |           |                   |   |          
|Current assets:                                  |  |                   |           |                   |   |          
|Cash and cash equivalents                        |  | $                 | 83,847    |                   | $ | 104,659  
|Restricted cash                                  |  |                   | 958       |                   |   | 937      
|Receivables, net                                 |  |                   | 40,746    |                   |   | 25,005   
|Inventories                                      |  |                   | 17,931    |                   |   | 17,119   
|Other current assets                             |  |                   | 27,724    |                   |   | 25,991   
|                                                 |  |                   |           |                   |   |          
|Total current assets                             |  |                   | 171,206   |                   |   | 173,711  
|Non-current assets:                              |  |                   |           |                   |   |          
|Property and equipment, net                      |  |                   | 1,693,402 |                   |   | 1,401,206
|Goodwill                                         |  |                   | 39,459    |                   |   | 39,459   
|Other intangible assets, net                     |  |                   | 390,057   |                   |   | 394,477  
|Other assets, net                                |  |                   | 68,781    |                   |   | 71,124   
|                                                 |  |                   |           |                   |   |          
|Total assets                                     |  | $                 | 2,362,905 |                   | $ | 2,079,977
|                                                 |  |                   |           |                   |   |          
|LIABILITIES AND CAPITAL                          |  |                   |           |                   |   |          
|Current liabilities:                             |  |                   |           |                   |   |          
|Current portion of long-term debt                |  | $                 | 27,938    |                   | $ | 17,591   
|Current portion of relinquishment liability      |  |                   | 81,337    |                   |   | 96,486   
|Current portion of capital lease                 |  |                   | 630       |                   |   |         
|Trade payables                                   |  |                   | 23,986    |                   |   | 17,386   
|Construction payables                            |  |                   | 102,661   |                   |   | 36,402   
|Accrued interest payable                         |  |                   | 20,125    |                   |   | 20,274   
|Other current liabilities                        |  |                   | 141,411   |                   |   | 145,452  
|                                                 |  |                   |           |                   |   |          
|Total current liabilities                        |  |                   | 398,088   |                   |   | 333,591  
|Non-current liabilities:                         |  |                   |           |                   |   |          
|Long-term debt, net of current portion           |  |                   | 1,522,314 |                   |   | 1,276,109
|Relinquishment liability, net of current portion |  |                   | 304,031   |                   |   | 406,858  
|Capital lease, net of current portion            |  |                   | 6,677     |                   |   |         
|Other long-term liabilities                      |  |                   | 526       |                   |   | 735      
|                                                 |  |                   |           |                   |   |          
|Total liabilities                                |  |                   | 2,231,636 |                   |   | 2,017,293
|Minority interests                               |  |                   | 3,258     |                   |   | 3,933    
|Commitments and contingencies                    |  |                   |           |                   |   |          
|Capital:                                         |  |                   |           |                   |   |          
|Retained earnings                                |  |                   | 128,011   |                   |   | 58,751   
|                                                 |  |                   |           |                   |   |          
|Total capital                                    |  |                   | 128,011   |                   |   | 58,751   
|                                                 |  |                   |           |                   |   |          
|Total liabilities and capital                    |  | $                 | 2,362,905 |                   | $ | 2,079,977
|                                                 |  |                   |           |                   |   |          

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED STATEMENTS OF INCOME

(in thousands)



|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|----------------------------------------------------------- |  | ----------------------------------------- | --------- | - | ----------------------------------------- | - | --------- | ----------------------------------------- |  | - | --------- | -
|                                                            |  | For the FiscalYear EndedSeptember 30,2008 |           |   | For the FiscalYear EndedSeptember 30,2007 |   |           | For the FiscalYear EndedSeptember 30,2006 | 
|Revenues:                                                   |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Gaming                                                      |  | $                                         | 1,410,774 |   |                                           | $ | 1,469,343 |                                           |  | $ | 1,279,835 |  
|Food and beverage                                           |  |                                           | 103,968   |   |                                           |   | 102,097   |                                           |  |   | 95,786    |  
|Hotel                                                       |  |                                           | 48,740    |   |                                           |   | 47,333    |                                           |  |   | 50,818    |  
|Retail, entertainment and other                             |  |                                           | 144,256   |   |                                           |   | 133,139   |                                           |  |   | 121,532   |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Gross revenues                                              |  |                                           | 1,707,738 |   |                                           |   | 1,751,912 |                                           |  |   | 1,547,971 |  
|LessPromotional allowances                                 |  |                                           | (135,555  | ) |                                           |   | (131,846  | )                                         |  |   | (124,917  | )
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Net revenues                                                |  |                                           | 1,572,183 |   |                                           |   | 1,620,066 |                                           |  |   | 1,423,054 |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Operating costs and expenses:                               |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Gaming                                                      |  |                                           | 892,034   |   |                                           |   | 869,333   |                                           |  |   | 720,063   |  
|Food and beverage                                           |  |                                           | 49,951    |   |                                           |   | 50,499    |                                           |  |   | 49,420    |  
|Hotel                                                       |  |                                           | 17,314    |   |                                           |   | 16,959    |                                           |  |   | 16,883    |  
|Retail, entertainment and other                             |  |                                           | 56,848    |   |                                           |   | 48,435    |                                           |  |   | 43,223    |  
|Advertising, general and administrative                     |  |                                           | 229,407   |   |                                           |   | 231,585   |                                           |  |   | 201,122   |  
|Corporate expenses                                          |  |                                           | 25,188    |   |                                           |   | 10,507    |                                           |  |   | 10,558    |  
|Pre-opening costs and expenses                              |  |                                           | 4,652     |   |                                           |   | 3,836     |                                           |  |   | 5,130     |  
|Depreciation and amortization                               |  |                                           | 102,370   |   |                                           |   | 93,347    |                                           |  |   | 88,016    |  
|Relinquishment liability reassessment                       |  |                                           | (68,947   | ) |                                           |   | 2,997     |                                           |  |   | 39,407    |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Total operating costs and expenses                          |  |                                           | 1,308,817 |   |                                           |   | 1,327,498 |                                           |  |   | 1,173,822 |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Income from operations                                      |  |                                           | 263,366   |   |                                           |   | 292,568   |                                           |  |   | 249,232   |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Other income (expense):                                     |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Accretion of discount to the relinquishment liability       |  |                                           | (27,085   | ) |                                           |   | (29,794   | )                                         |  |   | (30,707   | )
|Interest income                                             |  |                                           | 3,795     |   |                                           |   | 3,695     |                                           |  |   | 2,245     |  
|Interest expense, net of capitalized interest               |  |                                           | (93,793   | ) |                                           |   | (94,363   | )                                         |  |   | (90,928   | )
|Write-off of debt issuance costs                            |  |                                           |          |   |                                           |   | (71       | )                                         |  |   |          |  
|Other income (expense), net                                 |  |                                           | 248       |   |                                           |   | (137      | )                                         |  |   | 24,508    |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Total other expense                                         |  |                                           | (116,835  | ) |                                           |   | (120,670  | )                                         |  |   | (94,882   | )
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Income from continuing operations before minority interests |  |                                           | 146,531   |   |                                           |   | 171,898   |                                           |  |   | 154,350   |  
|Minority interests                                          |  |                                           | 2,729     |   |                                           |   | 648       |                                           |  |   | 420       |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Income from continuing operations                           |  |                                           | 149,260   |   |                                           |   | 172,546   |                                           |  |   | 154,770   |  
|Discontinued operations:                                    |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Income from discontinued operations                         |  |                                           |          |   |                                           |   | 94        |                                           |  |   | 147       |  
|Loss on sale of discontinued operations                     |  |                                           |          |   |                                           |   | (73       | )                                         |  |   |          |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Total income (loss) from discontinued operations            |  |                                           |          |   |                                           |   | 21        |                                           |  |   | 147       |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  
|Net income                                                  |  | $                                         | 149,260   |   |                                           | $ | 172,567   |                                           |  | $ | 154,917   |  
|                                                            |  |                                           |           |   |                                           |   |           |                                           |  |   |           |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(in thousands)



|                                                              |  |               |          |  
|------------------------------------------------------------- |  | ------------- | -------- | -
|                                                              |  | Total Capital |         
|Balance, September 30, 2005                                   |  | $             | (104,872 | )
|Net income                                                    |  |               | 154,917  |  
|Distributions to Tribe                                        |  |               | (88,900  | )
|                                                              |  |               |          |  
|Balance, September 30, 2006                                   |  | $             | (38,855  | )
|                                                              |  |               |          |  
|Net income                                                    |  |               | 172,567  |  
|Distributions to Tribe                                        |  |               | (75,000  | )
|Capital adjustment from majority-owned subsidiary transaction |  |               | 39       |  
|                                                              |  |               |          |  
|Balance, September 30, 2007                                   |  | $             | 58,751   |  
|                                                              |  |               |          |  
|Net income                                                    |  |               | 149,260  |  
|Distributions to Tribe                                        |  |               | (80,000  | )
|                                                              |  |               |          |  
|Balance, September 30, 2008                                   |  | $             | 128,011  |  
|                                                              |  |               |          |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|----------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------- | -------- | - | ------------------------------------------- | - | -------- | ------------------------------------------- |  | - | -------- | -
|                                                                                                                        |  | For the FiscalYear EndedSeptember 30,2008 |          |   | For the FiscalYear EndedFiscal Year 30,2007 |   |          | For the FiscalYear EndedFiscal Year 30,2006 | 
|Cash flows provided by (used in) operating activities:                                                                  |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Net income                                                                                                              |  | $                                         | 149,260  |   |                                             | $ | 172,567  |                                             |  | $ | 154,917  |  
|Adjustments to reconcile net income to net cash flows provided by operating activities:                                 |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Depreciation and amortization                                                                                           |  |                                           | 102,370  |   |                                             |   | 93,444   |                                             |  |   | 88,182   |  
|Accretion of discount to the relinquishment liability                                                                   |  |                                           | 27,085   |   |                                             |   | 29,794   |                                             |  |   | 30,707   |  
|Relinquishment liability reassessment                                                                                   |  |                                           | (68,947  | ) |                                             |   | 2,997    |                                             |  |   | 39,407   |  
|Cash paid for accretion of discount to the relinquishment liability                                                     |  |                                           | (27,762  | ) |                                             |   | (30,022  | )                                           |  |   | (29,897  | )
|Gain on Pocono Downs purchase settlement                                                                                |  |                                           |         |   |                                             |   |         |                                             |  |   | (25,444  | )
|Accretion of discount to the Pocono Downs purchase settlement                                                           |  |                                           | (1,246   | ) |                                             |   | (1,584   | )                                           |  |   |         |  
|Net loss on disposition of assets                                                                                       |  |                                           | 295      |   |                                             |   | 1,678    |                                             |  |   | 172      |  
|Net loss on sale of Erie OTW                                                                                            |  |                                           |         |   |                                             |   | 73       |                                             |  |   |         |  
|Provision for losses on receivables                                                                                     |  |                                           | 18,338   |   |                                             |   | 3,396    |                                             |  |   | 3,557    |  
|Amortization of debt issuance costs                                                                                     |  |                                           | 4,831    |   |                                             |   | 3,835    |                                             |  |   | 2,976    |  
|Write-off of debt issuance costs                                                                                        |  |                                           |         |   |                                             |   | 71       |                                             |  |   |         |  
|Amortization of net deferred gain on settlement of derivative instruments                                               |  |                                           | 455      |   |                                             |   | 455      |                                             |  |   | 444      |  
|Minority interests                                                                                                      |  |                                           | (2,729   | ) |                                             |   | (648     | )                                           |  |   | (420     | )
|Changes in operating assets and liabilities:                                                                            |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|(Increase) decrease in receivables                                                                                      |  |                                           | (24,977  | ) |                                             |   | 1,379    |                                             |  |   | (12,886  | )
|(Increase) decrease in inventories                                                                                      |  |                                           | (812     | ) |                                             |   | (1,603   | )                                           |  |   | 573      |  
|Increase in other assets                                                                                                |  |                                           | (5,828   | ) |                                             |   | (8,737   | )                                           |  |   | (9,740   | )
|Increase (decrease) in trade payables                                                                                   |  |                                           | 6,600    |   |                                             |   | (2,944   | )                                           |  |   | 2,395    |  
|(Decrease) increase in other liabilities                                                                                |  |                                           | (3,842   | ) |                                             |   | 20,252   |                                             |  |   | 9,317    |  
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Net cash flows provided by operating activities                                                                         |  |                                           | 173,091  |   |                                             |   | 284,403  |                                             |  |   | 254,260  |  
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Cash flows provided by (used in) investing activities:                                                                  |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Purchases of property and equipment, net of increase in construction payables of $66,259, $30,017 and $34, respectively |  |                                           | (317,429 | ) |                                             |   | (132,178 | )                                           |  |   | (101,886 | )
|Payment of Category One slot machine license fee                                                                        |  |                                           |         |   |                                             |   | (50,000  | )                                           |  |   |         |  
|Acquisition of Menominee Project development rights and other related assets                                            |  |                                           |         |   |                                             |   | (6,381   | )                                           |  |   |         |  
|Acquisition of Pautipaug Country Club assets                                                                            |  |                                           |         |   |                                             |   | (4,651   | )                                           |  |   |         |  
|Proceeds from settlement of contract dispute                                                                            |  |                                           |         |   |                                             |   | 2,000    |                                             |  |   |         |  
|Proceeds from sale of Erie OTW                                                                                          |  |                                           |         |   |                                             |   | 6,967    |                                             |  |   |         |  
|Issuance of third party loans and advances                                                                              |  |                                           | (4,708   | ) |                                             |   | (4,461   | )                                           |  |   | (3,405   | )
|Proceeds from asset sales                                                                                               |  |                                           | 785      |   |                                             |   | 362      |                                             |  |   | 449      |  
|Payments received on third-party loans                                                                                  |  |                                           | 623      |   |                                             |   | 512      |                                             |  |   | 678      |  
|Increase in restricted cash                                                                                             |  |                                           | (21      | ) |                                             |   | (937     | )                                           |  |   |         |  
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Net cash flows used in investing activities                                                                             |  |                                           | (320,750 | ) |                                             |   | (188,767 | )                                           |  |   | (104,164 | )
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Cash flows provided by (used in) financing activities:                                                                  |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan                                                                    |  |                                           |         |   |                                             |   | 278,000  |                                             |  |   | 233,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan                                                                    |  |                                           |         |   |                                             |   | (278,000 | )                                           |  |   | (233,000 | )
|Bank Credit Facility borrowingsrevolving loan                                                                          |  |                                           | 575,000  |   |                                             |   | 206,000  |                                             |  |   |         |  
|Bank Credit Facility repaymentsrevolving loan                                                                          |  |                                           | (608,000 | ) |                                             |   | (173,000 | )                                           |  |   |         |  
|Bank Credit Facility borrowingsterm loan                                                                               |  |                                           | 300,000  |   |                                             |   |         |                                             |  |   |         |  
|Salishan Credit Facility borrowingsrevolving loan                                                                      |  |                                           | 3,750    |   |                                             |   | 17,250   |                                             |  |   |         |  
|Line of credit borrowings                                                                                               |  |                                           | 565,746  |   |                                             |   | 524,313  |                                             |  |   | 444,226  |  
|Line of credit repayments                                                                                               |  |                                           | (579,399 | ) |                                             |   | (507,722 | )                                           |  |   | (444,226 | )
|Borrowings from the Mohegan Tribe                                                                                       |  |                                           | 8,333    |   |                                             |   |         |                                             |  |   |         |  
|Payments to the Mohegan Tribe                                                                                           |  |                                           | (8,333   | ) |                                             |   |         |                                             |  |   |         |  
|Payments on long-term debt                                                                                              |  |                                           | (1,000   | ) |                                             |   | (3,550   | )                                           |  |   | (14,970  | )
|Minority interest contributions and advances                                                                            |  |                                           | 2,054    |   |                                             |   |         |                                             |  |   | 1,340    |  
|Principal portion of relinquishment liability payments                                                                  |  |                                           | (48,352  | ) |                                             |   | (47,399  | )                                           |  |   | (44,731  | )
|Distributions to Tribe                                                                                                  |  |                                           | (80,000  | ) |                                             |   | (75,000  | )                                           |  |   | (88,900  | )
|Payments on capital lease obligations                                                                                   |  |                                           | (177     | ) |                                             |   | (34      | )                                           |  |   |         |  
|Capitalized debt issuance costs                                                                                         |  |                                           | (2,775   | ) |                                             |   | (7,081   | )                                           |  |   | (14      | )
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Net cash flows provided by (used in) financing activities                                                               |  |                                           | 126,847  |   |                                             |   | (66,223  | )                                           |  |   | (147,275 | )
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Net (decrease) increase in cash and cash equivalents                                                                    |  |                                           | (20,812  | ) |                                             |   | 29,413   |                                             |  |   | 2,821    |  
|Cash and cash equivalents at beginning of year                                                                          |  |                                           | 104,659  |   |                                             |   | 75,246   |                                             |  |   | 72,425   |  
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Cash and cash equivalents at end of year                                                                                |  | $                                         | 83,847   |   |                                             | $ | 104,659  |                                             |  | $ | 75,246   |  
|                                                                                                                        |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Supplemental disclosure:                                                                                                |  |                                           |          |   |                                             |   |          |                                             |  |   |          |  
|Cash paid during the year for interest                                                                                  |  | $                                         | 95,204   |   |                                             | $ | 92,501   |                                             |  | $ | 91,305   |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE
1ORGANIZATION AND BASIS OF PRESENTATION:

The Mohegan Tribe of Indians of Connecticut (the Mohegan Tribe or the
Tribe) established the Mohegan Tribal Gaming Authority (the Authority) in July 1995 with the exclusive power to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct
such activities elsewhere. The Tribe is a federally recognized Indian tribe with an approximately 507-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988,
federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut have entered
into such a compact (the Mohegan Compact), which has been approved by the United States Secretary of the Interior. The Authority is primarily engaged in the ownership, operation and development of gaming facilities. In October 1996, the
Authority opened a gaming and entertainment complex known as Mohegan Sun. The Authority is governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in the
composition of the Tribal Council results in a corresponding change in the Authoritys Management Board.

The following subsidiaries
are wholly owned by the Authority: Mohegan Basketball Club, LLC (MBC), Mohegan Golf, LLC (Mohegan Golf), Mohegan Commercial Ventures PA, LLC (MCV-PA), Mohegan Ventures-Northwest, LLC (Mohegan
Ventures-NW), Mohegan Ventures Wisconsin, LLC (MVW), and MTGA Gaming, LLC (MTGA Gaming). MBC owns and operates a professional basketball team in the Womens National Basketball Association (WNBA), the
Connecticut Sun, and owns approximately 3.6% of the membership interests in WNBA, LLC. Mohegan Golf owns and operates the Mohegan Sun Country Club at Pautipaug (Mohegan Sun Country Club) golf course in southeastern Connecticut.

MCV-PA holds a 0.01% general partnership interest in Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P., and Northeast Concessions,
L.P. (collectively, the Pocono Downs Entities), while the Authority holds a 99.99% limited partnership interest in each such entity. Downs Racing, L.P. (Downs Racing) owns and operates Mohegan Sun at Pocono Downs
(Pocono Downs), a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania, and several off-track wagering (OTW) facilities located elsewhere in Pennsylvania. The Authority
views Mohegan Sun and the properties owned by the Pocono Downs Entities as separate operating segments.

Mohegan Ventures-NW and the Tribe
hold 49.15% and 7.85% membership interests in Salishan-Mohegan, LLC (Salishan-Mohegan), respectively, formed with an unrelated third party to participate in a proposed development and management of a casino to be owned by the federally
recognized Cowlitz Indian Tribe of Washington (the Cowlitz Tribe) and to be located in Clark County, Washington (the Cowlitz Project).

MVW and Mohegan Ventures, LLC (MV), a wholly owned subsidiary of the Tribe, hold 85.40% and 14.60% membership interests in Wisconsin Tribal Gaming, LLC (WTG), respectively, formed to
participate in a proposed development of a casino to be owned by the federally recognized Menominee Indian Tribe of Wisconsin (the Menominee Tribe) and to be located in Kenosha, Wisconsin (the Menominee Project).

MTGA Gaming and the Tribe hold 49.00% and 51.00% membership interests in Mohegan Gaming & Hospitality, LLC (MG&H),
respectively. MG&H was formed to evaluate and pursue new business opportunities on behalf of the Authority and the Tribe. MG&H holds a 100.00% membership interest in Mohegan Resorts, LLC (Mohegan Resorts), which in turn holds a
100.00% membership interest in Mohegan Resorts Mass, LLC (MRM), formed to evaluate potential gaming opportunities in the Commonwealth of Massachusetts. Mohegan Resorts also holds a 100.0% membership interest in Mohegan Resorts Kansas,
LLC (MRK), formed in connection with an effort, ended in September 2008, to secure a gaming license for the



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



development of a gaming facility to be located in the State of Kansas. It is anticipated that certain of the Authoritys and the Tribes future
diversification efforts will be conducted, directly or indirectly, through MG&H and Mohegan Resorts.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Authority and its majority and wholly owned subsidiaries and entities. In accordance with the Financial Accounting Standard Board
(FASB) Interpretation No. 46(R), Consolidation of Variable Interest Entities (revised December 2003)an interpretation of ARB No. 51 (FIN 46), the accounts of Salishan-Mohegan are consolidated into
the accounts of Mohegan Ventures-NW, and the accounts of MG&H, Mohegan Resorts, MRK and MRM are consolidated into the accounts of MTGA Gaming, as Mohegan Ventures-NW and MTGA Gaming are deemed to be the primary beneficiaries. In consolidation,
all intercompany balances and transactions are eliminated.

Managements Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The most significant estimates included in the accompanying
consolidated financial statements relate to the assessment of impairment of goodwill and impairment and useful lives of intangible assets, estimated collectibility of receivables, the relinquishment liability, the liability associated with
unredeemed Players Club points and employee medical coverage and workers compensation self-insurance reserves. Actual results could differ from those estimates.

Reclassifications

Certain amounts in
the fiscal years 2007 and 2006 consolidated financial statements have been reclassified to conform to the fiscal year 2008 presentation.

Cash and Cash Equivalents

The Authority classifies deposits that can be redeemed on demand and investments with an original
maturity of three months or less when purchased as cash and cash equivalents. Cash equivalents are carried at cost, which approximates market value. At September 30, 2008 and 2007, the Authority had cash and cash equivalents of $83.8 million
and $104.7 million, respectively. For reporting purposes, cash and cash equivalents include all operating cash and in-house funds.

Restricted Cash

The Authority classifies cash that is contractually restricted as to its withdrawal or usage as restricted
cash. Restricted cash relates to a building permit fee dispute with Township of Plains, PA. There are no contractual requirements regarding the investment of funds, but funds are held in cash. Interests or earnings on the account balance are payable
to the Authority. The Authority expects this dispute to be settled within the next 12 months.

Receivables

Accounts receivable consists primarily of casino receivables, which represent credit extended to approved casino customers, and hotel and other non-gaming
receivables. The Authority maintains an allowance for



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



doubtful accounts which is based on managements estimate of the amount expected to be uncollectible considering historical experience and the
information management obtains regarding the creditworthiness of the customer. Future business or economic trends could affect the collectibility of these receivables.

Receivables from affiliates, which are recorded in other assets in the accompanying consolidated balance sheets, consist primarily of reimbursable costs and expenses incurred by Salishan-Mohegan for the Cowlitz
Project (see Note 14) and WTG for the Menominee Project (see Note 13). The Salishan-Mohegan receivables are payable upon: (1) the receipt of necessary financing for the development of the proposed casino, and (2) the related property being
taken into trust by the United States Department of the Interior. Due to the inherent uncertainty in the development of the Cowlitz Project, the Authority maintains a reserve for doubtful collection of the Salishan-Mohegan receivables, which is
based on managements estimate of the probability that the receivables will be collected. Future complications in the receipt of financing, the relevant land being taken into trust or other matters affecting the Cowlitz Project could affect the
collectibility of the receivables. The WTG receivables are payable upon the receipt of necessary financing for the development of the proposed casino. The WTG receivables are fully reserved at September 30, 2008 (see Note 13).

Inventories

Inventories are stated
at the lower of cost or market and consist principally of food and beverage, retail, hotel and operating supplies. Cost is determined using an average cost method. The Authority reduces the carrying value of slow moving inventory to net realizable
value, which is based on managements estimate of the amount of inventory that may not be used in future casino operations considering the length of time items are held in inventory and information management obtains regarding the plans to
utilize this inventory. Future business trends could affect the timely use of inventories.

Property and Equipment

Property and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets, other than land, using the
straight-line basis. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the improvements. Useful life estimates of asset categories are as follows:



|                                |  |            
|------------------------------- |  | -----------
|Buildings and land improvements |  | 40 years   
|Furniture and equipment         |  | 3 - 7 years

The costs of significant improvements are capitalized. Costs of normal repairs and maintenance are
charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the determination of net income.

In accordance with the Financial Accounting Standards Board (the FASB) Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(SFAS 144), the carrying value of the Authoritys assets is reviewed when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an impairment loss has
occurred based on current and future levels of income and expected future cash flows, as well as other factors, such a loss will be recognized in the consolidated statement of income. The Authority reviewed the relevant assets, including those
related to the suspension of Mohegan Suns expansion project (Project Horizon), at September 30, 2008 and 2007 and determined that no impairment existed (see Note 10).



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Capitalized Interest

The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is
incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of the Authoritys outstanding borrowings. Capitalization of interest ceases when the project is substantially
complete or development activity is suspended for more than a brief period.

Goodwill

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142), the goodwill associated with the
acquisition of the Pocono Downs Entities is not subject to amortization. The goodwill is assessed at least annually for impairment pursuant to SFAS 142 by comparing the fair value of the recorded assets to their carrying amount. If the carrying
amount of the goodwill exceeds its fair value, an impairment loss will be recognized immediately. The Authority assessed the goodwill for impairment using an income approach and determined that no impairment existed at September 30, 2008 and
2007. The income approach requires the Authority to make assumptions regarding future revenues and expenses, discount rates and the terminal value of the Pocono Downs Entities. As a result of a reduction in estimated future revenues and associated
cash flows due to the current economic conditions, and an increase in the weighted average cost of capital, the amount by which the estimated fair value of the Pocono Downs Entities exceeds its book value has decreased from the prior fiscal year. If
estimates of projected cash flows of the Pocono Downs Entities are not met, the goodwill may be impaired and subject to a non-cash write-down, which could have a material adverse impact on the accompanying consolidated financial statements.

Other Intangible Assets

In January 2005, the Authority and its wholly owned subsidiary, MCV-PA, acquired all the partnership interests in the Pocono Downs Entities. As part of the acquisition, Downs Racing gained the right to apply for a Category One slot machine
license. The right to apply for the license was determined by management to be an intangible asset with an indefinite useful life. Management, with assistance from an independent valuation firm, estimated the fair value of the intangible asset to be
$214.0 million (see Note 10). The valuation firm used the Income ApproachExcess Earnings Method. Conditional and permanent Category One slot machine licenses were granted to and approved for Downs Racing by the Pennsylvania Gaming and Control
Board (the PGCB) in September 2006 and December 2006, respectively. A one-time slot machine license fee of $50.0 million was paid to the PGCB in October 2006, which was added to the existing slot license intangible asset of $214.0
million. The total slot license intangible asset of $264.0 million, with an indefinite useful life, is included in the accompanying consolidated balance sheets. The slot license intangible asset is assessed at least annually for impairment pursuant
to SFAS 142. The Authority assessed the slot license intangible asset for impairment at September 30, 2008 and 2007 and determined that no impairment existed. If estimates of projected cash flows of the Pocono Downs entities are not met, the
slot license intangible asset may be impaired and subject to a non-cash write-down, which could have a material adverse impact on the accompanying consolidated financial statements.

In connection with the Relinquishment Agreement (see Note 11), Trading Cove Associates (TCA) granted the Authority an exclusive, irrevocable,
perpetual, world-wide and royalty-free license with respect to trademarks and other similar rights, including the Mohegan Sun name used at or developed for Mohegan Sun. The Mohegan Sun trademark was appraised by an independent valuation
firm to have a value of $130.0 million and is included as an intangible asset in the accompanying consolidated balance sheets. The independent valuation firm used the Income ApproachRelief from Royalty Method. In accordance with SFAS 142, the
Mohegan Sun



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



trademark is no longer subject to amortization as it is deemed to have an indefinite useful life. The Mohegan Sun trademark is assessed at least annually for
impairment pursuant to SFAS 142. The Authority assessed the Mohegan Sun trademark for impairment at September 30, 2008 and 2007 and determined that no impairment existed. The balance of the Mohegan Sun trademark is as follows (in thousands):



|                         |  |                     |         |   |      |   |         |  
|------------------------ |  | ------------------- | ------- | - | ---- | - | ------- | -
|                         |  | As of September 30, |        
|                         |  | 2008                |         |   | 2007 |  
|Trademark                |  | $                   | 130,000 |   |      | $ | 130,000 |  
|Accumulated amortization |  |                     | (10,308 | ) |      |   | (10,308 | )
|                         |  |                     |         |   |      |   |         |  
|Trademark, net           |  | $                   | 119,692 |   |      | $ | 119,692 |  
|                         |  |                     |         |   |      |   |         |  

In January 2003, MBC acquired a membership in the WNBA and the right to own and operate a
professional basketball team in the WNBA. As part of the acquisition, management, with the assistance from an independent valuation firm, estimated the fair value of the initial player roster to be $4.8 million, and the remaining $5.5 million of
MBCs aggregate investment was recognized as a franchise value. Refer to Note 15 for further discussion regarding the Authoritys accounting for these intangible assets.

In March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed certain liabilities from
Kenesah Gaming Development, LLC. The development rights, determined by management to be an intangible asset with an estimated fair value of $3.7 million, are included in the accompanying consolidated balance sheet as of September 30, 2007. At
acquisition, the development rights intangible asset was determined to be amortized on a straight line basis over its estimated useful life of seven years, which was anticipated to commence upon the opening of the proposed casino. However, during
2008, an impairment charge was recorded to reduce the development rights intangible asset to $0 following the issuance of new guidance by the Bureau of Indian Affairs on its policy for taking off-reservation land into trust for gaming purposes and
an unfavorable decision by the United States Department of the Interior to reject the Menominee Tribes request to suspend review of their application to take off-reservation land into trust in connection with the Menominee Project and a
federal courts subsequent refusal to issue a temporary restraining order to prevent the United States Department of the Interior from taking further action on the application. While the Authority expects to continue to support and pursue the
Menominee Project, it believes, these actions decreased the probability that the Menominee Tribe will obtain the necessary regulatory approvals in order to proceed with the Menominee Project. Refer to Note 13 for further discussion regarding the
Authoritys accounting for this intangible asset.

In May 2007, Mohegan Golf completed the acquisition of substantially all of the
assets of Pautipaug Country Club Inc. (PCC), including a membership intangible asset resulting from the contractual agreement with PCCs members established at the time of acquisition, valued at $1.7 million. The membership
intangible asset is assessed at least annually for impairment pursuant to SFAS 142. The Authority assessed the membership intangible asset for impairment at September 30, 2008 and 2007 and determined that no impairment existed. Refer to Note 12
for further discussion regarding the Authoritys accounting for this intangible asset.

Deferred Financing Costs

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense based on the related debt
agreements using the straight-line method, which approximates the effective interest method. The unamortized amounts are included in other assets in the accompanying consolidated balance sheets.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Unredeemed Players Club Points

The Authority maintains an accrual for unredeemed Players Club points. The accrual is based on the estimated cost of the points expected to be
redeemed as of the respective balance sheet date. Management determines the adequacy of this accrual by periodically evaluating the historical redemption experience and projected trends related to this accrual. Actual results could differ from those
estimates.

Self-insurance Accruals

The Authority is self-insured up to certain limits for costs associated with workers compensation, general liability and employee medical coverage. Liabilities for insurance claims and reserves include accruals
of estimated settlements for known claims, as well as accruals of estimates of incurred but not reported claims. These accruals are included in other current liabilities in the accompanying consolidated balance sheets. In estimating these costs, the
Authority considers historical loss experience and makes judgments about the expected levels of costs per claim. The Authority also uses information provided by independent consultants to assist in the determination of estimated accruals. These
claims are accounted for based on estimates of the undiscounted claims, including those claims incurred but not reported. The Authority believes the use of these estimates to account for these liabilities provides a consistent and effective way to
measure these accruals; however, changes in health care costs, accident frequency and severity and other factors can materially affect the estimate for these liabilities. The Authority continually monitors the potential changes in future estimates,
evaluates insurance accruals and makes adjustments when necessary.

Relinquishment Liability

The Authority, in accordance with SFAS No. 5, Accounting for Contingencies (SFAS 5), has recorded a relinquishment liability
of the estimated present value of its obligations under the Relinquishment Agreement (see Note 11). The Authority reassesses projected revenues, subject to the Relinquishment Agreement, and consequently the relinquishment liability:
(i) annually in conjunction with the Authoritys budgeting process, and (ii) when necessary to account for material increases or decreases in projected revenues over the relinquishment period. If the reassessment causes an overall
increase to the projected revenues over the relinquishment period, the relinquishment liability will be increased by five percent of such increase in revenues, discounted at the Authoritys risk-free rate of investment, an incremental layer. If
the reassessment causes an overall decrease to the projected revenues over the relinquishment period, the relinquishment liability will be decreased by five percent of such decrease in revenues, discounted based upon a weighted-average discount
rate, a decremental layer. The weighted-average discount rate is defined as the average discount rate used to discount all the previous incremental layers weighted by the amount of each such incremental layer. Further, the Authority records a
quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimation and judgment (including those related to estimates of future revenue projections and impact and timing of
future competition) used with respect to calculating this liability, future events that affect such estimates and judgments may cause the actual liability to differ significantly from the estimate.

Fair Value of Financial Instruments

The fair value amounts presented below are reported to satisfy the disclosure requirements of SFAS No. 107, Disclosures about Fair Values of Financial Instruments (SFAS 107), and are not necessarily indicative
of the amounts that the Authority could realize in a current market exchange.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The carrying amount of cash and cash equivalents, promissory notes, mortgages and bank financing
facilities approximate fair value. The fair value of the Authoritys other financing facilities is as follows (in millions):



|                                     |  |                     |       |      |   |      
|------------------------------------ |  | ------------------- | ----- | ---- | - | -----
|                                     |  | As of September 30,
|                                     |  | 2008                |       | 2007
|2005 61/8% Senior
Notes              |  | $                   | 206.6 |      | $ | 239.7
|2001 83/8% Senior
Subordinated Notes |  | $                   | 16.3  |      | $ | 16.3 
|2002 8% Senior Subordinated Notes    |  | $                   | 206.6 |      | $ | 254.1
|2003 63/8% Senior
Subordinated Notes |  | $                   | 313.5 |      | $ | 326.7
|2004 71/8% Senior
Subordinated Notes |  | $                   | 158.9 |      | $ | 225.3
|2005 67/8% Senior
Subordinated Notes |  | $                   | 102.8 |      | $ | 146.8

The estimated fair value of the Authoritys other financing facilities was based on quoted
market prices on or about September 30, 2008 and 2007.

Revenue Recognition

The Authority recognizes gaming revenue as amounts wagered less prizes paid out, and is comprised primarily of revenues from slot machines and table
games. Revenues from food and beverage, hotel, retail, entertainment events and other services are recognized at the time the service is performed. Minimum rental revenues are recognized on a straight-line basis over the terms of the related leases.
Percentage rents are recognized in the period in which the tenants exceed their respective percentage rent thresholds.

Promotional
Allowances

The Authority operates a complimentary Players Club program in which food and beverage, hotel, retail, entertainment
and other services are provided to guests at Mohegan Sun and Pocono Downs based on points that are earned through gaming activities. The retail value of these complimentary items is included in gross revenues when redeemed at Authority-operated
facilities and then deducted as promotional allowances to arrive at net revenues. The cost associated with reimbursing third parties for the value of these complimentary items redeemed at third party facilities is charged to gaming
expenses.

In addition, the Authority has ongoing promotional programs which offer coupons to its guests for the purchase of food and
beverage, hotel and retail amenities offered at Mohegan Sun and Pocono Downs, as applicable. The retail value of items or services purchased with coupons at Authority-operated facilities within Mohegan Sun and Pocono Downs is included in gross
revenues and the respective coupon value is deducted as promotional allowances to arrive at net revenues. The cost associated with reimbursing third parties for the value of coupons redeemed at third party facilities is charged to gaming expenses.

The retail value of providing promotional allowances is included in revenues as follows (in thousands):



|                                |  |                                         |         |      |   |         |  |   |        
|------------------------------- |  | --------------------------------------- | ------- | ---- | - | ------- |  | - | -------
|                                |  | For the Fiscal Years EndedSeptember 30,
|                                |  | 2008                                    |         | 2007 |   | 2006   
|Food and beverage               |  | $                                       | 49,616  |      | $ | 48,138  |  | $ | 46,894 
|Hotel                           |  |                                         | 15,246  |      |   | 16,385  |  |   | 17,356 
|Retail, entertainment and other |  |                                         | 70,693  |      |   | 67,323  |  |   | 60,667 
|                                |  |                                         |         |      |   |         |  |   |        
|Total                           |  | $                                       | 135,555 |      | $ | 131,846 |  | $ | 124,917
|                                |  |                                         |         |      |   |         |  |   |        



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The estimated cost of providing promotional allowances is included in operating costs and expenses,
primarily gaming, as follows (in thousands):



|                                |  |                                         |         |      |   |         |  |   |        
|------------------------------- |  | --------------------------------------- | ------- | ---- | - | ------- |  | - | -------
|                                |  | For the Fiscal Years EndedSeptember 30,
|                                |  | 2008                                    |         | 2007 |   | 2006   
|Food and beverage               |  | $                                       | 52,269  |      | $ | 49,243  |  | $ | 48,352 
|Hotel                           |  |                                         | 8,048   |      |   | 8,866   |  |   | 8,734  
|Retail, entertainment and other |  |                                         | 61,116  |      |   | 54,781  |  |   | 46,874 
|                                |  |                                         |         |      |   |         |  |   |        
|Total                           |  | $                                       | 121,433 |      | $ | 112,890 |  | $ | 103,960
|                                |  |                                         |         |      |   |         |  |   |        

The Authority records free or discounted food and beverage and other services in accordance with
Emerging Issues Task Force Issue No. 01-9, Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendors Products. The Authority also offers cash inducements and discounts on patron losses at
Mohegan Sun in certain circumstances that result in a reduction to gaming revenues. The offsets to gaming revenues were $21.1 million, $10.3 million and $11.2 million relating to discounts provided on patron losses for fiscal years ending
September 30, 2008, 2007 and 2006, respectively, and $1.2 million, $752,000 and $577,000 relating to Players Club points redeemed for cash for the fiscal years ended September 30, 2008, 2007 and 2006, respectively.

Gaming Expenses

Gaming expenses
primarily include the portion of gross slot revenues which must be paid to the State of Connecticut and the Pennsylvania Gaming Control Board (the PGCB), which are referred to as slot win contribution and slot machine tax assessments,
respectively, labor costs, expenses associated with operation of slot machines, table games, keno, live harness racing at Pocono Downs and racebook, certain marketing expenses, and promotional expenses for the Players Club programs offered at
Mohegan Sun and Pocono Downs.

Advertising

The Authority expenses the production costs of advertising the first time the advertising takes place. Prepaid rental fees associated with billboard advertising are capitalized and amortized over the term of the
related rental agreement. Total advertising costs for the fiscal years ended September 30, 2008, 2007 and 2006 were $43.3 million, $42.7 million and $39.3 million, respectively. The Authority did not record any prepaid advertising at
September 30, 2008 and 2007.

Corporate Expenses

Corporate expenses represent an allocation of governmental and certain administrative services provided by the Tribe, payroll costs, professional fees and various other expenses not directly related to the
Authoritys operations at Mohegan Sun or Pocono Downs. In addition, corporate expenses include the costs associated with the Authoritys various gaming diversification efforts, which are expensed as incurred, except when reimbursable by a
third party.

Pre-Opening Costs and Expenses

For the fiscal years ended September 30, 2008, 2007 and 2006, pre-opening costs and expenses consisted primarily of direct incremental personnel, consulting and other costs associated with the development of a
Phase I



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



and II gaming facility at Pocono Downs and the construction of the Casino of the Wind component of Project Horizon at Mohegan Sun. Construction of the Phase
I facility commenced in September 2005 and was completed in November 2006, while construction of the Phase II facility (Project Sunrise) commenced in May 2007 and was completed in July 2008. Construction of Casino of the Wind commenced
in June 2007 and was completed in August 2008. In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, Reporting on the Costs of Start-Up Activities, pre-opening costs and expenses were
expensed as incurred.

Income Taxes

The Tribe is a sovereign Indian nation with independent legal jurisdiction over its people and its lands. Like other sovereign governments, the Tribe and its entities, including the Authority, are not subject to
federal, state or local income taxes.

New Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes
a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This standard does not require any new fair value measurements. SFAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. However, the FASB provided a one year deferral for the implementation of SFAS 157 for non-financial assets and liabilities that are
recognized or disclosed at fair value in the financial statements on a non-recurring basis. The Authority does not believe the adoption of this standard will have a material impact on its financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS 159). SFAS 159 provides entities with the option to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value and also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This standard is intended to expand the use of fair value measurement but does not
require any new fair value measurements. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Authority does not believe the adoption of this standard will have a material impact on its
financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R), Business
Combinations (SFAS 141(R)) and SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements (SFAS 160). SFAS 141(R) requires the acquiring entity in a business combination to record all
assets acquired and liabilities assumed at their respective acquisition-date fair values and changes other practices under SFAS 141. SFAS 141(R) also requires additional disclosure of information surrounding a business combination, such that users
of the entitys financial statements can fully understand the nature and financial impact of the business combination. SFAS 160 requires entities to report non-controlling (minority) interests in subsidiaries as equity in the consolidated
financial statements. The Authority is required to adopt SFAS 141(R) and SFAS 160 simultaneously in its fiscal year beginning October 1, 2009. The provisions of SFAS 141(R) will only impact the Authority if it is party to a business combination
after the pronouncement has been adopted. The Authority is currently evaluating the potential impact, if any, that SFAS 160 may have on its financial position, results of operations and cash flows.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS
161)an amendment of SFAS No. 133, Accounting for Derivative Instruments and



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Hedging Activities (SFAS 133). SFAS 161 requires enhanced disclosures for derivative instruments and hedging activities, including
disclosures regarding how: (i) an entity uses derivative instruments; (ii) derivative instruments and related hedged items are accounted for under SFAS 133; and (iii) derivative instruments and related hedged items affect an
entitys financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Authority is currently evaluating the
potential impact, if any, that SFAS 161 may have on its financial position, results of operations and cash flows.

In May 2008, the FASB
issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. SFAS 162 is effective 60 days following the Securities and Exchange
Commissions approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The Authority is currently
evaluating the potential impact, if any, that SFAS 162 may have on its financial position, results of operations and cash flows.

NOTE
3RECEIVABLES, NET:

Components of receivables, net are as follows (in thousands):

|                                |  |                     |         |   |      |   |        |  
|------------------------------- |  | ------------------- | ------- | - | ---- | - | ------ | -
|                                |  | As of September 30, |        
|                                |  | 2008                |         |   | 2007 |  
|Gaming                          |  | $                   | 45,706  |   |      | $ | 21,559 |  
|Hotel                           |  |                     | 1,162   |   |      |   | 1,263  |  
|Other                           |  |                     | 6,721   |   |      |   | 6,197  |  
|                                |  |                     |         |   |      |   |        |  
|Subtotal                        |  |                     | 53,589  |   |      |   | 29,019 |  
|Allowance for doubtful accounts |  |                     | (12,843 | ) |      |   | (4,014 | )
|                                |  |                     |         |   |      |   |        |  
|Total receivables, net          |  | $                   | 40,746  |   |      | $ | 25,005 |  
|                                |  |                     |         |   |      |   |        |  

NOTE 4PROPERTY AND EQUIPMENT, NET:

Components of property and equipment, net are as follows (in thousands):



|                                  |  |                     |           |   |      |   |           |  
|--------------------------------- |  | ------------------- | --------- | - | ---- | - | --------- | -
|                                  |  | As of September 30, |          
|                                  |  | 2008                |           |   | 2007 |  
|Land                              |  | $                   | 64,439    |   |      | $ | 57,247    |  
|Land improvements                 |  |                     | 63,226    |   |      |   | 48,313    |  
|Buildings and improvements        |  |                     | 1,600,108 |   |      |   | 1,332,138 |  
|Furniture and equipment           |  |                     | 493,909   |   |      |   | 426,330   |  
|Construction in process           |  |                     | 91,762    |   |      |   | 75,898    |  
|                                  |  |                     |           |   |      |   |           |  
|Subtotal                          |  |                     | 2,313,444 |   |      |   | 1,939,926 |  
|Less: accumulated depreciation    |  |                     | (620,042  | ) |      |   | (538,720  | )
|                                  |  |                     |           |   |      |   |           |  
|Total property and equipment, net |  | $                   | 1,693,402 |   |      | $ | 1,401,206 |  
|                                  |  |                     |           |   |      |   |           |  



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



For the fiscal years ended September 30, 2008, 2007 and 2006, depreciation expense totaled $97.9
million, $92.8 million and $87.2 million, respectively. Capitalized interest totaled $6.5 million, $1.7 million and $1.2 million for the fiscal years ended September 30, 2008, 2007 and 2006, respectively.

On September 22, 2008, the Authority announced the suspension of the hotel, retail and parking garage elements of Project Horizon due to a slowdown
in its business volumes and uncertainties in the financial markets a result of the ongoing national economic recession. As of September 30, 2008, construction in process includes assets totaling $80.6 million related to Project Horizon,
including the suspended elements. The Authority intends to re-evaluate the feasibility of the suspended elements in approximately 12 months, but currently believes that the suspension related assets included in construction in process have a future
benefit. The Authority reviewed the carrying value of these assets in accordance with SFAS 144 and determined that no impairment existed at September 30, 2008 and 2007. Refer to Note 10.

NOTE 5OTHER CURRENT ASSETS AND OTHER CURRENT LIABILITIES:

Components of other current assets are as follows (in thousands):



|                                                    |  |                     |        |      |   |       
|--------------------------------------------------- |  | ------------------- | ------ | ---- | - | ------
|                                                    |  | As of September 30,
|                                                    |  | 2008                |        | 2007
|Non-qualified deferred compensation                 |  | $                   | 11,675 |      | $ | 11,768
|Current portion of Pocono Downs purchase settlement |  |                     | 6,950  |      |   | 6,950 
|Prepaid expenses                                    |  |                     | 9,099  |      |   | 7,273 
|                                                    |  |                     |        |      |   |       
|Total other current assets                          |  | $                   | 27,724 |      | $ | 25,991
|                                                    |  |                     |        |      |   |       

Components of other current liabilities are as follows (in thousands):



|                                               |  |                     |         |      |   |        
|---------------------------------------------- |  | ------------------- | ------- | ---- | - | -------
|                                               |  | As of September 30,
|                                               |  | 2008                |         | 2007
|Accrued payroll and related taxes and benefits |  | $                   | 51,600  |      | $ | 60,930 
|Slot win contribution payable (see Note 10)    |  |                     | 16,751  |      |   | 19,317 
|Miscellaneous other current liabilities        |  |                     | 73,060  |      |   | 65,205 
|                                               |  |                     |         |      |   |        
|Total other current liabilities                |  | $                   | 141,411 |      | $ | 145,452
|                                               |  |                     |         |      |   |        



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 6FINANCING FACILITIES:

Financing facilities consist of the following (in thousands):



|                                                              |  |                     |           |      |   |          
|------------------------------------------------------------- |  | ------------------- | --------- | ---- | - | ---------
|                                                              |  | As of September 30,
|                                                              |  | 2008                |           | 2007
|Bank Credit Facility                                          |  | $                   | 300,000   |      | $ | 33,000   
|2005 61/8% Senior
Notes                                       |  |                     | 250,000   |      |   | 250,000  
|2001 83/8% Senior
Subordinated Notes                          |  |                     | 16,345    |      |   | 16,345   
|2002 8% Senior Subordinated Notes                             |  |                     | 250,000   |      |   | 250,000  
|2003 63/8% Senior
Subordinated Notes                          |  |                     | 330,000   |      |   | 330,000  
|2004 71/8% Senior
Subordinated Notes                          |  |                     | 225,000   |      |   | 225,000  
|2005 67/8% Senior
Subordinated Notes                          |  |                     | 150,000   |      |   | 150,000  
|WNBA Promissory Note                                          |  |                     | 3,000     |      |   | 4,000    
|Line of Credit                                                |  |                     | 2,938     |      |   | 16,591   
|Salishan Credit Facility                                      |  |                     | 21,000    |      |   | 17,250   
|Menominee Kenosha Gaming Authority Note Payable (see Note 13) |  |                     | 600       |      |   | 600      
|                                                              |  |                     |           |      |   |          
|Subtotal                                                      |  |                     | 1,548,883 |      |   | 1,292,786
|Net deferred gain on derivative instruments sold              |  |                     | 1,369     |      |   | 914      
|                                                              |  |                     |           |      |   |          
|Total debt                                                    |  | $                   | 1,550,252 |      | $ | 1,293,700
|                                                              |  |                     |           |      |   |          

Maturities of the Authoritys debt as of September 30, 2008 are as follows (in
thousands):



|             |  |                          |          
|------------ |  | ------------------------ | ---------
|Fiscal Years |  | Long-Term DebtMaturities
|2009         |  | $                        | 27,938   
|2010         |  |                          | 62,500   
|2011         |  |                          | 137,345  
|2012         |  |                          | 695,500  
|2013         |  |                          | 250,000  
|Thereafter   |  |                          | 375,600  
|             |  |                          |          
|Total        |  | $                        | 1,548,883
|             |  |                          |          

Prior Bank Credit Facility

In March 2007, the Authority extinguished its Amended and Restated Loan Agreement dated March 25, 2003, as amended (the Prior Bank Credit
Facility). In connection with the extinguishment of the Prior Bank Credit Facility, certain unamortized debt issuance costs totaling $71,000 were charged as a write-off of debt issuance costs in the accompanying consolidated statement of
income for the fiscal year ended September 30, 2007.

Bank Credit Facility

In March 2007, the Authority entered into a Second Amended and Restated Loan Agreement (the Bank Credit Facility) providing for up to $1.0
billion in borrowing capacity from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. This Bank Credit Facility replaced the Prior Bank Credit Facility. The five-year senior
secured revolving credit facility included a $300.0 million term loan conversion provision which was triggered upon the initial accumulation of



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



$300.0 million in total borrowings on the Bank Credit Facility on August 15, 2008. The term loan requires principal payments in quarterly installments of
$750,000 beginning December 31, 2008 through the maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. Refer to information below and Note 19 for further discussion of the
Bank Credit Facility as amended by subsequent event. As of September 30, 2008, the amount under Letters of Credit issued pursuant to the Bank Credit Facility totaled $7.2 million, of which no amount was drawn (refer to Letters of Credit
below). Inclusive of the term loan and Letters of Credit, which reduce borrowing availability under the Bank Credit Facility, the Authority had approximately $692.8 million of borrowing capacity under the Bank Credit Facility as of September 30,
2008, without taking into account covenants under the bank credit facility and the amended bank credit facility, the line of credit and note indentures. Considering restrictive financial covenants under our bank credit facility and note indentures,
the amount available for borrowings approximated $85.0 million under the bank credit facility as of September 30, 2008.

In February 2008,
the Authority received requisite consent from its lenders to Amendment No. 1 to its Bank Credit Facility. Amendment No. 1, among other things, provided for increases in the permitted capital expenditures for Project Horizon and Project
Sunrise from $800.0 million and $200.0 million, respectively, to $950.0 million and $215.0 million, respectively. Amendment No. 1 also modified the Authoritys total leverage, senior leverage and minimum fixed charge coverage ratio
covenants to conform with the increase in projected expenditures and the change in the projected completion dates for Project Horizon and Project Sunrise.

At the Authoritys option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month Eurodollar rate, plus in
either case, the Applicable Rate based on the Authoritys Total Leverage Ratio, as each term is defined in the Bank Credit Facility, at the time each loan is made. The Authority also pays commitment fees for the unused portion of the revolving
loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is between 0.000% and 1.375%,
and the Applicable Rate for Eurodollar rate advances is between 1.250% and 2.625%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of Americas announced prime rate or the federal funds
rate plus 0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears. As of September 30, 2008, the Authority
had a $300.0 million Eurodollar rate loan and no base rate loan outstanding. The Eurodollar rate loan outstanding at September 30, 2008 was based on a one-month Eurodollar rate of 3.704% plus an Applicable Rate of 2.125%. The Applicable Rate
for commitment fees was 0.300% as of September 30, 2008. Accrued interest, including commitment fees, on the Bank Credit Facility was $89,000 and $96,000 as of September 30, 2008 and September 30, 2007, respectively.

The Bank Credit Facility is collateralized by a lien on substantially all of the Authoritys assets, including the assets comprising Pocono Downs
and a leasehold mortgage on the land previously taken into trust by the federal government and improvements which comprise Mohegan Sun. The Authority will also be required to pledge additional assets as collateral for the Bank Credit Facility as it
or its guarantor subsidiaries acquire them. The Authoritys obligations under the Bank Credit Facility are guaranteed by MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. The Bank Credit
Facility subjects the Authority to a number of restrictive covenants, including financial covenants. These financial covenants relate to, among other things, its permitted total debt and senior debt leverage ratios, its minimum fixed charge coverage
ratio, its maximum capital expenditures and a periodic test which ensures that the Authority has sufficient liquidity under its Bank Credit Facility and other allowed borrowings, projected cash flows over applicable construction periods and existing
cash and cash equivalents to cover planned construction expenditures. Refer to Note 19 for further discussion of the Amended Bank Credit Facility.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Bank Credit Facility includes non-financial covenants by the Authority and the Tribe of the type
customarily found in loan agreements for similar transactions including requirements that:



| |  |  | the Tribe preserves its existence as a federally recognized Indian tribe;
| | - |  | -------------------------------------------------------------------------



| |  |  | the Tribe cause the Authority to continually operate Mohegan Sun in compliance with all applicable laws; and
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | except under specific conditions, limit the Authority from selling or disposing of its assets, limit the transfer of the Authoritys and its guarantor
subsidiaries assets to non-guarantor entities, limit the incurrence by the Authority and its guarantor subsidiaries of other debt or contingent obligations and limit the Authoritys and its guarantor subsidiaries ability to extend
credit, make investments or commingle their assets with assets of the Tribe.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of September 30, 2008, the
Authority and the Tribe were in compliance with all of their respective covenant requirements in the Bank Credit Facility.

On December 10, 2008, the Authority entered into an amendment to the terms of the Bank Credit
Facility pursuant to a Third Amended and Restated Loan Agreement (the Amended Bank Credit Facility) following the suspension of Project Horizon. Among other things, the Amended Bank Credit Facility reduced the overall size of the credit
facility from $1.0 billion to $850.0 million, reduced the term loan from $300.0 million to $150.0 million and reduced the increase option from $250.0 million to $150.0 million. Factoring in the reduction in the size of our bank credit facility from
$1.0 billion to $850.0 million, our borrowing capacity effectively was reduced to approximately $542.8 million under the amended bank credit facility from approximately $692.8 million under the bank credit facility as of September 30, 2008,
without taking into account covenants under the Bank Credit Facility and Amended Bank Credit Facility, as applicable, and note indentures. Pursuant to the amendment, the proceeds of the Amended Bank Credit Facility may also be used to repay the
Authoritys 63/8% $330.0 million Senior Subordinated Notes at maturity on July 15, 2009. It is the Authoritys
intent to utilize the Amended Bank Credit Facility to repay the 63/8% $330.0 million Senior Subordinated Notes at maturity.
Refer to Note 19 for further discussion of the Amended Bank Credit Facility.

2005
61/8% Senior Notes

In February 2005, the Authority issued $250.0 million Senior Notes with fixed interest payable at a rate of 6.125% per annum (the 2005 Senior Notes). The net proceeds from this financing were used to
repay amounts outstanding under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Notes mature on February 15, 2013. The first call date for the 2005 Senior Notes is February 15,
2009. Interest on the 2005 Senior Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Notes are uncollateralized general obligations of the Authority, which are effectively subordinated to all of the existing and
future senior secured indebtedness of the Authority, including the Bank Credit Facility. The 2005 Senior Notes rank equally in right of payment with 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due
and owing and rank senior to the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing, the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior
Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Notes. Refer to Note
18 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities. As of September 30, 2008 and September 30, 2007, accrued interest on the 2005 Senior Notes was $1.9 million.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



2001 83/8% Senior Subordinated Notes

In July 2001, the
Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.375% per annum (the 2001 Senior Subordinated Notes). The proceeds from this financing were used to pay transaction costs, pay down
$90.0 million on the then existing bank credit facility and fund costs related to Project Sunburst. Interest on the 2001 Senior Subordinated Notes is payable semi-annually on January 1 and July 1. The 2001 Senior Subordinated Notes mature
on July 1, 2011. The first call date for the 2001 Senior Subordinated Notes was July 1, 2006. The 2001 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility,
the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2001 Senior Subordinated Notes rank equally with the
2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are
then due and owing. MBC is a guarantor of the 2001 Senior Subordinated Notes. Refer to Note 18 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities.

In August 2004, the Authority completed a cash tender offer and consent solicitation to repurchase any or all of its outstanding 2001 Senior Subordinated
Notes. As part of the tender offer, the Authority solicited and received requisite consents to certain proposed amendments to the indentures governing the 2001 Senior Subordinated Notes, which eliminated substantially all of the restrictive
covenants thereunder. The aggregate principal amount of 2001 Senior Subordinated Notes tendered was $133.7 million. An aggregate principal amount of $16.3 million of the 2001 Senior Subordinated Notes remain outstanding as of September 30,
2008. As of September 30, 2008 and September 30, 2007, accrued interest on the 2001 Senior Subordinated Notes was $342,000.

2002 8% Senior
Subordinated Notes

In February 2002, the Authority issued $250.0 million Senior Subordinated Notes with fixed interest payable at a
rate of 8.000% per annum (the 2002 Senior Subordinated Notes). The proceeds from this financing were used to pay transaction costs and pay down $243.0 million on the then existing bank credit facility. Interest on the 2002 Senior
Subordinated Notes is payable semi-annually on April 1 and October 1. The 2002 Senior Subordinated Notes mature on April 1, 2012. The first call date for the 2002 Senior Subordinated Notes was April 1, 2007. The 2002 Senior
Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment
obligations under the Relinquishment Agreement that are then due and owing. The 2002 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005
Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA
Gaming are guarantors of the 2002 Senior Subordinated Notes. Refer to Note 18 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities. As of September 30, 2008 and
September 30, 2007, accrued interest on the 2002 Senior Subordinated Notes was $10.0 million.

2003 63/8% Senior Subordinated Notes

In July 2003, the Authority issued $330.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.375% per annum (the 2003
Senior Subordinated Notes). The proceeds from this financing were used



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



to repurchase substantially all of the outstanding $300.0 million 8.750% Senior Subordinated Notes issued in March 1999 and to pay fees and expenses
associated with the issuance. Interest on the 2003 Senior Subordinated Notes is payable semi-annually on January 15 and July 15. The 2003 Senior Subordinated Notes mature on July 15, 2009. The Authority has the option of repaying the
2003 Senior Subordinated Notes at maturity with proceeds from the Amended Bank Credit Facility as described in Note 19. In accordance with SFAS No. 6, Classification of Short-Term Obligations Expected to Be Refinanced (SFAS
No. 6), the Authority has classified the 2003 Senior Subordinated Notes as long-term debt for financial reporting purposes based on the Authoritys intent and ability to refinance this debt on a long-term basis through the use of proceeds
from the Amended Bank Credit Facility. The 2003 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar
proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2003 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes,
the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono
Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2003 Senior Subordinated Notes. Refer to Note 18 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor
entities. As of September 30, 2008 and September 30, 2007, accrued interest on the 2003 Senior Subordinated Notes was $4.4 million.

2004 71/8% Senior Subordinated Notes

In August 2004, the Authority issued $225.0 million Senior
Subordinated Notes with fixed interest payable at a rate of 7.125% per annum (the 2004 Senior Subordinated Notes). The net proceeds from this financing, together with $130.0 million of availability under the Prior Bank Credit
Facility, were used to repurchase substantially all of the outstanding 2001 Senior Subordinated Notes and substantially all of the outstanding 1999 Senior Notes tendered in the tender offers described above and to pay fees and expenses associated
with the issuance. The 2004 Senior Subordinated Notes mature on August 15, 2014. The first call date for the 2004 Senior Subordinated Notes is August 15, 2009. Interest on the 2004 Senior Subordinated Notes is payable semi-annually on
February 15 and August 15. The 2004 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar
proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2004 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes,
the 2003 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono
Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2004 Senior Subordinated Notes. Refer to Note 18 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor
entities. As of September 30, 2008 and September 30, 2007, accrued interest on the 2004 Senior Subordinated Notes was $2.0 million.

2005 67/8% Senior Subordinated Notes

In February 2005, the Authority issued $150.0 million Senior
Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the 2005 Senior Subordinated Notes). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank Credit Facility and
to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15, 2010. Interest on the 2005 Senior



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Subordinated Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Subordinated Notes are uncollateralized general
obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are
then due and owing. The 2005 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the remaining 50% of the
Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Subordinated
Notes. Refer to Note 18 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities. As of September 30, 2008 and September 30, 2007, accrued interest on the 2005 Senior
Subordinated Notes was $1.3 million.

The senior and senior subordinated note indentures contain certain financial and non-financial
covenants with which the Authority and the Tribe must comply. The financial covenants include, among other things, limitations on restricted payments and the incurrence of indebtedness, while the non-financial covenants include, among other things,
reporting obligations, compliance with laws and regulations and the Authoritys continued existence. As of September 30, 2008, both the Authority and the Tribe were in compliance with all of their respective covenant requirements in the
senior and senior subordinated note indentures.

WNBA Promissory Note

The Authority and MBC are parties to a membership agreement with WNBA, LLC (the Membership Agreement). The Membership Agreement sets forth the terms and conditions pursuant to which MBC acquired a
membership in the WNBA and the right to own and operate a professional basketball team in the WNBA. The Authority guaranteed the obligations of MBC under the Membership Agreement.

In consideration for this acquisition, MBC paid $2.0 million, with funds advanced from the Authority, and issued a promissory note to the WNBA (the
WNBA Note) for $8.0 million. The WNBA Note accrues interest at an annual rate equal to a three-month Eurodollar rate plus 1.50%. The Authority guaranteed the obligations of MBC under the WNBA Note. Pursuant to the WNBA Note, principal
payments of $1.0 million, subject to adjustment for certain revenue thresholds, and interest payments are required to be paid to the WNBA on each anniversary of the WNBA Note. The WNBA Note is scheduled to mature in January 2011, but will mature no
later than January 2013. As of September 30, 2008 and September 30, 2007, the principal balance outstanding on the WNBA Note was $3.0 million and $4.0 million, respectively. As of September 30, 2008 and September 30, 2007,
accrued interest on the WNBA Note was $94,000 and $187,000, respectively. Refer to Note 15 for a further discussion of the Authoritys investment in a WNBA franchise.

Line of Credit

The Authority has a $25.0 million revolving loan agreement with Bank of America (the
Line of Credit). Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of the Authoritys Leverage Ratio, as each term is defined in the Line of Credit.
Borrowings under the Line of Credit are uncollateralized obligations of the Authority. The Line of Credit was amended in March 2008 to extend the maturity date from March 31, 2008 to March 31, 2009. As of September 30, 2008, the
Authority had $2.9 million in loans outstanding under the Line of Credit, which were based on a one-month Eurodollar rate of 2.486% plus an Applicable Margin of 1.775%. The Line of Credit subjects the Authority to certain covenants, including a
covenant to maintain at least $25.0 million available for borrowing under the Bank Credit Facility. As of September 30, 2008, the Authority was in compliance with all



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



covenant requirements in the Line of Credit and had $22.1 million of borrowing capacity thereunder. As of September 30, 2008, there was no accrued
interest on the Line of Credit. As of September 30, 2007, accrued interest on the Line of Credit was $17,000.

Letters of Credit

As of September 30, 2008, the Authority maintained five uncollateralized letters of credit, three of which are maintained to satisfy potential
workers compensation liabilities, overdue pari-mutuel wagering tax liabilities of the Pocono Downs Entities and potential contractor and subcontractor liabilities relating to Project Horizon, and two of which related to road work at the Pocono
Downs Entities. The letters of credit expire on various dates from January 2009 through September 2009, subject to renewals. As of September 30, 2008, no amounts were drawn on the letters of credit.

Salishan-Mohegan Bank Credit Facility

In October
2006, Salishan-Mohegan entered into a $25.0 million revolving loan agreement with Bank of America (the Salishan Credit Facility), which matures on September 30, 2009. The revolving loan has no mandatory amortization provisions and
is payable in full at maturity. At the option of Salishan-Mohegan, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month or six-month Eurodollar rate, plus a spread of
1.250% for base rate loans and an Applicable Rate, as defined in the Salishan Credit Facility, of 2.250% for Eurodollar loans. The base rate is the higher of Bank of Americas announced prime rate or the federal funds rate plus 0.500%. The
Salishan Credit Facility is collateralized by a lien on substantially all of the existing and future assets of Salishan-Mohegan. The obligations of Salishan-Mohegan under the Salishan Credit Facility are also guaranteed by the Tribe. The Salishan
Credit Facility subjects Salishan-Mohegan to a number of restrictive covenants, including financial and non-financial covenants customarily found in loan agreements for similar transactions.

As of September 30, 2008, Salishan-Mohegan had $21.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans
outstanding at September 30, 2008 were comprised of: (1) a $17.8 million loan based on a one-month Eurodollar rate of 3.709% plus an Applicable Rate of 2.250%; (2) a $2.2 million loan based on a one-month Eurodollar rate of 2.488%
plus an Applicable Rate of 2.250%; and (3) a $1.0 million loan based on a one-month Eurodollar rate of 3.704% plus an Applicable Rate of 2.250%. The Applicable Rate for commitment fees was 0.50% as of September 30, 2008. As of
September 30, 2008, Salishan-Mohegan had $4.0 million of borrowing capacity under the Salishan Credit Facility. As of September 30, 2008 and September 30, 2007, accrued interest on the Salishan Credit Facility was $11,000 and $42,000,
respectively.

Derivative Instruments

The Authority is considered an end user of derivative instruments and engages in derivative transactions from time to time for risk management purposes only. There were no derivative instruments held by the Authority as of
September 30, 2008 and 2007.

Interest rate swap agreements hedging currently outstanding debt instruments of the Authority which
qualified for hedge accounting in accordance with SFAS 133 and were designated as fair value hedges were sold in prior fiscal years for a net aggregate gain of $1.7 million. The $1.7 million net aggregate gain was deferred and added to the carrying
value of the respective notes being hedged and is being amortized and recorded to interest expense over the remaining term of the respective notes. For the fiscal years ended September 30, 2008, 2007 and 2006, the Authority recorded
amortization of $455,000, $455,000 and $444,000 to reduce interest



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



expense related to the sale of these derivative instruments. The Authority expects to record $222,000 to offset interest expense over the next twelve months.

NOTE 7LEASES:

The Authority
leases space to certain tenants in The Shops at Mohegan Sun and certain other Mohegan Sun outlets. The Authority also leases, to third parties, the rights to utilize the Authoritys antenna on the Mohegan Sun Arena. The total minimum future
rental income on non-cancelable leases expected to be earned by the Authority is as follows (in thousands):



|                             |  |                                   |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |       
|---------------------------- |  | --------------------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ---------- |  | ----- | ----- |  | - | ----- |  | - | ------
|                             |  | Fiscal Years Ending September 30,
|                             |  | 2009                              |       | 2010 |   | 2011  |  | 2012 |       | 2013 |   | Thereafter |  | Total
|Minimum Future Rental Income |  | $                                 | 4,851 |      | $ | 4,708 |  | $    | 4,625 |      | $ | 3,376      |  | $     | 2,478 |  | $ | 9,638 |  | $ | 29,676

In July 2008, the Authority entered into a land lease agreement with the Tribe relating to
property located adjacent to the Tribes reservation that is currently used by Mohegan Suns employees for parking. The agreement requires the Authority to make monthly payments equaling $75,000 and expires on June 30, 2018. The
Authority has classified this lease as a capital lease for financial reporting purposes due to the existence of a bargain purchase option at the expiration of the lease. As of September 30, 2008, the Authority is obligated under this capital
lease to make future minimum lease payments of $8.8 million, including $1.5 million in interest. The Authority also is liable under numerous operating leases for equipment and buildings at the Pocono Downs Entities, which expire in various years
through 2013, subject to renewal. Total rental expense for the Pocono Downs Entities was $5.9 million, $3.2 million and $424,000 for the fiscal years ended September 30, 2008, 2007 and 2006, respectively. The total minimum future rental expense
on non-cancelable leases expected to be incurred by the Authority is as follows (in thousands):



|                              |  |                                   |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |       
|----------------------------- |  | --------------------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ---------- |  | ----- | ----- |  | - | ----- |  | - | ------
|                              |  | Fiscal Years Ending September 30,
|                              |  | 2009                              |       | 2010 |   | 2011  |  | 2012 |       | 2013 |   | Thereafter |  | Total
|Minimum Future Rental Expense |  | $                                 | 1,939 |      | $ | 1,094 |  | $    | 1,091 |      | $ | 1,084      |  | $     | 1,018 |  | $ | 4,275 |  | $ | 10,501

The Authority also has loaned funds to tenants related to The Shops at Mohegan Sun and certain
other Mohegan Sun outlets. As of September 30, 2008 and 2007, outstanding tenant loans were $1.4 million and $2.0 million, respectively. These loans mature in periods between three and ten years. These amounts, net of allowance for doubtful
accounts, have been included in other assets in the accompanying consolidated balance sheets.

NOTE 8RELATED PARTY TRANSACTIONS:

The Tribe provides governmental and certain administrative services to the Authority in conjunction with the operation of Mohegan Sun. During the
fiscal years ended September 30, 2008, 2007 and 2006, the Authority incurred $23.9 million, $21.5 million and $19.5 million, respectively, of expenses for such services.

The Tribe has entered into various land lease agreements with the Authority for access, parking and related purposes for Mohegan Sun. The Authority
expensed $209,000, $262,000 and $262,000 relating to these land lease agreements for the fiscal years ended September 30, 2008, 2007 and 2006, respectively. In July 2008, the Authority entered into an additional land lease agreement with the
Tribe relating to property located adjacent to the Tribes reservation that is currently used by Mohegan Suns employees for parking. The land lease agreement requires the Authority to make monthly payments equaling $75,000 until maturity
on June 30, 2018. The



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Authority has classified this lease as a capital lease for financial reporting purposes due to the existence of a bargain purchase option at the expiration
of the lease.

The Authority purchases the majority of its utilities, including electricity, gas, water and waste water services, from an
instrumentality of the Tribe, the Mohegan Tribal Utility Authority. During the fiscal years ended September 30, 2008, 2007 and 2006, the Authority incurred costs of $23.6 million, $23.7 million and $19.7 million, respectively, for such
utilities.

The Tribe previously provided services through its Development Department for projects related to Mohegan Sun. The Development
Department of the Tribe, including personnel assigned to the department, was transferred to the Authority during the fiscal year ended September 30, 2007. Prior to this transfer, the Authority recorded $53,000 and $2.8 million of capital
expenditures associated with the Tribes Development Department for the fiscal years ended September 30, 2007 and 2006, respectively.

In March 2008, MTGA Gaming and the Tribe formed MG&H. The Tribe holds a 51.00% membership interest in MG&H and MTGA Gaming holds the remaining 49.00% interest. In June 2008, the Tribe loaned MG&H $8.3 million, which was used to
fund MG&Hs portion of a Privilege Fee payment to the State of Kansas in connection with MG&Hs unsuccessful effort, ended in September 2008, to secure a gaming license for the development of a gaming facility to be located in the
State of Kansas. The promissory note executed by MG&H in favor of the Tribe (the Mohegan Tribe Promissory Note) provided for the accrual of interest at an annual rate of 12.0% and was due to mature on October 15, 2008. In
September 2008, MG&H repaid the $8.3 million outstanding on the Mohegan Tribe Promissory Note following a refund of the Privilege Fee payment as a result of the selection of another applicant by the Kansas Lottery Gaming Facility Review Board.
During the fiscal year ended September 30, 2008, MG&H incurred $244,000 of interest expense on the Mohegan Tribe Promissory Note.

Roland J. Harris, a member of the Authoritys Management Board, resigned from his position in the Tribal Council, and correspondingly the Management Board, in December 2006 to accept a position as Senior Vice President of Project
Management at the Authority. Mr. Harris subsequently resigned from this position in November 2007.

In August 2006, the Authority
purchased a 5.00% membership interest in Salishan-Mohegan from Mohegan Ventures-NW and sold such 5.00% interest to the Tribe for approximately $351,000, reflecting the carrying value of such interest. In October 2006, a 2.85% membership interest in
Salishan-Mohegan was transferred from Salishan Company to the Tribe, in exchange for the Tribes guarantee of the Salishan Credit Facility. The amount of the membership interest transferred was approximately $197,000, reflecting the carrying
value of the 2.85% interest. Subsequent to this transaction, Mohegan Ventures-NW holds a 49.15% membership interest, the Tribe holds a 7.85% membership interest and Salishan Company holds a 43.00% membership interest in Salishan-Mohegan (see Note
14). Mohegan Ventures-NW and the Tribe continue to each hold one of four seats on the Board of Managers of Salishan-Mohegan.

The Authority
leases the land on which Mohegan Sun is located from the Tribe pursuant to a long-term lease agreement. The Authority is required to pay to the Tribe a nominal annual rental fee under the lease agreement. The lease has an initial term of 25 years
and is renewable for an additional 25-year term upon expiration. Refer to Note 10 for a further discussion of the lease.

In September
1995, the Tribe adopted the Mohegan Tribal Employment Rights Ordinance, as amended from time to time (the TERO), which sets forth hiring and contracting preference requirements for employers and



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



entities conducting business on Tribal lands on or adjacent to the Mohegan Reservation. Pursuant to the TERO, the Authority and other covered employers are
required to give hiring, promotion, training, retention and other employment-related preferences to Native Americans who meet the minimum qualifications for the applicable employment position. However, this preference requirement does not apply to
key employees, as such persons are defined in the TERO.

Similarly, any entity awarding a contract or subcontract valued up to $200,000 to
be performed on Tribal lands must give preference, first, to certified Mohegan entities submitting commercially responsible bids, and second, to other certified Native American entities. This contracting preference is conditioned upon the bid by the
preferred certified entity being within 5% of the lowest bid by a non-certified entity. Contracts in excess of $200,000 are awarded to the lowest commercially responsible bidder, on a competitive basis, with preference to certified Mohegan entities
and then other certified Native American entities in the event of a matching bid. The TERO establishes procedures and requirements for certifying Mohegan entities and other Native American entities. Certification is based largely on the level of
ownership and control exercised by the members of the Tribe or other Native American tribes, as the case may be, over the entity bidding on a contract.

As of September 30, 2008, approximately 130 employees of the Authority were members of the Tribe.

NOTE
9EMPLOYEE BENEFIT PLANS:

The Authority maintains a retirement savings plan for its employees under Section 401(k) and
Section 401(a) of the Internal Revenue Code (the Mohegan Retirement and 401(k) Plan). The 401(k) portion of the plan allows employees of the Authority to defer up to the lesser of the maximum amount prescribed by the Internal
Revenue Code or 25% of their income on a pre-tax basis, through contributions to the 401(k) Plan. The Authority matches 100% of the eligible employees contributions up to a maximum of 3% of their individual earnings. Contributions to the
retirement portion of the plan by the Authority are discretionary and are allocated to eligible employee accounts based on a rate of $0.30 per qualified hour worked. Employees become eligible for the Mohegan Retirement and 401(k) plan after 90 days
of employment and become fully vested after six years of credited service. For the fiscal years ended September 30, 2008, 2007 and 2006, the Authority contributed $11.2 million, $10.2 million and $9.5 million, net of forfeitures, to the Mohegan
Retirement and 401(k) Plan, respectively.

The Authority, together with the Tribe, maintains a non-qualified deferred compensation plan
(the Deferred Compensation Plan) for certain key employees. The Deferred Compensation Plan allows participants to defer up to 100% of their pre-tax income. For the fiscal years ended September 30, 2008, 2007 and 2006, employee
contributions, net of withdrawals and changes in fair value of investments, totaled ($93,000), $2.9 million and $1.9 million, respectively.

NOTE
10COMMITMENTS AND CONTINGENCIES:

The Mohegan Compact

In May 1994, the Tribe and the State of Connecticut entered into a Memorandum of Understanding (MOU) which sets forth certain matters
regarding implementation of the Mohegan Compact. The MOU stipulates that a portion of the revenues earned on slot machines must be paid to the State of Connecticut (Slot Win Contribution). The Slot Win Contribution payments will not be
required if the State of Connecticut legalizes any other gaming operations with slot machines or other commercial casino table games within Connecticut, except those consented to by the Tribe and the Mashantucket Pequot Tribe (MPT). For
each 12-month period commencing July 1, 1995, the Slot Win Contribution shall be the lesser of: (a) 30% of gross revenues from slot machines or (b) the greater of (i) 25% of gross revenues from slot machines or (ii) $80.0
million.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In 2006, the State of Connecticut asserted that Slot Win Contribution payments are required to be
made with respect to free slot promotions, such as the Authoritys e-Bonus program and the MPTs free play program. In December 2006, the State of Connecticut filed suit against the MPT seeking a declaratory
judgment that patrons free play at Foxwoods Resort Casino constitutes a wager for purposes of calculating Slot Win Contribution payments. In October 2007, the Tribe entered into an agreement with the State of
Connecticut to escrow, on a monthly basis, an amount equal to 25% of the value of all e-Bonus plays used by patrons at Mohegan Sun. As a result, during the fiscal year ended September 30, 2008, the Authority reflected expenses associated with
the e-Bonus escrow payments totaling $6.9 million, which is included in the Authoritys Slot Win Contribution for the fiscal year ended September 30, 2008. Pursuant to the escrow agreement, the escrowed funds or a portion thereof
associated with prizes paid for e-Bonus play, plus interest thereon, will either be forwarded to the State of Connecticut or returned to the Authority pending the outcome of the dispute between the Tribe and the State of Connecticut and
the lawsuit against the MPT.

The Authority reflected expenses associated with the Slot Win Contribution and e-Bonus escrow totaling $221.0
million, $230.4 million and $226.3 million for the fiscal years ended September 30, 2008, 2007 and 2006, respectively. As of September 30, 2008 and 2007, outstanding Slot Win Contribution and e-Bonus escrow payments to the State of
Connecticut totaled $17.5 million and $19.3 million, respectively.

Category One Slot Machine License

In September 2006, a conditional Category One slot machine license was granted to Downs Racing by the PGCB for the operation of slot machines at Pocono
Downs. After the satisfaction of certain regulatory conditions and the payment of a one-time slot machine license fee of $50.0 million to the PGCB in October 2006, Downs Racing opened Phase I of its gaming and entertainment facility in November
2006. The PGCB approved a permanent Category One slot machine license for Downs Racing in December 2006. This license initially permits Downs Racing to install and operate up to 3,000 slot machines at Pocono Downs. Under certain circumstances, Downs
Racing may be permitted to install up to a total of 5,000 slot machines.

The Race Horse Development and Gaming Act of 2004 (the
Pennsylvania Gaming Act) stipulates that a portion of the gross revenues earned on slot machines by holders of Category One licenses must be paid to the PGCB on a daily basis, which includes amounts to be paid to the Pennsylvania Harness
Horsemens Association Inc. (the PHHA), and local share assessments to be paid to the host cities and municipalities. The current assessment of the amount payable to the PGCB on a daily basis is 55% of gross slot revenues. In
addition to this daily slot machine tax assessment, Downs Racing must pay, on an annual basis, to the PGCB amounts necessary to ensure that the city and municipality hosting Pocono Downs will receive an annual minimum of $10.0 million from the local
share assessment. The local share assessment is equal to the greater of 2.0% of annual gross slot revenues or $10.0 million. Downs Racing maintains a $5.0 million escrow deposit in the name of the Commonwealth of Pennsylvania for the payment of slot
machine tax assessments to the PGCB, which is included in other assets in the accompanying consolidated balance sheets.

The Authority
reflected expenses associated with the PGCB slot machine and local share tax assessments totaling $103.4 million and $92.2 million for the fiscal years ended September 30, 2008 and 2007, respectively. As of September 30, 2008 and
September 30, 2007, outstanding slot machine and local share tax payments totaled $5.2 million and $6.1 million, respectively.

PGCB Regulatory Fees

In addition to the slot machine tax payments described above, the holders of slot machine licenses are
also required to reimburse the PGCB for administrative and operating expenses incurred. The assessment of this



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



amount on Downs Racing and other slot facility operators is yet to be finalized. Based upon an estimate of Pocono Downs slot machine revenues compared to
current and future licensees in the Commonwealth, Downs Racing is recording expenses associated with the reimbursement of PGCB operating expenses at a rate of 1.5% of gross slot machine revenues. This rate has been approved by the PGCB, which
receives corresponding payments on a weekly basis from Downs Racing. The Authority reflected expenses associated with this fee assessment totaling $2.7 million and $2.4 million for the fiscal years ended September 30, 2008 and 2007,
respectively. As of September 30, 2008 and September 30, 2007, outstanding regulatory fee payments to the PGCB totaled $73,000 and $54,000, respectively. Additionally, in order to fund current operations of the PGCB, two loans in the
amount of $36.0 million and $22.6 million, were granted to the PGCB, and a $7.0 million payment was made to the PGCB by current licensees from gaming tax funds received by the Commonwealth of Pennsylvania. The loans and the $7.0 million payment were
used to cover expenses incurred by the PGCB from inception to June 30, 2008, and are anticipated to be repaid in total by the slot machine licensees once all approved gaming facilities are open. Each licensees share of these costs will be
proportional to each licensees gross slot machine revenues. In January 2007, Downs Racing made a prepayment to the PGCB of $800,000 for a portion of its incurred expenses, which is recorded in prepaid expenses in the accompanying consolidated
balance sheets.

Priority Distribution Agreement

In August 2001, the Authority and the Tribe entered into an agreement (the Priority Distribution Agreement), which obligates the Authority to make monthly payments to the Tribe to the extent of the
Authoritys net cash flow, as defined in the Priority Distribution Agreement. The Priority Distribution Agreement, which has a perpetual term, limits the maximum aggregate payments by the Authority to the Tribe in each calendar year to $14.0
million, as adjusted annually in accordance with the formula specified in the Priority Distribution Agreement to reflect the effects of inflation. However, payments pursuant to the Priority Distribution Agreement do not reduce the Authoritys
obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other agreements with the Tribe. The monthly payments under the Priority Distribution Agreement are limited obligations of
the Authority payable only to the extent of its net cash flow, as defined in the Priority Distribution Agreement, and are not secured by a lien or encumbrance on any assets or property of the Authority. The Authoritys consolidated financial
statements reflect payments associated with the Priority Distribution Agreement of $17.3 million, $16.8 million and $16.3 million for the fiscal years ended September 30, 2008, 2007 and 2006, respectively.

Agreement with the Town of Montville

In June 1994, the Tribe and the Town of Montville (the Town) entered into an agreement whereby the Tribe agreed to pay to the Town an annual payment of $500,000 to minimize the impact on the Town resulting from the decreased tax
revenues on reservation land held in trust. The Tribe assigned its right and obligations in the agreement with the Town to the Authority.

Land Lease from the Tribe to the Authority

The land upon which Mohegan Sun is located is held in trust for the Tribe by the
United States. The Tribe and the Authority have entered into a land lease agreement under which the Tribe leases to the Authority the property and all buildings, improvements and related facilities constructed or installed on the property. The lease
was amended in March 2007 to update the legal description of the property covered under the lease, which was approved by the Secretary of the Interior in April 2007. Summarized below are several key provisions of the lease agreement:



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Term

The term of the lease is 25 years with an option, exercisable by the Authority, to extend the term for one additional 25-year period. Upon the termination of the lease, the Authority will be required to surrender to
the Tribe, possession of the property and improvements, excluding any equipment, furniture, trade fixtures or other personal property.

Rent and Other Operating Expenses

The Authority is required to pay to the Tribe a nominal annual rental fee. For any period
when the Tribe or another agency or instrumentality of the Tribe is not the tenant under the lease, the rent will be 8% of the tenants gross revenues from the premises. The Authority is responsible for the payment of all costs of owning,
operating, constructing, maintaining, repairing, replacing and insuring the leased property.

Use of Leased Property

The Authority may use the leased property and improvements solely for the construction and operation of Mohegan Sun, unless prior approval is obtained
from the Tribe for any proposed alternative use. Similarly, no construction or alteration of any building or improvement located on the leased property by the Authority may be made unless complete and final plans and specifications have been
approved by the Tribe. Following foreclosure of any mortgage on the Authoritys interest under the lease or any transfer of such interest to the holder of such mortgage in lieu of foreclosure, the leased property and improvements may be used
for any lawful purpose, subject only to applicable codes and governmental regulations; provided, however, that a non-Indian holder of the leased property may in no event conduct gaming operations on the property.

Permitted Mortgages and Rights of Permitted Mortgagees

The Authority may not mortgage, pledge or otherwise encumber its leasehold estate in the leased property except to a holder of a permitted mortgage. Under the lease, a permitted mortgage includes the
leasehold mortgage securing the Authoritys obligations under the Bank Credit Facility granted by the Authority that provides, among other things, that (1) the Tribe will have the right to notice of, and to cure, any default of the
Authority, (2) the Tribe will have the right to prior notice of an intention by the holder to foreclose on the permitted mortgage and the right to purchase the mortgage in lieu of any foreclosure, and (3) the permitted mortgage is subject
and subordinated to any and all access and utility easements granted by the Tribe under the lease.

As provided in the lease, each holder
of a permitted mortgage has the right to notice of any default of the Authority under the lease and the opportunity to cure such default within any applicable cure period.

Default Remedies

The Authority will
be in default under the lease if, subject to the notice provisions, it fails to make lease payments or to comply with its covenants under the lease or if it pledges, encumbers or conveys its interest in the lease in violation of the terms of the
lease. Following a default, the Tribe may, with approval from the Secretary of the Interior, terminate the lease unless a permitted mortgage remains outstanding with respect to the leased property. In that case, the Tribe may not (1) terminate
the lease or the Authoritys right to possession of the leased property, (2) exercise any right of re-entry, (3) take possession of and/or relet the leased property or any portion thereof, or (4) enforce any other right or remedy
which may materially and adversely affect the rights of the holder of the permitted mortgage, unless the default triggering such rights was a monetary default which such holder failed to cure after notice.



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ACLS of New England, Inc.

The Authority has a 10-year laundry services agreement with ACLS of New England, Inc. (ACLS). The Authority has an option to renew the
agreement for one additional 10-year term after its expiration in October 2012. Under the laundry services agreement, the Authority will pay an agreed upon rate for laundry services, adjusted annually for the Consumer Price Index and unusual
increases in energy costs. Additionally, the Authority has made a $500,000 loan to ACLS to develop the laundry service facility. Pursuant to the terms of the loan, interest may accrue based on the exercise of the renewal options or other certain
circumstances. In the event that circumstances occur where interest will be accrued, interest shall accrue commencing from the date of the advance at an annual rate of 5%.

The Authority also entered into a co-investment and escrow agreement with the MPT and ACLS. Under the terms of those agreements, the Authority and the
MPT may, under certain circumstances, become the joint owners of the laundry facility and be jointly and severally obligated to repay a term loan which is secured by a mortgage on the laundry facility. The term of the agreements is for ten years
and, if the Authority and the MPT become obligated to repay the term loan, the maximum potential future principal payments (undiscounted) the Authority and the MPT could be required to make are approximately $3.0 million.

Pocono Downs Purchase Settlement

In
August 2006, the Authority and the seller of the Pocono Downs Entities, a subsidiary of Penn National Gaming Inc. (Penn National), entered into an amendment of the Pocono Downs Purchase Agreement. Penn National joined in this amendment
to confirm its continuing guaranty of the performance of its subsidiaries under the Pocono Downs Purchase Agreement, as amended. Pursuant to the amendment, the Authority will receive an aggregate refund of $30.0 million of the original purchase
price for the Pocono Downs Entities, payable in five annual installments of $7.0 million, $7.0 million, $6.5 million, $6.0 million and $3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. The $7.0 million installments due in
November 2007 and 2008 were received on November 14, 2007 and 2008, respectively. Pursuant to the amendment, the seller and the Authority agreed to modify certain provisions of the Pocono Downs Purchase Agreement, including: 1) the elimination
of the Authoritys post-closing termination rights; 2) the elimination of the sellers indemnification obligations for costs in excess of $2.0 million incurred with respect to remedial actions in connection with certain environmental
conditions at Pocono Downs; and 3) the elimination of certain other post-closing indemnification obligations of the seller, including those relating to claims asserted in connection with a specific property tax matter, described below. Pursuant to
SFAS 141, Business Combinations, and other relevant accounting guidance, the $24.5 million present value of the payments for the $30.0 million refund, calculated utilizing the Authoritys risk-free rate of investment, was recorded
as an asset and a non-operating gain in other income upon the execution of the amendment of the Pocono Downs Purchase Agreement. The difference between the present value and the contract value of $30.0 million is recorded as other non-operating
income over the duration of the payment schedule. Accretion of discount to the gain on the Pocono Downs purchase settlement was $1.2 million, $1.6 million and $216,000 for the fiscal years ended September 30, 2008, 2007 and 2006, respectively.
At September 30, 2008 and 2007, the Pocono Downs purchase settlement receivable was $21.3 million and $27.0 million, respectively, and is recorded in other current assets and other assets in the accompanying consolidated balance sheets,
respectively.

Horsemens Agreement

In January 2005, Downs Racing entered into an agreement with the PHHA, which represents owners, trainers and drivers at the Pocono Downs harness racing facility. The agreement governs all live harness racing events
and simulcasting and account wagering conducted at Pocono Downs and the OTW facilities through December 31, 2010.



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Among other things, the agreement provides for the payment of 4.3% of all pari-mutuel wagering held
at the Pocono Downs facilities to the PHHA. This amount comprises the payment of $420,000 in certain operating costs and expenses for the PHHA, with the remainder allocated to purses owed to horsemen for each live racing event. Downs Racing is also
required to distribute to the PHHA, 2.5% and 1.1% in fees earned on live races conducted at Pocono Downs and simulcast to wagering locations inside and outside Pennsylvania, respectively.

Also, as previously described above, the Pennsylvania Gaming Act requires the holders of slot machine licenses to make payments to the PHHA of up to 12%
of slot machine revenues. Pursuant to the terms of the agreement with the PHHA, a liability for amounts due to the PHHA for purses earned by horsemen but not yet paid, and other fees, of $5.4 million and $2.1 million was recorded as of
September 30, 2008 and 2007, respectively.

Pennsylvania Property Tax Litigation

A final settlement was reached in June 2007 between the various parties involved in a dispute with Downs Racing, relating to certain property tax
assessments, in Wilkes-Barre, Pennsylvania. Based on the settlement, Downs Racing is required to make agreed upon payments to the Wilkes-Barre Area School District for each tax year through 2015 totaling $18.2 million. Downs Racing made payments,
pursuant to the settlement, of $1.6 million and $3.5 million for the fiscal years ended September 30, 2008 and 2007, respectively, which are recorded as charges to the Authoritys income from operations in the respective accompanying
statements of income. The total amount of the remaining payments is $16.6 million.

Project Horizon Suspension

On September 22, 2008, the Authority announced the suspension of the Earth Expansion component of Project Horizon, including the hotel, related
retail and parking garage improvements, as a result of the ongoing national economic recession. As of September 30, 2008, the Authority has incurred approximately $58.0 million for the Earth Expansion relating to the excavation and foundation
work for the planned podium and hotel tower, as well as professional fees for design and architectural work performed. Incurred costs will remain on the Authoritys respective balance sheet as long as the Project remains suspended. While the
Authority plans to re-evaluate the suspended elements of Project Horizon in approximately 12 months, it can provide no assurances as to if or when such suspended elements will resume. The following information summarizes the contingencies with
respect to Project Horizon:

Severance

The Authority may terminate certain construction-related employees due to the suspension of the project. The costs associated with their post-employment severance benefits will be expensed at the time the termination
is communicated to the employees.

Construction Materials

Certain construction materials purchased for Project Horizon may no longer be useful if we do not resume the project. The costs for such materials will be
expensed at such time it is determined they no longer have a future benefit or value to the Authority.

Construction and Other
Agreements

The Authority has entered into certain construction agreements in connection with Project Horizon which allow for
termination of the agreements without cause. In the event of termination of such contracts, the



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Authority is obligated to pay only for those costs incurred through the date of termination and, in some cases, certain costs related to termination.
However, such termination costs are not expected to be material.

The Authority also has entered into certain other agreements relating to
Project Horizon, including services and leasing agreements. The Authority does not believe that any of these other agreements will give rise to liabilities that are likely to have a material adverse effect on the Authoritys financial position.

The Authority can provide no assurances that any actual costs associated with the termination of agreements resulting from the suspension
of Project Horizon will approximate estimated costs or that such costs will commence when anticipated. Costs relating to the termination of agreements will be expensed at such time the contracts are terminated and the costs are incurred.

Construction Insurance

Effective
June 1, 2007, the Authority obtained construction insurance coverage from various insurance carriers in connection with Project Horizon. All premiums have been fully paid through October 6, 2010. As of September 30, 2008, aggregate
outstanding premiums total $2.6 million. The Authority is currently negotiating with its insurance carriers to revise the coverage period.

Other Litigation

The Authority is a defendant in certain litigation incurred in the normal course of business. In the
opinion of management, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the Authoritys financial position, results of operations or cash flows.

NOTE 11RELINQUISHMENT AGREEMENT:

In
February 1998, the Authority and TCA entered into a relinquishment agreement (the Relinquishment Agreement or the Agreement). Effective January 1, 2000 (the Relinquishment Date), the Relinquishment Agreement
superseded a then existing management agreement with TCA. The Relinquishment Agreement provides, among other things, that the Authority will make certain payments to TCA out of, and determined as a percentage of, Revenues, as defined in the
Relinquishment Agreement, generated by Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments (Senior Relinquishment Payments and Junior Relinquishment Payments) have separate schedules and
priority. Senior Relinquishment Payments commenced on April 25, 2000, twenty-five days following the end of the first three-month period after the Relinquishment Date and continue at the end of each three-month period thereafter until
January 25, 2015. Junior Relinquishment Payments commenced on July 25, 2000, twenty-five days following the end of the first six-month period after the Relinquishment Date and continue at the end of each six-month period thereafter until
January 25, 2015. Each Senior Relinquishment Payment and Junior Relinquishment Payment is an amount equal to 2.5% of the Revenues generated by Mohegan Sun over the immediately preceding three-month or six-month payment period, as the case may
be. Revenues are defined in the Relinquishment Agreement as gross gaming revenues, other than Class II gaming revenue, and all other revenues, as defined, including, without limitation, hotel revenues, room service, food and beverage sales, ticket
revenues, fees or receipts from convention/events center and all rental or other receipts from lessees and concessionaires but not the gross receipts of such lessees, licenses and concessionaires, derived directly or indirectly from the facilities,
as defined. Revenues under the relinquishment agreement exclude revenues generated from certain expansion areas of Mohegan Sun, such as the Casino of the Wind, as such areas do not constitute facilities as defined.

In the event of any bankruptcy, liquidation or reorganization or similar proceeding relating to the Authority, the Relinquishment Agreement provides that
each of the Senior and Junior Relinquishment Payments then due



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and owing are subordinated in right to payment of senior secured obligations, which include the Bank Credit Facility and capital lease obligations, and that
the Junior Relinquishment Payments then due and owing are further subordinated to payment of all other senior obligations, including the Authoritys 2005 Senior Notes. The Relinquishment Agreement also provides that all relinquishment payments
are subordinated in right of payment to the minimum priority distribution payments, which are monthly payments required to be made by the Authority to the Tribe, to the extent then due. The Authority, in accordance with SFAS No. 5, has recorded
a relinquishment liability of the estimated present value of its obligations under the Relinquishment Agreement (see Note 2).

A
relinquishment liability of $549.1 million was established at September 30, 1998 based on the present value of the estimated future Mohegan Sun revenues utilizing the Authoritys risk-free investment rate. At September 30, 2008, the
carrying amount of the relinquishment liability was $385.4 million as compared to $503.3 million at September 30, 2007. The decrease in the relinquishment liability during the fiscal year ended September 30, 2008 is due to $76.1 million in
relinquishment payments made during the fiscal year and a $68.9 million relinquishment liability reassessment credit, offset by $27.1 million representing the accretion of discount to the relinquishment liability.

The following relinquishment payments were made during our fiscal years ended (millions):



|                                            |  |      |      |      |   |      |  |   |     
|------------------------------------------- |  | ---- | ---- | ---- | - | ---- |  | - | ----
|                                            |  | 2008 |      | 2007 |   | 2006
|Payments representing principal amounts     |  | $    | 48.4 |      | $ | 47.5 |  | $ | 44.7
|Payments representing accretion of discount |  |      | 27.7 |      |   | 30.0 |  |   | 29.9
|                                            |  |      |      |      |   |      |  |   |     
|Total payments                              |  | $    | 76.1 |      | $ | 77.5 |  | $ | 74.6
|                                            |  |      |      |      |   |      |  |   |     

The accretion of discount to the relinquishment liability reflects the accretion of the discount
to the present value of the relinquishment liability for the impact of the time value of money. At September 30, 2008 and September 30, 2007, relinquishment payments earned but unpaid were $17.4 million and $20.8 million, respectively.

The relinquishment liability reassessment credit of $68.9 million for the fiscal year ended September 30, 2008 and the relinquishment
liability reassessment charges of $3.0 million and $39.4 million for the fiscal years ended September 30, 2007 and 2006, respectively, resulted from revised Mohegan Sun revenue projections as of the end of the respective fiscal year compared to
estimates of Mohegan Sun revenue projections as of the end of the prior fiscal year on the determination of the relinquishment liability.

In fiscal year 2008, based on the Authoritys suspension of Project Horizon, recent operating trends and increased competition in the Northeast gaming market, all having the effect of decreasing estimated future Mohegan Sun revenues,
the Authority concluded that projected revenues from Mohegan Sun subject to the Relinquishment Agreement over the remaining period of the Agreement, which expires on December 31, 2014, would decrease by approximately $1.55 billion, thereby
decreasing the related relinquishment liability, causing the Authority to record a non-cash relinquishment liability credit of $68.9 million for the fiscal year ended September 30, 2008.

In fiscal year 2007, based on updated projections for Project Horizon and delayed competition in the Northeast gaming market, both having the effect of
increasing future Mohegan Sun revenues, the Authority concluded that projected revenues from Mohegan Sun subject to the Relinquishment Agreement over the remaining period of the Agreement would increase by approximately $139.8 million, thereby
increasing the related relinquishment liability, causing the Authority to record a non-cash relinquishment liability charge of $3.0 million for the fiscal year ended September 30, 2007.



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In fiscal year 2006, the Authority reviewed current revenue forecasts, including estimated timing and
extent of future competition, and significantly increased revenue projections for the period in which the Relinquishment Agreement applies, primarily due to the approval by the Management Board of the Authority in October 2006 of an expansion of
Mohegan Sun referred to as Project Horizon, and managements estimates of the impact this expansion will have on future competition assumptions. The Authority concluded that projected revenues from Mohegan Sun subject to the
Relinquishment Agreement over the remaining period of the Agreement would increase by approximately $878.2 million, thereby increasing the related relinquishment liability, causing the Authority to record a non-cash relinquishment liability charge
of $39.4 million for the fiscal year ended September 30, 2006.

NOTE 12MOHEGAN GOLF, LLC:

In November 2006, the Authority formed a wholly owned subsidiary, Mohegan Golf, to purchase and operate a golf course in southeastern Connecticut. Mohegan
Golf is a full and unconditional guarantor of the Authoritys outstanding indebtedness under the Bank Credit Facility and senior and senior subordinated notes. Refer to Note 18 for consolidating financial information of the Authority, its
guarantor subsidiaries and its non-guarantor entities.

In May 2007, Mohegan Golf acquired substantially all of the assets of PCC, which
included a golf course located in Sprague and Franklin, Connecticut. The club was renamed Mohegan Sun Country Club at Pautipaug and opened in June 2007. Mohegan Golf incurred acquisition costs of $4.7 million for the property and other items
acquired from PCC, which was allocated among the following assets and liabilities: (1) property and equipment valued at $3.1 million; (2) a membership intangible asset resulting from the contractual agreement with PCCs members
established at the time of acquisition, valued at $1.7 million; (3) current assets of $210,000; (4) environmental obligations of $300,000; and (5) capital lease obligations of $34,000. The membership intangible asset will be amortized
on a straight line basis over its estimated useful life of fifteen years and will be periodically reviewed for impairment in accordance with SFAS 142. As of September 30, 2008 and 2007, accumulated amortization on the membership intangible
asset was $155,000 and $43,000, respectively. The Authority expects to incur $113,000 in amortization expense for each of the next five years related to the membership intangible asset. The results of operations for Mohegan Sun Country Club are
included in the accompanying consolidated financial statements for the fiscal year ended September 30, 2008 and from date of acquisition (May 17, 2007) through September 30, 2007. Pro forma operating results for the 2007 acquisition are
not presented because the results would not be materially different from historical results.

NOTE 13MOHEGAN VENTURES WISCONSIN, LLC (MENOMINEE
PROJECT):

In October 2004, the Authority entered into a management agreement with the Menominee Tribe and the Menominee Kenosha Gaming
Authority (MKGA). The terms of the management agreement grant the Authority the exclusive right and obligation to manage, operate and maintain the Menominee Project, a planned casino and destination resort to be located in Kenosha,
Wisconsin, for a period of seven years commencing with the opening of the planned casino, in consideration of a management fee of 13.4% of Net Revenues, as defined in the management agreement, which approximates net income earned from the Menominee
Project. The management agreement is subject to approval by the National Indian Gaming Commission (the NIGC).

In March 2007,
the Authority formed a wholly owned subsidiary, MVW, one of two members in WTG. MVW holds an 85.4% membership interest in WTG and MV holds the remaining 14.6% membership interest. MVW and WTG are full and unconditional guarantors of the
Authoritys outstanding indebtedness under the Bank Credit Facility and senior and senior subordinated notes. Refer to Note 18 for consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor entities.



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In March 2007, WTG purchased the development rights for the Menominee Project, along with certain
other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC (KGD). As a result of the purchase, the Authority and the Mohegan Tribe, through MVW and MV, respectively, will receive development fees payable to WTG of
13.4% of Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and MKGA, which approximates net income from the Menominee Project over a period of seven years following the opening of the casino. Development of the
Menominee Project is subject to certain governmental and regulatory approvals, including but not limited to, the United States Department of the Interior accepting new land into trust for gaming at the project site in Kenosha, Wisconsin.

WTG paid $6.4 million in cash for the casino development rights and other items acquired from KGD, which was allocated among the following assets and
liabilities: (1) receivables at fair value from MKGA of $4.4 million for project advances; (2) a development rights intangible asset valued at $3.7 million; (3) a note payable to MV of $1.1 million; and (4) a note payable to MKGA
of $600,000. The purchase amount was contributed by MVW in return for its initial membership interest in WTG, and MV converted the $1.1 million receivable from WTG to capital in return for its initial membership interest in WTG. At acquisition, the
development rights intangible asset was determined to be amortized on a straight line basis over its estimated useful life of seven years, which was anticipated to commence upon the opening of the proposed casino. However, during 2008, it was
determined by management, pursuant to SFAS 142, that the development rights intangible asset was fully impaired following the issuance of stricter criteria by the Bureau of Indian Affairs on its policy for taking off-reservation land into trust for
gaming purposes and an unfavorable decision by the United States Department of the Interior to reject the Menominee Tribes request to suspend review of the Menominee Tribes application to take off-reservation land into trust in
connection with the Menominee Project and a federal courts subsequent refusal to issue a temporary restraining order to prevent the United States Department of the Interior from taking further action on the application. While the Authority
expects to continue to support and pursue the Menominee Project, it believes, these actions decreased the probability that the Menominee Tribe will obtain the necessary regulatory approvals in order to proceed with the Menominee Project. As a result
of the Authority have fully reserved the WTG receivables pertaining to reimbursable development costs and expenses in connection with the Menominee Project of $8.1 million and have written-off the related development rights intangible asset of $3.7
million. The $5.8 million adjustment to the allowance on future collection of reimbursable development costs and expenses and the $3.7 million loss associated with the write-off are included in Corporate expenses and depreciation and amortization,
respectively, in the accompanying consolidated statement of income for the fiscal year ended September 30, 2008.

NOTE 14MOHEGAN
VENTURES-NORTHWEST, LLC (COWLITZ PROJECT):

In July 2004, the Authority formed Mohegan Ventures-NW as its wholly owned subsidiary and
one of three members in Salishan-Mohegan. Salishan-Mohegan was formed to participate in the Cowlitz Project, a proposed development and management of a casino to be located in Clark County, Washington, and owned by the Cowlitz Tribe. Mohegan
Ventures-NW holds a 49.15% membership interest, the Mohegan Tribe holds a 7.85% membership interest and Salishan Company holds a 43.0% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Mohegan Tribe each hold one of four seats on
the Board of Managers of Salishan-Mohegan. Salishan-Mohegan is not a restricted entity of the Authority and therefore is not required to be a guarantor of the Authoritys debt obligations. Refer to Note 18 for consolidating financial
information of the Authority, its guarantor subsidiaries and its non-guarantor entities.

Upon formation of Salishan-Mohegan, Salishan
Company contributed land purchase options related to property in Clark County, Washington. In January 2006, pursuant to the option agreements, Salishan-Mohegan exercised certain of these options and purchased two respective parcels for $7.5 million,
including closing costs for purposes of the Cowlitz Project. In April 2006, Salishan-Mohegan closed on the remaining option and



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purchased the respective parcel for $3.2 million, including closing costs and net of total purchase option payments made in prior periods of $1.6 million.
The option agreements also required a cumulative payment of $2.4 million for fees related to extending the options to purchase all three parcels, which were due at the closing of the last parcel.

Pursuant to the development agreement described below, the notes receivable contributed to Salishan-Mohegan and amounts paid by Salishan-Mohegan
subsequent to formation related to the development of the Cowlitz Project are reimbursable to Salishan-Mohegan by the Cowlitz Tribe, subject to appropriate approvals defined in the development agreement. Reimbursements are contingent and are to be
distributed upon: (1) the receipt of necessary financing for the development of the proposed casino and (2) the property being taken into trust by the United States Department of the Interior. The receivables bear interest at the Wall
Street Journal Prime Rate plus 2% or 3%, compounded annually. As of September 30, 2008 and 2007, receivables, including accrued interest, from the Cowlitz Tribe totaled $25.0 million and $20.1 million, respectively, offset by reserves of $7.5
million and $6.0 million, respectively, which are recorded in the accompanying consolidated balance sheets.

In September 2004,
Salishan-Mohegan entered into development and management agreements with the Cowlitz Tribe regarding the Cowlitz Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing, development,
construction, and furnishing, as well as providing assistance with the financing, of the Cowlitz Project. The development agreement provides for certain development fees of 3% of total Project Costs, as defined in the development agreement, which
are to be distributed to Mohegan VenturesNW and the Mohegan Tribe pursuant to the Salishan-Mohegan operating agreement. As of April 2006, Salishan-Mohegan purchased the land to be used as the site for the planned casino, which will be
transferred to the Cowlitz Tribe or the United States under certain conditions in the development agreement. The management agreement is for a period of seven years commencing with the opening of the planned casino, during which Salishan-Mohegan
will manage, operate and maintain the planned casino. The management agreement provides for a management fee of 24% of Net Revenues, as defined in the management agreement, which approximates net income from the Cowlitz Project. Pursuant to the
operating agreement, management fees will be allocated to the members of Salishan-Mohegan based on their respective membership percentages. Development of the Cowlitz Project is subject to certain governmental and regulatory approvals, including,
but not limited to, negotiating a gaming compact with the State of Washington and the United States Department of the Interior accepting land into trust on behalf of the Cowlitz Tribe. The management agreement is subject to approval by the NIGC.

In May 2008, the BIA published a final rule relating to gaming on trust lands acquired after October 17, 1988. The new rule
addresses, among other things, the process used by the BIA to determine what lands should be taken into trust for an initial reservation or restored lands for a tribe, such as the Cowlitz Tribe seeking its initial or restored reservation. The new
rule also expressly provides that a tribe may rely on earlier final agency decisions, including decisions of the NIGC. In November 2005, the Cowlitz Tribe received an opinion from the NIGC determining that if the BIA takes the Cowlitz Project site
into trust, the land will constitute restored lands of the Cowlitz Tribe. As a result of this opinion by the NIGC, the additional analysis called for under the new rule is not expected to apply to the BIAs decision for the Cowlitz Tribe. In
May 2008, the BIA published a Final Environmental Impact Statement for the Cowlitz Project site.

NOTE 15INVESTMENT IN WNBA FRANCHISE:

In January 2003, the Authority formed a wholly owned subsidiary, MBC, for the purpose of owning and operating a professional basketball
team in the WNBA. In January 2003, the Authority and MBC entered into the Membership Agreement with WNBA, LLC. The Membership Agreement sets forth the terms and conditions pursuant to which MBC acquired a membership in the WNBA and the right to own
and operate a professional



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



basketball team in the WNBA. The Authority guaranteed the obligations of MBC under the Membership Agreement. MBC is a full and unconditional guarantor of the
Authoritys outstanding indebtedness under the Bank Credit Facility and senior and senior subordinated notes. Refer to Note 18 for consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor entities.

As part of the acquisition, management, with the assistance from an independent valuation firm, estimated the fair value of the initial
player roster to be $4.8 million, and the remaining $5.5 million of MBCs aggregate investment was recognized as a franchise value, both of which are recorded as intangible assets in the accompanying consolidated balance sheets. The player
roster value is being amortized over seven years, and the franchise value is being amortized over thirty years. Since the date of acquisition to September 30, 2008, write-offs of player contracts included on the initial player roster totals
$3.5 million. As of September 30, 2008 and 2007, accumulated amortization on the player roster value was $1.0 million and $1.3 million, respectively. As of September 30, 2008 and 2007, accumulated amortization on the franchise value was
$1.0 million and $854,000, respectively. For the fiscal years ended September 30, 2008, 2007 and 2006, amortization expense associated with these intangible assets totaled $598,000, $531,000 and $918,000, respectively, including charges
totaling $192,000, $58,000 and $405,000 related to net write-offs of certain player contracts included on the initial player roster for the fiscal years ended September 30, 2008, 2007 and 2006, respectively. The Authority expects to incur
amortization expense of $364,000 for each of the next two years, $243,000 in the third year and $183,000 in the fourth and fifth years, related to these assets.

In connection with MBCs purchase of the membership in the WNBA, MBC has an approximately 3.6% ownership position in WNBA, LLC, which is being accounted for under the cost method. Under the Limited Liability
Company Agreement of WNBA, LLC, if at any time WNBA, LLCs Board of Governors determines that additional funds are necessary or desirable for the WNBA, LLCs or any league entitys general business, the Board of Governors may require
additional cash capital contributions. In that circumstance, each member of the league shall be obligated to contribute to WNBA, LLC an amount of cash equal to that members proportionate share of ownership. Pursuant to the WNBA Note, the
principal payment due on the WNBA Note after any such contribution made by MBC will be reduced by the contribution amount. Through September 30, 2008, there were no cash capital contributions required by WNBA, LLC.

NOTE 16DISCONTINUED OPERATIONS:

Prior to the
Authoritys acquisition of the Pocono Downs Entities, Penn National, the former owner of the Pocono Downs Entities, entered into an agreement to sell all of the assets associated with the OTW facility located in Erie, Pennsylvania to MTR Gaming
Group, Inc. and Presque Isle Downs, Inc. (collectively Presque Isle) for $7.0 million upon the occurrence of either of the following two conditions: (1) the commencement by any of the Presque Isle entities of pari-mutuel wagering in
Erie, Pennsylvania or (2) the receipt by any Presque Isle entity of revenue from slot machine operations in Erie, Pennsylvania. Penn National assigned its rights to proceeds under this agreement to Downs Racing upon its acquisition by the
Authority.

In October 2006, the PGCB granted Presque Isle a conditional license to operate slot machines at Presque Isle Downs in Erie
County, Pennsylvania. In February 2007, Presque Isle opened slot machine gaming operations at the Erie property. In July 2007, Presque Isle commenced pari-mutuel wagering at Presque Isle Downs and paid Downs Racing $7.0 million in return for the
conveyance of the Erie OTW facility, pursuant to the terms of the agreement. The Authority has accordingly reported the results and sale of its Erie OTW facility from its Pocono Downs operating segment as income from discontinued operations and loss
on sale of discontinued operations, respectively, in the accompanying consolidated statements of income, which includes total net revenues from the Erie OTW facility of $2.6 million and $3.4 million for the fiscal years ended September 30, 2007
and 2006. As of September 30, 2006, assets held for sale totaled $7.1 million, which were comprised of the property and equipment of the Erie OTW operations, net of accumulated depreciation.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 17SEGMENT REPORTING:

As of September 30, 2008, the Authority owns and operates Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun Country Club at Pautipaug in Connecticut (the Connecticut Entities), and
the Pocono Downs Entities. All of the Authoritys revenues are derived from these operations. The Authoritys executive officers review and assess the performance and operating results and determine the proper allocation of resources to
the Connecticut Entities and the Pocono Downs Entities on a separate basis. The Authority, therefore, believes that it has two operating segments, one comprised solely of Mohegan Sun, which includes the operations of the Connecticut Entities, and
another, referred to as Pocono Downs herein, comprised of the operations of the Pocono Downs Entities. The two operating segments are also separate reportable segments due to the differing nature of their operations. The following tables
provide financial information on each segment (in thousands):



|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|----------------------------------------------------------- |  | ---------------------------------------- | --------- | - | ----------------- | - | --------- | ---- |  | - | --------- | -
|                                                            |  | For the Fiscal Years Ended September 30, |          
|                                                            |  | 2008 (1)                                 |           |   | 2007 (2)          |   |           | 2006 | 
|Net revenues:                                               |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Mohegan Sun                                                 |  | $                                        | 1,362,945 |   |                   | $ | 1,430,560 |      |  | $ | 1,392,958 |  
|Pocono Downs                                                |  |                                          | 209,238   |   |                   |   | 189,506   |      |  |   | 30,096    |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Total                                                       |  |                                          | 1,572,183 |   |                   |   | 1,620,066 |      |  |   | 1,423,054 |  
|Income (loss) from operations:                              |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Mohegan Sun                                                 |  |                                          | 280,232   |   |                   |   | 287,017   |      |  |   | 267,415   |  
|Pocono Downs                                                |  |                                          | 12,093    |   |                   |   | 16,137    |      |  |   | (7,547    | )
|Corporate                                                   |  |                                          | (28,959   | ) |                   |   | (10,586   | )    |  |   | (10,636   | )
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Total                                                       |  |                                          | 263,366   |   |                   |   | 292,568   |      |  |   | 249,232   |  
|Accretion of discount to the relinquishment liability       |  |                                          | (27,085   | ) |                   |   | (29,794   | )    |  |   | (30,707   | )
|Interest income                                             |  |                                          | 3,795     |   |                   |   | 3,695     |      |  |   | 2,245     |  
|Interest expense, net of capitalized interest               |  |                                          | (93,793   | ) |                   |   | (94,363   | )    |  |   | (90,928   | )
|Write-off of debt issuance costs                            |  |                                          |          |   |                   |   | (71       | )    |  |   |          |  
|Other income (expense), net                                 |  |                                          | 248       |   |                   |   | (137      | )    |  |   | 24,508    |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Income from continuing operations before minority interests |  |                                          | 146,531   |   |                   |   | 171,898   |      |  |   | 154,350   |  
|Minority interests                                          |  |                                          | 2,729     |   |                   |   | 648       |      |  |   | 420       |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Income from continuing operations                           |  |                                          | 149,260   |   |                   |   | 172,546   |      |  |   | 154,770   |  
|Total income from discontinued operations                   |  |                                          |          |   |                   |   | 21        |      |  |   | 147       |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Net income                                                  |  | $                                        | 149,260   |   |                   | $ | 172,567   |      |  | $ | 154,917   |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|                                                            | 
|                                                            |  | For the Fiscal Years Ended September 30, |          
|                                                            |  | 2008                                     |           |   | 2007              |   |           | 2006 | 
|Capital expenditures:                                       |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Mohegan Sun                                                 |  | $                                        | 210,482   |   |                   | $ | 103,742   |      |  | $ | 44,375    |  
|Pocono Downs                                                |  |                                          | 173,184   |   |                   |   | 58,449    |      |  |   | 44,448    |  
|Corporate                                                   |  |                                          | 22        |   |                   |   | 4         |      |  |   | 13,097    |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Total                                                       |  | $                                        | 383,688   |   |                   | $ | 162,195   |      |  | $ | 101,920   |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|                                                            |  |                                          |          
|                                                            |  | September 30,2008                        |           |   | September 30,2007 |   |           |      | 
|Total assets:                                               |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Mohegan Sun                                                 |  | $                                        | 1,654,704 |   |                   | $ | 1,540,349 |      |  |   |           |  
|Pocono Downs (including goodwill of $39,459)                |  |                                          | 619,712   |   |                   |   | 444,206   |      |  |   |           |  
|Corporate                                                   |  |                                          | 88,489    |   |                   |   | 95,422    |      |  |   |           |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  
|Total                                                       |  | $                                        | 2,362,905 |   |                   | $ | 2,079,977 |      |  |   |           |  
|                                                            |  |                                          |           |   |                   |   |           |      |  |   |           |  



|(1) | Includes operating results of Project Sunrise from opening date of July 17, 2008 to September 30, 2008 & Casino of the Wind from opening date of August 29, 2008 to September 30,
2008.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 18SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:

As of September 30, 2008, substantially all of the Authoritys outstanding public debt, including its 2005 Senior Notes, 2002 Senior
Subordinated Notes, 2003 Senior Subordinated Notes, 2004 Senior Subordinated Notes and 2005 Senior Subordinated Notes, is fully and unconditionally guaranteed by the following subsidiaries of the Authority: MBC, Mohegan Ventures-NW, MCV-PA, the
Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. MBC is the only subsidiary guarantor, on a full and unconditional basis, of the 2001 Senior Subordinated Notes. Separate financial statements and other disclosures concerning MBC,
Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are not presented below because the Authority believes that the summarized financial information provided below and in Note 18 is adequate for investor
analysis of these subsidiaries. Condensed consolidating financial statement information for the Authority, MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG, MTGA Gaming and the non-guarantor entities,
Salishan-Mohegan, MG&H, Mohegan Resorts, MRK and MRM, as of September 30, 2008 and September 30, 2007 and for the fiscal years ended September 30, 2008, 2007 and 2006 is as follows (in thousands):

CONDENSED CONSOLIDATING BALANCE SHEETS



|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|------------------------------------------------ |  | ------------------------ | --------- | --------------------- | - | --------------------- |  | ------------------------------------ | ------ |  | ----------------- | -------- | - |  | - | ---------
|                                                 |  | As of September 30, 2008
|                                                 |  | Authority                |           | GuarantorSubsidiaries |   | Non-GuarantorEntities |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal
|ASSETS                                           |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Property and equipment, net                      |  | $                        | 1,393,035 |                       | $ | 280,416               |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,693,402
|Intercompany receivables                         |  |                          | 416,132   |                       |   | 12,052                |  |                                      |       |  |                   | (428,184 | ) |  |   |         
|Investment in subsidiaries                       |  |                          | 176,266   |                       |   | 3,140                 |  |                                      |       |  |                   | (179,406 | ) |  |   |         
|Other intangible assets, net                     |  |                          | 119,827   |                       |   | 270,230               |  |                                      |       |  |                   |         |   |  |   | 390,057  
|Other assets, net                                |  |                          | 177,712   |                       |   | 81,659                |  |                                      | 20,075 |  |                   |         |   |  |   | 279,446  
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total assets                                     |  | $                        | 2,282,972 |                       | $ | 647,497               |  | $                                    | 40,026 |  | $                 | (607,590 | ) |  | $ | 2,362,905
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|LIABILITIES AND CAPITAL                          |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total current liabilities                        |  | $                        | 323,697   |                       | $ | 52,816                |  | $                                    | 21,575 |  | $                 |         |   |  | $ | 398,088  
|Long-term debt, net of current portion           |  |                          | 1,519,714 |                       |   | 2,600                 |  |                                      |       |  |                   |         |   |  |   | 1,522,314
|Relinquishment liability, net of current portion |  |                          | 304,031   |                       |   |                      |  |                                      |       |  |                   |         |   |  |   | 304,031  
|Intercompany payables                            |  |                          |          |                       |   | 416,132               |  |                                      | 12,052 |  |                   | (428,184 | ) |  |   |         
|Other long-term liabilities                      |  |                          | 7,203     |                       |   |                      |  |                                      |       |  |                   |         |   |  |   | 7,203    
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities                                |  |                          | 2,154,645 |                       |   | 471,548               |  |                                      | 33,627 |  |                   | (428,184 | ) |  |   | 2,231,636
|Minority interests in subsidiaries               |  |                          |          |                       |   |                      |  |                                      |       |  |                   | 3,258    |   |  |   | 3,258    
|Total capital                                    |  |                          | 128,327   |                       |   | 175,949               |  |                                      | 6,399  |  |                   | (182,664 | ) |  |   | 128,011  
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities and capital                    |  | $                        | 2,282,972 |                       | $ | 647,497               |  | $                                    | 40,026 |  | $                 | (607,590 | ) |  | $ | 2,362,905
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|                                                 | 
|                                                 |  | As of September 30, 2007
|                                                 |  | Authority                |           | GuarantorSubsidiaries |   | Non-GuarantorEntity   |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal
|ASSETS                                           |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Property and equipment, net                      |  | $                        | 1,260,092 |                       | $ | 121,163               |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,401,206
|Intercompany receivables                         |  |                          | 220,006   |                       |   | 10,372                |  |                                      |       |  |                   | (230,378 | ) |  |   |         
|Investment in subsidiaries                       |  |                          | 214,011   |                       |   | 2,788                 |  |                                      |       |  |                   | (216,799 | ) |  |   |         
|Other intangible assets, net                     |  |                          | 119,827   |                       |   | 274,650               |  |                                      |       |  |                   |         |   |  |   | 394,477  
|Other assets, net                                |  |                          | 200,534   |                       |   | 69,491                |  |                                      | 14,269 |  |                   |         |   |  |   | 284,294  
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total assets                                     |  | $                        | 2,014,470 |                       | $ | 478,464               |  | $                                    | 34,220 |  | $                 | (447,177 | ) |  | $ | 2,079,977
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|LIABILITIES AND CAPITAL                          |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total current liabilities                        |  | $                        | 292,551   |                       | $ | 40,119                |  | $                                    | 921    |  | $                 |         |   |  | $ | 333,591  
|Long-term debt, net of current portion           |  |                          | 1,255,259 |                       |   | 3,600                 |  |                                      | 17,250 |  |                   |         |   |  |   | 1,276,109
|Relinquishment liability, net of current portion |  |                          | 406,858   |                       |   |                      |  |                                      |       |  |                   |         |   |  |   | 406,858  
|Intercompany payables                            |  |                          |          |                       |   | 220,006               |  |                                      | 10,372 |  |                   | (230,378 | ) |  |   |         
|Other long-term liabilities                      |  |                          | 735       |                       |   |                      |  |                                      |       |  |                   |         |   |  |   | 735      
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities                                |  |                          | 1,955,403 |                       |   | 263,725               |  |                                      | 28,543 |  |                   | (230,378 | ) |  |   | 2,017,293
|Minority interests in subsidiaries               |  |                          |          |                       |   | 1,043                 |  |                                      |       |  |                   | 2,890    |   |  |   | 3,933    
|Total capital                                    |  |                          | 59,067    |                       |   | 213,696               |  |                                      | 5,677  |  |                   | (219,689 | ) |  |   | 58,751   
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities and capital                    |  | $                        | 2,014,470 |                       | $ | 478,464               |  | $                                    | 34,220 |  | $                 | (447,177 | ) |  | $ | 2,079,977
|                                                 |  |                          |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING STATEMENTS OF INCOME



|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|------------------------------------------------------------------ |  | -------------------------------------------- | --------- | - | --------------------- | - | ------- | --------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                   |  | For the Fiscal Year Ended September 30, 2008 |          
|                                                                   |  | Authority                                    |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                       |  | $                                            | 1,358,388 |   |                       | $ | 215,578 |                       |  | $ |                                     |   |  | $                 | (1,783 | ) |  | $ | 1,572,183 |  
|Operating costs and expenses:                                      |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                        |  |                                              | 855,268   |   |                       |   | 162,662 |                       |  |   |                                     |   |  |                   | (1,783 | ) |  |   | 1,016,147 |  
|Advertising, general and administrative                            |  |                                              | 219,179   |   |                       |   | 32,701  |                       |  |   | 2,715                                |   |  |                   |       |   |  |   | 254,595   |  
|Pre-opening costs and expenses                                     |  |                                              | 1,204     |   |                       |   | 3,448   |                       |  |   |                                     |   |  |                   |       |   |  |   | 4,652     |  
|Depreciation and amortization                                      |  |                                              | 83,528    |   |                       |   | 18,842  |                       |  |   |                                     |   |  |                   |       |   |  |   | 102,370   |  
|Relinquishment liability reassessment                              |  |                                              | (68,947   | ) |                       |   |        |                       |  |   |                                     |   |  |                   |       |   |  |   | (68,947   | )
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                 |  |                                              | 1,090,232 |   |                       |   | 217,653 |                       |  |   | 2,715                                |   |  |                   | (1,783 | ) |  |   | 1,308,817 |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                      |  |                                              | 268,156   |   |                       |   | (2,075  | )                     |  |   | (2,715                               | ) |  |                   |       |   |  |   | 263,366   |  
|Accretion of discount to the relinquishment liability              |  |                                              | (27,085   | ) |                       |   |        |                       |  |   |                                     |   |  |                   |       |   |  |   | (27,085   | )
|Interest expense, net of capitalized interest                      |  |                                              | (52,718   | ) |                       |   | (39,331 | )                     |  |   | (2,586                               | ) |  |                   | 842    |   |  |   | (93,793   | )
|Loss on interests in subsidiaries                                  |  |                                              | (39,734   | ) |                       |   | (1,361  | )                     |  |   |                                     |   |  |                   | 41,095 |   |  |   |          |  
|Other income, net                                                  |  |                                              | 641       |   |                       |   | 1,990   |                       |  |   | 2,254                                |   |  |                   | (842   | ) |  |   | 4,043     |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interests |  |                                              | 149,260   |   |                       |   | (40,777 | )                     |  |   | (3,047                               | ) |  |                   | 41,095 |   |  |   | 146,531   |  
|Minority interests                                                 |  |                                              |          |   |                       |   | 1,043   |                       |  |   | 269                                  |   |  |                   | 1,417  |   |  |   | 2,729     |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                  |  | $                                            | 149,260   |   |                       | $ | (39,734 | )                     |  | $ | (2,778                               | ) |  | $                 | 42,512 |   |  | $ | 149,260   |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|                                                                   | 
|                                                                   |  | For the Fiscal Year Ended September 30, 2007 |          
|                                                                   |  | Authority                                    |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntity   |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                       |  | $                                            | 1,426,401 |   |                       | $ | 195,167 |                       |  | $ |                                     |   |  | $                 | (1,502 | ) |  | $ | 1,620,066 |  
|Operating costs and expenses:                                      |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                        |  |                                              | 842,843   |   |                       |   | 143,885 |                       |  |   |                                     |   |  |                   | (1,502 | ) |  |   | 985,226   |  
|Advertising, general and administrative                            |  |                                              | 216,737   |   |                       |   | 23,351  |                       |  |   | 2,004                                |   |  |                   |       |   |  |   | 242,092   |  
|Pre-opening costs and expenses                                     |  |                                              | 445       |   |                       |   | 3,391   |                       |  |   |                                     |   |  |                   |       |   |  |   | 3,836     |  
|Depreciation and amortization                                      |  |                                              | 81,950    |   |                       |   | 11,397  |                       |  |   |                                     |   |  |                   |       |   |  |   | 93,347    |  
|Relinquishment liability reassessment                              |  |                                              | 2,997     |   |                       |   |        |                       |  |   |                                     |   |  |                   |       |   |  |   | 2,997     |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                 |  |                                              | 1,144,972 |   |                       |   | 182,024 |                       |  |   | 2,004                                |   |  |                   | (1,502 | ) |  |   | 1,327,498 |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                      |  |                                              | 281,429   |   |                       |   | 13,143  |                       |  |   | (2,004                               | ) |  |                   |       |   |  |   | 292,568   |  
|Accretion of discount to the relinquishment liability              |  |                                              | (29,794   | ) |                       |   |        |                       |  |   |                                     |   |  |                   |       |   |  |   | (29,794   | )
|Interest expense, net of capitalized interest                      |  |                                              | (56,843   | ) |                       |   | (36,232 | )                     |  |   | (2,324                               | ) |  |                   | 1,036  |   |  |   | (94,363   | )
|Loss on interests in subsidiaries                                  |  |                                              | (22,139   | ) |                       |   | (570    | )                     |  |   |                                     |   |  |                   | 22,709 |   |  |   |          |  
|Other income (expense), net                                        |  |                                              | (86       | ) |                       |   | 1,442   |                       |  |   | 3,167                                |   |  |                   | (1,036 | ) |  |   | 3,487     |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interests |  |                                              | 172,567   |   |                       |   | (22,217 | )                     |  |   | (1,161                               | ) |  |                   | 22,709 |   |  |   | 171,898   |  
|Minority interests                                                 |  |                                              |          |   |                       |   | 57      |                       |  |   |                                     |   |  |                   | 591    |   |  |   | 648       |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations                           |  |                                              | 172,567   |   |                       |   | (22,160 | )                     |  |   | (1,161                               | ) |  |                   | 23,300 |   |  |   | 172,546   |  
|Income from discontinued operations                                |  |                                              |          |   |                       |   | 21      |                       |  |   |                                     |   |  |                   |       |   |  |   | 21        |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                  |  | $                                            | 172,567   |   |                       | $ | (22,139 | )                     |  | $ | (1,161                               | ) |  | $                 | 23,300 |   |  | $ | 172,567   |  
|                                                                   |  |                                              |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  



F-41



---

##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                                  |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|----------------------------------------------------------------- |  | -------------------------------------------- | --------- | - | --------------------- | - | ------- | ------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                  |  | For the Fiscal Year Ended September 30, 2006 |          
|                                                                  |  | Authority                                    |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntity |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                      |  | $                                            | 1,389,629 |   |                       | $ | 34,627  |                     |  | $ |                                     |   |  | $                 | (1,202 | ) |  | $ | 1,423,054 |  
|Operating costs and expenses:                                     |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                       |  |                                              | 804,522   |   |                       |   | 26,269  |                     |  |   |                                     |   |  |                   | (1,202 | ) |  |   | 829,589   |  
|Advertising, general and administrative                           |  |                                              | 199,780   |   |                       |   | 10,129  |                     |  |   | 1,771                                |   |  |                   |       |   |  |   | 211,680   |  
|Pre-opening costs and expenses                                    |  |                                              |          |   |                       |   | 5,130   |                     |  |   |                                     |   |  |                   |       |   |  |   | 5,130     |  
|Depreciation and amortization                                     |  |                                              | 84,473    |   |                       |   | 3,543   |                     |  |   |                                     |   |  |                   |       |   |  |   | 88,016    |  
|Relinquishment liability reassessment                             |  |                                              | 39,407    |   |                       |   |        |                     |  |   |                                     |   |  |                   |       |   |  |   | 39,407    |  
|                                                                  |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                |  |                                              | 1,128,182 |   |                       |   | 45,071  |                     |  |   | 1,771                                |   |  |                   | (1,202 | ) |  |   | 1,173,822 |  
|                                                                  |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                     |  |                                              | 261,447   |   |                       |   | (10,444 | )                   |  |   | (1,771                               | ) |  |                   |       |   |  |   | 249,232   |  
|Accretion of discount to the relinquishment liability             |  |                                              | (30,707   | ) |                       |   |        |                     |  |   |                                     |   |  |                   |       |   |  |   | (30,707   | )
|Interest expense, net of capitalized interest                     |  |                                              | (64,983   | ) |                       |   | (25,945 | )                   |  |   | (1,203                               | ) |  |                   | 1,203  |   |  |   | (90,928   | )
|Loss on interests in subsidiaries                                 |  |                                              | (35,469   | ) |                       |   | (484    | )                   |  |   |                                     |   |  |                   | 35,953 |   |  |   |          |  
|Other income, net                                                 |  |                                              | 24,629    |   |                       |   | 1,257   |                     |  |   | 2,070                                |   |  |                   | (1,203 | ) |  |   | 26,753    |  
|                                                                  |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interest |  |                                              | 154,917   |   |                       |   | (35,616 | )                   |  |   | (904                                 | ) |  |                   | 35,953 |   |  |   | 154,350   |  
|Minority interest                                                 |  |                                              |          |   |                       |   |        |                     |  |   |                                     |   |  |                   | 420    |   |  |   | 420       |  
|                                                                  |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations                          |  |                                              | 154,917   |   |                       |   | (35,616 | )                   |  |   | (904                                 | ) |  |                   | 36,373 |   |  |   | 154,770   |  
|Income from discontinued operations                               |  |                                              |          |   |                       |   | 147     |                     |  |   |                                     |   |  |                   |       |   |  |   | 147       |  
|                                                                  |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                 |  | $                                            | 154,917   |   |                       | $ | (35,469 | )                   |  | $ | (904                                 | ) |  | $                 | 36,373 |   |  | $ | 154,917   |  
|                                                                  |  |                                              |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|----------------------------------------------------------- |  | -------------------------------------------- | -------- | - | --------------------- | - | -------- | --------------------- |  | - | ------------------------------------ | - |  | ----------------- | -------- | - |  | - | -------- | -
|                                                            |  | For the Fiscal Year Ended September 30, 2008 |         
|                                                            |  | Authority                                    |          |   | GuarantorSubsidiaries |   |          | Non-GuarantorEntities |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |         
|Net cash flows provided by (used in) operating activities   |  | $                                            | 151,596  |   |                       | $ | 24,998   |                       |  | $ | (3,503                               | ) |  | $                 |         |   |  | $ | 173,091  |  
|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Purchases of property and equipment                         |  |                                              | (161,321 | ) |                       |   | (156,108 | )                     |  |   |                                     |   |  |                   |         |   |  |   | (317,429 | )
|Other cash flows used in investing activities               |  |                                              | (145,425 | ) |                       |   | (6,056   | )                     |  |   | (2,602                               | ) |  |                   | 150,762  |   |  |   | (3,321   | )
|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                              | (306,746 | ) |                       |   | (162,164 | )                     |  |   | (2,602                               | ) |  |                   | 150,762  |   |  |   | (320,750 | )
|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Bank Credit Facility borrowingsrevolving loan              |  |                                              | 575,000  |   |                       |   |         |                       |  |   |                                     |   |  |                   |         |   |  |   | 575,000  |  
|Bank Credit Facility repaymentsrevolving loan              |  |                                              | (608,000 | ) |                       |   |         |                       |  |   |                                     |   |  |                   |         |   |  |   | (608,000 | )
|Bank Credit Facility borrowingsterm loan                   |  |                                              | 300,000  |   |                       |   |         |                       |  |   |                                     |   |  |                   |         |   |  |   | 300,000  |  
|Line of Credit borrowings                                   |  |                                              | 565,746  |   |                       |   |         |                       |  |   |                                     |   |  |                   |         |   |  |   | 565,746  |  
|Line of Credit repayments                                   |  |                                              | (579,399 | ) |                       |   |         |                       |  |   |                                     |   |  |                   |         |   |  |   | (579,399 | )
|Principal portion of relinquishment liability payments      |  |                                              | (48,352  | ) |                       |   |         |                       |  |   |                                     |   |  |                   |         |   |  |   | (48,352  | )
|Distributions to Tribe                                      |  |                                              | (80,000  | ) |                       |   |         |                       |  |   |                                     |   |  |                   |         |   |  |   | (80,000  | )
|Other cash flows provided by (used in) financing activities |  |                                              | (4,397   | ) |                       |   | 148,924  |                       |  |   | 8,087                                |   |  |                   | (150,762 | ) |  |   | 1,852    |  
|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net cash flows provided by financing activities             |  |                                              | 120,598  |   |                       |   | 148,924  |                       |  |   | 8,087                                |   |  |                   | (150,762 | ) |  |   | 126,847  |  
|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents        |  |                                              | (34,552  | ) |                       |   | 11,758   |                       |  |   | 1,982                                |   |  |                   |         |   |  |   | (20,812  | )
|Cash and cash equivalents at beginning of year              |  |                                              | 89,282   |   |                       |   | 15,370   |                       |  |   | 7                                    |   |  |                   |         |   |  |   | 104,659  |  
|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash and cash equivalents at end of year                    |  | $                                            | 54,730   |   |                       | $ | 27,128   |                       |  | $ | 1,989                                |   |  | $                 |         |   |  | $ | 83,847   |  
|                                                            |  |                                              |          |   |                       |   |          |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  



F-42



---

##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|----------------------------------------------------------- |  | -------------------------------------------- | -------- | - | --------------------- | - | ------- | ------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------- | - |  | - | -------- | -
|                                                            |  | For the Fiscal Year Ended September 30, 2007 |         
|                                                            |  | Authority                                    |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntity |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |        
|Net cash flows provided by (used in) operating activities   |  | $                                            | 248,594  |   |                       | $ | 36,950  |                     |  | $ | (1,141                               | ) |  | $                 |        |   |  | $ | 284,403  |  
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Purchases of property and equipment                         |  |                                              | (88,091  | ) |                       |   | (45,773 | )                   |  |   |                                     |   |  |                   |        |   |  |   | (133,864 | )
|Payment of Category One slot machine license fee            |  |                                              |         |   |                       |   | (50,000 | )                   |  |   |                                     |   |  |                   |        |   |  |   | (50,000  | )
|Other cash flows provided by (used in) investing activities |  |                                              | (67,483  | ) |                       |   | 3,918   |                     |  |   | (3,444                               | ) |  |                   | 62,106  |   |  |   | (4,903   | )
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                              | (155,574 | ) |                       |   | (91,855 | )                   |  |   | (3,444                               | ) |  |                   | 62,106  |   |  |   | (188,767 | )
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan        |  |                                              | 278,000  |   |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | 278,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan        |  |                                              | (278,000 | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (278,000 | )
|New Bank Credit Facility borrowingsrevolving loan          |  |                                              | 206,000  |   |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | 206,000  |  
|New Bank Credit Facility repaymentsrevolving loan          |  |                                              | (173,000 | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (173,000 | )
|Line of credit borrowings                                   |  |                                              | 524,313  |   |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | 524,313  |  
|Line of credit repayments                                   |  |                                              | (507,722 | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (507,722 | )
|Principal portion of relinquishment liability payments      |  |                                              | (47,399  | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (47,399  | )
|Distributions to Tribe                                      |  |                                              | (75,000  | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (75,000  | )
|Other cash flows provided by (used in) financing activities |  |                                              | (6,724   | ) |                       |   | 70,823  |                     |  |   | 4,592                                |   |  |                   | (62,106 | ) |  |   | 6,585    |  
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows provided by (used in) financing activities   |  |                                              | (79,532  | ) |                       |   | 70,823  |                     |  |   | 4,592                                |   |  |                   | (62,106 | ) |  |   | (66,223  | )
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net increase in cash and cash equivalents                   |  |                                              | 13,488   |   |                       |   | 15,918  |                     |  |   | 7                                    |   |  |                   |        |   |  |   | 29,413   |  
|Cash and cash equivalents at beginning of year              |  |                                              | 75,794   |   |                       |   | (548    | )                   |  |   |                                     |   |  |                   |        |   |  |   | 75,246   |  
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash and cash equivalents at end of year                    |  | $                                            | 89,282   |   |                       | $ | 15,370  |                     |  | $ | 7                                    |   |  | $                 |        |   |  | $ | 104,659  |  
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|                                                            | 
|                                                            |  | For the Fiscal Year Ended September 30, 2006 |         
|                                                            |  | Authority                                    |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntity |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |        
|Net cash flows provided by (used in) operating activities   |  | $                                            | 263,215  |   |                       | $ | (8,959  | )                   |  | $ | 4                                    |   |  | $                 |        |   |  | $ | 254,260  |  
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Purchases of property and equipment                         |  |                                              | (46,478  | ) |                       |   | (42,326 | )                   |  |   | (13,082                              | ) |  |                   |         |   |  |   | (101,886 | )
|Other cash flows used in investing activities               |  |                                              | (64,846  | ) |                       |   | (15,157 | )                   |  |   | (3,405                               | ) |  |                   | 81,130  |   |  |   | (2,278   | )
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                              | (111,324 | ) |                       |   | (57,483 | )                   |  |   | (16,487                              | ) |  |                   | 81,130  |   |  |   | (104,164 | )
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Bank Credit Facility borrowingsrevolving loan              |  |                                              | 233,000  |   |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | 233,000  |  
|Bank Credit Facility repaymentsrevolving loan              |  |                                              | (233,000 | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (233,000 | )
|Line of credit borrowings                                   |  |                                              | 444,226  |   |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | 444,226  |  
|Line of credit repayments                                   |  |                                              | (444,226 | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (444,226 | )
|Principal portion of relinquishment liability payments      |  |                                              | (44,731  | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (44,731  | )
|Distributions to Tribe                                      |  |                                              | (88,900  | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (88,900  | )
|Other cash flows provided by (used in) financing activities |  |                                              | (13,970  | ) |                       |   | 64,973  |                     |  |   | 16,483                               |   |  |                   | (81,130 | ) |  |   | (13,644  | )
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows provided by (used in) financing activities   |  |                                              | (147,601 | ) |                       |   | 64,973  |                     |  |   | 16,483                               |   |  |                   | (81,130 | ) |  |   | (147,275 | )
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents        |  |                                              | 4,290    |   |                       |   | (1,469  | )                   |  |   |                                     |   |  |                   |        |   |  |   | 2,821    |  
|Cash and cash equivalents at beginning of year              |  |                                              | 71,504   |   |                       |   | 921     |                     |  |   |                                     |   |  |                   |        |   |  |   | 72,425   |  
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash and cash equivalents at end of year                    |  | $                                            | 75,794   |   |                       | $ | (548    | )                   |  | $ |                                     |   |  | $                 |        |   |  | $ | 75,246   |  
|                                                            |  |                                              |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 19SUBSEQUENT EVENTS:

Massachusetts Ground Lease

In October 2008, MRM entered into a ground lease agreement with a land
owner for approximately 152 acres of land located in Palmer, Massachusetts, which would serve as a potential site for future gaming development, if legalized in Massachusetts. The lease may be terminated at MRMs discretion under certain
circumstances. The initial lease term is 50 years, with options for an extension of 25 years and an additional extension of 24 years, subject to the terms and conditions of the lease.

Amended Bank Credit Facility

On
December 10, 2008, the Authority entered into an amendment to the terms of its Bank Credit Facility pursuant to the Amended Bank Credit Facility, in connection with the suspension of certain elements of the Authoritys Project Horizon
expansion. Among other things, the Amended Bank Credit Facility reduced the overall size of the credit facility from $1.0 billion to $850.0 million, with the $150.0 million reduction being applied to reduce the existing $300.0 million term loan via
incremental funding under the revolver, and reduced the increase option from $250.0 million to $150.0 million. The term loan requires principal payments in quarterly installments of $750,000 beginning December 31, 2008 through June 30,
2010. In the event the term loan has not been paid in full prior to June 30, 2010, the amortization rate under the Amended Bank Credit Facility increases to $30.0 million per quarter beginning June 30, 2010, with an automatic and permanent
reduction of the revolver by such amount after payment in full of the term loan. The maturity date of the Amended Bank Credit Facility is March 9, 2012, upon which date the remaining balances outstanding on the term loan and any revolving loans
are payable.

The Amended Bank Credit Facility will be used for working capital and other business purposes of the Authority. Pursuant to
the amendment, the proceeds of the Amended Bank Credit Facility may also be used to repay the 2003 Senior Subordinated Notes at maturity on July 15, 2009. Permitted capital expenditures for Project Horizon have been reduced under the Amended
Bank Credit Facility from $950.0 million to $350.0 million, and certain investments and other capital expenditures have additionally been limited.

The Authoritys total leverage, senior leverage and minimum fixed charge coverage ratio covenants have been modified under the Amended Bank Credit Facility to conform with the current construction plans for Project Horizon and recent
operating trends. The amendment also modified the interest rate margins and fee rates under the credit facility. Pursuant to the Amended Bank Credit Facility, the applicable spread for base rate advances is between 2.250% and 3.250% in the event the
term loan remains outstanding, and between 0.750% and 2.250% after the term loan has been repaid in full; the applicable spread for Eurodollar rate advances is between 3.500% and 4.500% if the term loan remains outstanding, and between 2.000% and
3.500% after payment of the term loan in full. The applicable spread for commitment fees is 0.500% in the event the term loan remains outstanding and between 0.200% and 0.500% after the term loan has been repaid in full. The base rate is the higher
of Bank of Americas announced prime rate, the Eurodollar rate (as defined in the Amended Bank Credit Facility) for one-month contracts plus 1.250% or the federal funds rate plus 0.50%. Interest on Eurodollar loans is payable at the end of each
applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears.

Receivables

On December 23, 2008, the Authority increased the allowance for doubtful accounts pertaining to a gaming
receivable held at September 30, 2008 based on information that became known at that date. This resulted in a $3.5 million charge, which has been reflected in the accompanying consolidated financial statements.



F-44



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2008, 2007 and 2006

(in thousands)



|                                                      |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|----------------------------------------------------- |  | --------------------------- | ------ | ---------------------------- | - | --------------------------- |  | ---------------------- | --- |  | - | ------
|                                                      |  | Column A                    |        | Column B                     |   | Column C                    |  | Column D              
|                                                      |  | Balance at beginningof year |        | Charges to costsand expenses |   | Deductions fromreserves (1) |  | Balances at endof year
|Description:                                          |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|Fiscal Year Ended September 30, 2008                  |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|Reserves and allowances deducted from asset accounts: |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|Reserves for uncollectibleaccounts                    |  | $                           | 11,214 |                              | $ | 18,338                      |  | $                      | 986 |  | $ | 28,566
|Fiscal Year Ended September 30, 2007                  |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|Reserves and allowances deducted from asset accounts: |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|Reserves for uncollectibleaccounts                    |  | $                           | 8,116  |                              | $ | 3,396                       |  | $                      | 298 |  | $ | 11,214
|Fiscal Year Ended September 30, 2006                  |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|Reserves and allowances deducted from asset accounts: |  |                             |        |                              |   |                             |  |                        |     |  |   |       
|Reserves for uncollectibleaccounts                    |  | $                           | 4,992  |                              | $ | 3,557                       |  | $                      | 433 |  | $ | 8,116 



|Note (1): | Deductions from reserves include the write-off of uncollectible accounts, net of recoveries of accounts previously written off.
|--------- | -------------------------------------------------------------------------------------------------------------------------------



S-1



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##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                  
|3.1         |  | Constitution of the Mohegan Tribe of Indians of Connecticut, as amended (filed as Exhibit 3.1 to the Authoritys Registration Statement on Form S-4, filed with the SEC on November 1, 2004
(the 2004 Form S-4), and incorporated by reference herein).                                                    
|            | 
|3.2         |  | Ordinance No. 95-2 of the Tribe for Gaming on Tribal Lands, enacted on July 15, 1995 (filed as Exhibit 3.2 to the Authoritys Amendment No. 1 to the Authoritys Registration Statement
on Form S-1, filed with the SEC on February 29, 1996 (the 1996 Forms S-1), and incorporated by reference herein).  
|            | 
|3.3         |  | Articles of Organization of Mohegan Basketball Club LLC, dated as of January 27, 2003 (filed as Exhibit 3.3 to the Authoritys Registration Statement on Form S-4, filed with the SEC on
September 23, 2003 (the 2003 Form S-4), and incorporated by reference herein).                                    
|            | 
|3.4         |  | Operating Agreement of Mohegan Basketball Club LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of January 24, 2003 (filed as Exhibit 3.4 to the 2003 Form S-4,
and incorporated by reference herein).                                                                     
|            | 
|3.5         |  | Certificate of Organization of Mohegan Commercial Ventures PA, LLC, dated as of January 6, 2005, as amended (filed as Exhibit 3.5 to the Authoritys Registration Statement on Form S-4,
filed with the SEC on June 7, 2005 (the 2005 Senior Subordinated Form S-4), and incorporated by reference herein).
|            | 
|3.6         |  | Operating Agreement of Mohegan Commercial Ventures PA, LLC, a Commonwealth of Pennsylvania limited liability company, dated as of December 15, 2004 (filed as Exhibit 3.6 to the 2005 Senior
Subordinated Form S-4, and incorporated by reference herein).                                                   
|            | 
|3.7         |  | Certificate of Limited Partnership of Downs Racing, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.7 to the 2005 Senior Subordinated Form S-4, and incorporated by reference
herein).                                                                                                     
|            | 
|3.8         |  | Amended and Restated Limited Partnership Agreement of Downs Racing, L.P., dated as of January 25, 2005 (filed as Exhibit 3.8 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                                
|            | 
|3.9         |  | Certificate of Limited Partnership of Backside, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.9 to the 2005 Senior Subordinated Form S-4, and incorporated by reference
herein).                                                                                                         
|            | 
|3.10        |  | Amended and Restated Limited Partnership Agreement of Backside, L.P., dated as of January 25, 2005 (filed as Exhibit 3.10 to the 2005 Senior Subordinated Form S-4, and incorporated by reference
herein).                                                                                                   
|            | 
|3.11        |  | Certificate of Limited Partnership of Mill Creek Land, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.11 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                                 
|            | 
|3.12        |  | Amended and Restated Limited Partnership Agreement of Mill Creek Land, L.P., dated as of January 25, 2005 (filed as Exhibit 3.12 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                            
|            | 
|3.13        |  | Certificate of Limited Partnership of Northeast Concessions, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.13 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                           
|            | 
|3.14        |  | Amended and Restated Limited Partnership Agreement of Northeast Concessions, L.P., dated as of January 25, 2005 (filed as Exhibit 3.14 to the 2005 Senior Subordinated Form S-4, and incorporated
by reference herein).                                                                                      



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.15        |  | Articles of Organization of Mohegan Ventures-Northwest, LLC, dated as of July 23, 2004 (filed as Exhibit 3.15 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2006, filed with the SEC on August 10, 2006 (the June 2006 10-Q), and incorporated by reference herein).                                                                                                                                                                        
|            | 
|3.16        |  | Operating Agreement of Mohegan Ventures-Northwest, LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of July 23, 2004 (filed as Exhibit 3.16 to the June 2006
10-Q and incorporated by reference herein).                                                                                                                                                                                                                                               
|            | 
|3.17        |  | Articles of Organization of Mohegan Golf, LLC, dated as of November 20, 2006 (filed as Exhibit 3.17 to the Authoritys Annual Report on Form 10-K for the fiscal year ended
September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).                                                                                                                                                                                                          
|            | 
|3.18        |  | Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of February 27, 2007 (filed as Exhibit 3.18 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).                                                                                                                                                                        
|            | 
|3.19        |  | Articles of Organization of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.19 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).                                                                                                                                                                         
|            | 
|3.20        |  | Certificate of Formation of MTGA Gaming, LLC, dated as of July 27, 2007 2006 (filed as Exhibit 3.20 to the Authoritys Annual Report on Form 10-K for the fiscal year ended
September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).                                                                                                                                                                                                          
|            | 
|3.21        |  | Articles of Amendment of Mohegan Golf, LLC, dated as of April 8, 2008 (filed as Exhibit 3.18 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008,
filed with the SEC on May 15, 2008 (the March 2008 10-Q), and incorporated by reference herein).                                                                                                                                                                                          
|            | 
|4.1         |  | Relinquishment Agreement, dated February 7, 1998, by and among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit
10.14 to the Authoritys Form 10-K405 for the fiscal year ended September 30, 1998, filed with the SEC on December 29, 1998, and incorporated by reference herein).                                                                                                                        
|            | 
|4.2         |  | Indenture, dated as of July 26, 2001, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the
83/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.9 to the Authoritys
Registration Statement on Form S-4, File No. 333-69472, filed with the SEC on September 14, 2001 (the 2001 Form S-4), and incorporated by reference herein).
|            | 
|4.3         |  | Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture)
and the State Street Bank and Trust Company, as Trustee, relating to the 83/8% Senior Subordinated Notes Due 2011 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.12 to the June 2003 10-Q, and incorporated by reference herein).                                            
|            | 
|4.4         |  | Second Supplemental Indenture, dated as of July 28, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to
State Street Bank and Trust Company), as Trustee, relating to the 83/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal
Gaming Authority (filed as Exhibit 4.9 to the June 2004 10-Q and incorporated by reference herein).                                                            
|            | 
|4.5         |  | Form of Global 83/8% Senior Subordinated Notes Due 2011 of the Mohegan
Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.9 to the 2001 Form S-4, and incorporated by reference herein).                                                                                                                                                                                                                                                                             



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.6         |  | Indenture, dated as of February 20, 2002, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to
the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the Authoritys Registration Statement on Form S-4, filed with the SEC on March 27, 2002 (the 2002 Form S-4), and
incorporated by reference herein).                                                                                                                                                                                                                            
|            | 
|4.7         |  | Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the
Indenture) and the State Street Bank and Trust Company, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                     
|            | 
|4.8         |  | Amended and Restated Supplemental Indenture, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor
to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.14 to the Authoritys Quarterly Report on Form 10-Q for the quarter ended
December 31, 2004, filed with the SEC on February 14, 2005 (the December 2004 10-Q), and incorporated by reference herein).                                                                                                               
|            | 
|4.9         |  | Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State
Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.15 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                 
|            | 
|4.10        |  | Supplemental Indenture No. 3, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association
(as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the December 2004 10-Q, and incorporated by reference
herein).                                                                                                                                                                                                                                    
|            | 
|4.11        |  | Supplemental Indenture No. 4, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as
Exhibit 4.11 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.12        |  | Supplemental Indenture No. 5, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to
the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).                                                                   
|            | 
|4.13        |  | Supplemental Indenture No. 6, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.13 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference
herein).



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.14        |  | Supplemental Indenture No. 7, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.14 to the
Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).                   
|            | 
|4.15        |  | Form of Global 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.12 to the 2002 Form S-4, and incorporated by reference
herein).                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|4.16        |  | Indenture, dated as of July 9, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as
Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19
to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                               
|            | 
|4.17        |  | Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the
63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the December 2004
10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                 
|            | 
|4.18        |  | Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National
Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed
as Exhibit 4.21 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                    
|            | 
|4.19        |  | Supplemental Indenture No. 3, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior
Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.20        |  | Supplemental Indenture No. 4, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due
2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.18 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference
herein).                                                                   
|            | 
|4.21        |  | Supplemental Indenture No. 5, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the
SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).
|            | 
|4.22        |  | Supplemental Indenture No. 6, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of
the Mohegan Tribal Gaming Authority (filed as Exhibit 4.22 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference
herein).                                                                      



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.23        |  | Form of Global 63/8% Senior Subordinated Notes Due 2009 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|4.24        |  | Indenture, dated as of August 3, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as
Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19
to the June 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                             
|            | 
|4.25        |  | Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National
Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed
as Exhibit 4.25 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                    
|            | 
|4.26        |  | Supplemental Indenture No. 2, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior
Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.27        |  | Supplemental Indenture No. 3, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due
2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference
herein).                                                                   
|            | 
|4.28        |  | Supplemental Indenture No. 4, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the
SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).
|            | 
|4.29        |  | Supplemental Indenture No. 5, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of
the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference
herein).                                                                      
|            | 
|4.30        |  | Form of Global 71/8% Senior Subordinated Notes Due 2014 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|4.31        |  | Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and
U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 (filed as Exhibit 4.28 to
the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                  
|            | 
|4.32        |  | Supplemental Indenture No. 1, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior
Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.33        |  | Supplemental Indenture No. 2, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due
2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.27 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference
herein).                                                                                                            
|            | 
|4.34        |  | Supplemental Indenture No. 3, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the
SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).                                         
|            | 
|4.35        |  | Supplemental Indenture No. 4, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 of
the Mohegan Tribal Gaming Authority (filed as Exhibit 4.35 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference
herein).                                                                                                               
|            | 
|4.36        |  | Form of Global 67/8% Senior Subordinated Notes Due 2015 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.29 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|4.37        |  | Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and
Wachovia Bank, National Association, as Trustee, relating to the 61/8% Senior Notes Due 2013 (filed as Exhibit 4.31 to the
December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                   
|            | 
|4.38        |  | Supplemental Indenture No. 1, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.39        |  | Supplemental Indenture No. 2, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21,
2006, and incorporated by reference herein).                                                                   
|            | 
|4.40        |  | Supplemental Indenture No. 3, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.36 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.41        |  | Supplemental Indenture No. 4, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to 61/8% Senior Notes Due 2013 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.41 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference
herein).
|            | 
|4.42        |  | Form of Global 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming
Authority (filed as Exhibit 4.32 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|10.1        |  | The Mohegan TribeState of Connecticut Gaming Compact between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut (filed as Exhibit 10.1 to the 1996 Form S-1 and
incorporated herein by reference).                                                                                                                                                                                                                                                                                                                            
|            | 
|10.2        |  | Agreement, dated April 25, 1994, between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut resolving certain land claims (filed as Exhibit 10.2 to the 1996 Form S-1
and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                   
|            | 
|10.3        |  | Memorandum of Understanding, dated April 25, 1994, between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut regarding implementation of the Compact and the Resolution
Agreement (filed as Exhibit 10.3 to the 1996 Form S-1 and incorporated herein by reference).                                                                                                                                                                                                                                                          
|            | 
|10.4        |  | Agreement, dated June 16, 1994, between the Mohegan Tribe of Indians of Connecticut and the Town of Montville, Connecticut (filed as Exhibit 10.4 to the 1996 Form S-1, and incorporated herein by
reference).                                                                                                                                                                                                                                                                                                                                       
|            | 
|10.5        |  | Land Lease, dated September 29, 1995, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.5 to the 1996 Form S-1, and incorporated
herein by reference).                                                                                                                                                                                                                                                                                                                                
|            | 
|10.6        |  | Amendment to the Land Lease, dated February 19, 1999, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.6 to the 1999
Form S-4, and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                
|            | 
|10.7        |  | Amendment to the Land Lease, dated March 6, 2007, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.1 to the Authoritys
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007, filed with the SEC on August 13, 2007 (the June 2007 10-Q), and incorporated herein by reference).                                                                                                                                                                             
|            | 
|10.8        |  | The Merrill Lynch Non-Qualified Deferred Compensation Plan Trust Agreement, dated September 1, 1998, between the Mohegan Tribal Gaming Authority and Merrill Lynch Trust (filed as Exhibit
10.16 to the 1998 Form 10-K, and incorporated by reference herein). *                                                                                                                                                                                                                                                                                     
|            | 
|10.9        |  | Priority Distribution Agreement between the Mohegan Tribal Gaming Authority and the Mohegan Tribe of Indians of Connecticut, dated August 1, 2001 (filed as Exhibit 10.1 to the Authoritys
Quarterly Report on Form 10-Q for the period ended June 30, 2001 (the June 2001 10-Q), and incorporated by reference herein).                                                                                                                                                                                                                          



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                       
|10.10       |  | Employment Agreement, dated October 4, 2001, by and between the Mohegan Tribal Gaming Authority and Robert Soper (filed as Exhibit 10.23 to the 2001 10-K/A, and incorporated by reference
herein). *                                                                                                             
|            | 
|10.11       |  | Membership Agreement, dated January 28, 2003, by and among WNBA, LLC, the Mohegan Basketball Club LLC, the Mohegan Tribal Gaming Authority and the Mohegan Tribe of Indians of Connecticut (filed
as Exhibit 10.1 to the Form 8-K filed with the SEC on January 30, 2003, and incorporated by reference herein).  
|            | 
|10.12       |  | Loan Agreement, dated June 27, 2003, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.2 to the June 2003 10-Q, and incorporated by reference
herein).                                                                                                                         
|            | 
|10.13       |  | Revolving Loan Note, dated June 27, 2003, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.3 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                    
|            | 
|10.14       |  | First Amendment to Loan Agreement, dated June 11, 2004, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.1 to the June 2004 10-Q, and incorporated by
reference herein).                                                                                                      
|            | 
|10.15       |  | Second Amendment to Loan Agreement, dated June 22, 2004, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.2 to the June 2004 10-Q, and incorporated by
reference herein).                                                                                                     
|            | 
|10.16       |  | Management Agreement between The Cowlitz Indian Tribe and Salishan-Mohegan, LLC, dated September 21, 2004 (filed as Exhibit 10.30 to the Authoritys Registration Statement on Form S-4, File
No. 333-120119, filed with the SEC on November 1, 2004 (the 2004 Form S-4), and incorporated by reference herein).
|            | 
|10.17       |  | Development Agreement between The Cowlitz Indian Tribe and Salishan-Mohegan, LLC, dated September 21, 2004 (filed as Exhibit 10.31 to the 2004 Form S-4, and incorporated by reference herein).                                                                                                                   
|            | 
|10.18       |  | Purchase Agreement by and among PNGI Pocono Corp., PNGI, LLC, and Mohegan Tribal Gaming Authority as of October 14, 2004 (filed as Exhibit 10.2 to the Form 8-K filed with the SEC on October 18,
2004, and incorporated by reference herein).                                                                    
|            | 
|10.19       |  | Third Amendment to Loan Agreement, dated August 31, 2004, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.34 to the 2004 Form S-4, and incorporated by
reference herein).                                                                                                    



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.20       |  | Management Agreement by and among the Menominee Indian Tribe of Wisconsin, the Menominee Kenosha Gaming Authority and the Mohegan Tribal Gaming Authority, dated October 21, 2004 (filed as
Exhibit 10.35 to the 2004 Form S-4, and incorporated by reference herein).                                                                                                                                                                                                                                            
|            | 
|10.21       |  | Trust Agreement under The Mohegan Retirement and 401(k) Plan dated July 1, 2005 between the Mohegan Tribe of Indians of Connecticut and Merrill Lynch Trust Company, FSB (filed as Exhibit 10.30
to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2005, filed with the SEC on December 9, 2005, and incorporated by reference herein). *                                                                                                                                     
|            | 
|10.22       |  | Employment Agreement, executed July 28, 2006, by and between the Mohegan Tribal Gaming Authority and Mitchell Grossinger Etess (filed as Exhibit 10.1 to the Form 8-K filed with the SEC on
August 3, 2006, and incorporated herein by reference). *                                                                                                                                                                                                                                                              
|            | 
|10.23       |  | Employment Agreement, executed July 28, 2006, by and between the Mohegan Tribal Gaming Authority and Jeffrey E. Hartmann (filed as Exhibit 10.2 to the Form 8-K filed with the SEC on
August 3, 2006, and incorporated herein by reference). *                                                                                                                                                                                                                                                                    
|            | 
|10.24       |  | Employment Agreement, executed July 28, 2006, by and between the Mohegan Tribal Gaming Authority and Leo M. Chupaska (filed as Exhibit 10.3 to the Form 8-K filed with the SEC on August 3, 2006,
and incorporated herein by reference). *                                                                                                                                                                                                                                                                        
|            | 
|10.25       |  | Second Amendment to Purchase Agreement and Release of Claims dated as of August 7, 2006 by and among PNGI Pocono, Inc. (as successor to PNGI Pocono, Corp. and PNGI, LLC) and the Mohegan Tribal
Gaming Authority, and is joined in by Penn National Gaming, Inc. for limited purposes described in the agreement (filed as Exhibit 10.4 to the June 2006 10-Q and incorporated by reference herein).                                                                                                             
|            | 
|10.26       |  | Employment Agreement, executed December 20, 2006, by and between the Mohegan Tribal Gaming Authority and Anthony Patrone (filed as Exhibit 10.32 to the Authoritys Annual Report on Form
10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated herein by reference).*                                                                                                                                                                                     
|            | 
|10.27       |  | Second Amended and Restated Loan Agreement, dated as of March 9, 2007, by and among the Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority, the Lenders named
therein and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.1 to the Authoritys Form 8-K filed with the SEC on March 15, 2007, and incorporated by reference herein).                                                                                                                                
|            | 
|10.28       |  | Amendment No. 1 to the Second Amended and Restated Loan Agreement, dated as of February 13, 2008, by and among the Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming
Authority, the Lenders named therein and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.1 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2007, filed with the SEC on February 14,
2008 (the December 2008 10-Q), and incorporated by reference herein).
|            | 
|10.29       |  | Amendment to Employment Agreement, dated February 4, 2008, by and between the Mohegan Tribal Gaming Authority and Leo M. Chupaska (filed as Exhibit 10.1 to the Authoritys Form 8-K filed
with the SEC on February 8, 2008, and incorporated herein by reference). *                                                                                                                                                                                                                                             
|            | 
|10.30       |  | Third Amended and Restated Loan Agreement, dated as of December 10, 2008, by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, the Lenders named therein
and Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.1 to the Form 8-K filed with the SEC on December 15, 2008, and incorporated by reference herein).                                                                                                                                      
|            | 
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                               
|            | 
|32.1        |  | Section 1350 Certification of Chief Executive Officer (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|32.2        |  | Section 1350 Certification of Chief Financial Officer (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                           



|* | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------