<PAGE>

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                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 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, 2001

                                      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    (IRS employerIdentification No.)
       incorporation or organization)

         One Mohegan Sun Boulevard,
                Uncasville, CT                        06382
      (Address of principal executive               (Zip Code)
                  offices)

                                (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

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

                                Title of Class
                                     NONE

   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  [_]

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<PAGE>

                        MOHEGAN TRIBAL GAMING AUTHORITY
                              INDEX TO FORM 10-K

<TABLE>
<CAPTION>
                                                                                                  Page
                                                                                                  ----
<S>                                                                                               <C>
Cautionary Note Regarding Forward-Looking Statements.............................................   1

                                                PART I

Item 1.--Business................................................................................   2
Item 2.--Properties..............................................................................  30
Item 3.--Legal Proceedings.......................................................................  30
Item 4.--Submission of Matters to a Vote of Security Holders.....................................  30

                                               PART II

Item 5.--Market for Registrant's Common Equity and Related Stockholders Matters..................  31
Item 6.--Selected Financial Data.................................................................  31
Item 7.--Management's Discussion and Analysis of Financial Condition and Results of Operations...  32
Item 7A.--Quantitative and Qualitative Disclosure of Market Risk.................................  42
Item 8.--Financial Statements and Supplementary Data.............................................  43
Item 9.--Changes in and Disagreements with Accountants on Accounting and Financial Disclosure....  43

                                               PART III

Item 10.--Executive Officers of the Registrant...................................................  44
Item 11.--Executive Compensation.................................................................  46
Item 12.--Security Ownership of Certain Beneficial Owners and Management.........................  47
Item 13.--Certain Relationships and Related Transactions.........................................  47

                                               PART IV

Item 14.--Exhibits, Financial Statement Schedules and Reports on Form 8-K........................  49

Signatures.......................................................................................  52

Index to Financial Statements.................................................................... F-1

Schedule II--Valuation and Qualifying Accounts and Reserves...................................... S-1
</TABLE>

                                      i

<PAGE>

   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 Tribe
and the Authority, collectively.

             CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

   This Form 10-K contains statements about future events, including, without
limitation, information relating to plans for future expansion and other
business development activities as well as other capital spending, financing
sources and the effects of regulation (including gaming and tax regulation) and
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 forward-looking statements are not based on historical facts
but rather reflect the Authority's or the Tribe's current expectations
concerning future results and events. These forward-looking statements
generally can be identified by use of statements that include phrases such as
"believe," "expect," "anticipate," "intend," "plan," "foresee," "likely,"
"will" or other similar words or phrases. Similarly, statements that describe
the Authority's objectives, plans or goals are or may be forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors which may cause the Authority's actual results, performance or
achievements to be different from any future results, performance or
achievements expressed or implied by these statements. You should review
carefully all of the information, including the financial statements, included
in this Form 10-K.

   In addition to the risk factors described under "Part I--Item 1.
Business--Risk Factors," the following important factors could affect future
results, causing actual results to differ materially from those expressed in
the Authority's forward-looking statements:

  .  the expansion and construction activities for the new casino, the new
     hotel and the convention center and related upgrades and amenities;

  .  the financial performance of the original casino;

  .  the Authority's dependence on existing management;

  .  the Authority's leverage and ability to meet its debt service obligations;

  .  increased competition from new or existing gaming operations;

  .  general domestic and global economic conditions;

  .  changes in federal or state tax laws or the administration of such laws;

  .  changes in gaming laws or regulations (including the potential
     legalization of gaming in a number of jurisdictions); and

  .  maintenance of licenses required under gaming laws and regulations and
     construction permits and approvals required under applicable laws and
     regulations.

   These factors and the other risk factors discussed in this Form 10-K are not
necessarily all of the important factors that could cause the Authority's
actual results to differ materially from those expressed in any of its
forward-looking statements. Other unknown or unpredictable factors also could
have material adverse effects on the Authority's future results. The
forward-looking statements included in this Form 10-K are made only as of the
date of this Form 10-K. The Authority does not have and does not undertake any
obligation to publicly update any forward-looking statements to reflect
subsequent events or circumstances. All subsequent written and oral
forward-looking statements attributable to the Authority or persons acting on
behalf of the Authority are expressly qualified in their entirety by the
factors discussed above. The Authority cannot assure you that projected results
or events will be achieved.

                                      1

<PAGE>

                                    PART I

Item 1. Business

Overview

   The Mohegan Tribe of Indians of Connecticut is a federally recognized Indian
tribe with an approximately 390-acre reservation located in southeastern
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") that has been approved by
the U.S. Secretary of the Interior.

   The Authority, established on July 15, 1995, is an instrumentality of the
Tribe. The Tribe established the Authority in July 1995 with the exclusive
power to conduct and regulate gaming activities for the Tribe. On October 12,
1996, the Authority opened a casino known as Mohegan Sun Casino ("Mohegan
Sun"). The Authority is currently engaged in a major expansion of Mohegan Sun
("Project Sunburst"), including increased gaming and retail space and an
entertainment arena which opened on September 25, 2001 and the addition of a
hotel and a convention center which is expected to open in April 2002.

   The Authority's mailing address is One Mohegan Sun Boulevard, Uncasville, CT
06382 and its telephone number is (860) 862-8000.

   The following disclosure relating to the Authority's business is organized
as follows:

  .  Mohegan Sun
  .  Strategy
  .  Project Sunburst
  .  Additional Mohegan Sun Enhancements
  .  Market
  .  Competition from Other Gaming Operations
  .  Mohegan Tribe of Indians of Connecticut
  .  The Authority
  .  Government Regulation
  .  Material Agreements
  .  Certain Indebtedness
  .  Environmental Matters
  .  Employees and Labor Relations
  .  Risk Factors

Mohegan Sun

   The Authority owns and operates Mohegan Sun, a full-service gaming and
entertainment complex on a 240-acre site overlooking the Thames River on the
Tribe's reservation in southeastern Connecticut. The Authority has entered into
a land lease with the Tribe whereby the Tribe leases to the Authority the site
on which Mohegan Sun is located. Mohegan Sun opened in October 1996 at a cost
of approximately $303.0 million and is currently undergoing a $960.0 million
expansion known as Project Sunburst. Mohegan Sun is one of two legally
authorized gaming operations in New England offering both traditional slot
machines and table games.

   Mohegan Sun currently operates in a 1.9 million square foot facility which
conveys a historical northeastern Indian theme through architectural features
and the use of natural design elements such as timber, stone and water. The
original casino ("Casino of the Earth") is comprised of four quadrants, each of
which has its own

                                      2

<PAGE>

unique entrance and reflects a separate seasonal theme--winter, spring, summer
and fall--emphasizing the importance of the seasonal changes to Mohegan Tribal
life. On September 25, 2001, the Authority opened the first phase of Project
Sunburst ("Casino of the Sky"). The Casino of the Sky includes the world's
largest planetarium dome, which projects changing displays of constellations,
sun cycles and clouds. Wombi Rock, a three-story crystal mountain built inside
the Casino of the Sky, is crafted from more than 12,000 individual plates of
onyx and alabaster fused to glass. The Casino of the Sky also includes an
85-foot-high waterfall, which pays tribute to the journey of the Tribe from
upstate New York.

   The Casino of the Earth includes 176,500 square feet of gaming space with
3,655 slot machines, 158 table games, 42 poker tables and a 9,000 square foot
simulcasting race book facility. On April 18, 2001, the Hall of the Lost Tribes
smoke-free gaming venue opened featuring 637 slot machines, quick-service food
and beverage concessions, and a new cocktail bar with video poker. Food and
beverage amenities include a 680-seat buffet, three full-service themed fine
dining restaurants, a 24-hour coffee shop, a New York style delicatessen, a ten
station food court featuring international and domestic cuisine, and multiple
service bars for a total of 1,888 restaurant seats. The 350-seat, 10,000 square
foot Wolf Den Lounge located in the center of the Casino of the Earth hosts
live musical entertainment seven days a week. Three retail shops are located
within the Casino of the Earth and provide shopping opportunities ranging from
Mohegan Sun souvenirs to clothing to cigars.

   The Casino of the Sky includes 119,000 square feet of gaming space with
2,564 slot machines, 82 table games, the Shops at Mohegan Sun, the 10,000-seat
Mohegan Sun Arena and a 300-seat cabaret. Wombi Rock serves as a three-level
lounge and bar. Food and beverage amenities include Jasper White's Summer
Shack, Todd English's Tuscany, Michael Jordan's Steakhouse and 23 Sportcafe,
Rain, the Rising Moon Gallery of Eateries and a 350-seat Sunburst Buffet. The
Shops at Mohegan Sun located in the Casino of the Sky contain 32 different
retail shops, five of which are owned and operated by the Authority. The
remaining 27 are tenants of the Authority and include, but are not limited to,
Boccelli, Discovery Channel, Godiva, Swarovski and Lux, Bond & Green. For
non-gaming entertainment, the Casino of the Sky offers an arcade-style
recreation area and a child care facility operated by New Horizon Kids Quest,
Inc.

   The Authority also operates a 4,000 square foot, 16-pump gasoline service
station and convenience center located adjacent to Mohegan Sun.

   On November 29, 2000, in connection with construction of the Hall of the
Lost Tribes, which is now part of the Casino of the Earth, the Authority
discontinued certain bingo operations to provide the necessary floor space for
the new gaming venue. Pursuant to Accounting Principles Board Opinion No. 30
"Reporting the Results of Operations--Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions" ("APB 30"), the financial statements of the Authority
have been restated to reflect the disposition of bingo operations as
discontinued operations. Accordingly, the revenues, costs and expenses of the
bingo operations have been excluded from the captions in the Statements of
Income (Loss) and have been reported as "Loss from discontinued operations."
For the fiscal years ended September 30, 2001, 2000 and 1999, loss from
discontinued operations totaled $591,000, $674,000 and $812,000, respectively.
See "Part II--Item 6. Selected Financial Data" and the Authority's financial
statements and the related notes beginning on page F-1 of this Form 10-K.

   The Authority believes ease of access is one of the important factors that
differentiate Mohegan Sun from its local competition. Mohegan Sun is located
approximately one mile from the interchange of Interstate 395 and Route 2A in
Uncasville, Connecticut. The Authority constructed a four-lane access road and
entrance/exit ramps off of Route 2A, providing guests direct access to
Interstate 395 and Interstate 95, the main highways connecting Boston,
Providence and New York City. Mohegan Sun currently has parking spaces for
8,265 guests and 3,075 employees. The gaming industry in Connecticut
experiences seasonal fluctuations, with the heaviest gaming activity at Mohegan
Sun occurring during the period from July through October.

                                      3

<PAGE>

Strategy

   The Authority's overall strategy is to profit from expanding demand in the
gaming market in the northeastern United States. Mohegan Sun's initial success
resulted primarily from guests living within 100 miles of Mohegan Sun. Based
upon Mohegan Sun's results and experience, we believe the gaming market in the
northeastern United States is strong and that there is significant demand for
additional amenities. The Authority expects to develop Mohegan Sun into a
full-scale entertainment and destination resort and believes that this will
increase the number of guests and lengthen their stays at Mohegan Sun.
Specifically, the Authority is currently engaged in a major expansion of
Mohegan Sun, Project Sunburst, including the addition of a luxury hotel,
increased gaming and retail space, a convention center and an entertainment
arena. By providing Mohegan Sun with additional capacity and the ability to
capture a share of the overnight market, the Authority believes Mohegan Sun's
market penetration will expand. The Authority believes that Project Sunburst
will create a long-term competitive advantage for Mohegan Sun in the gaming
market in the northeastern United States. See "--Project Sunburst," "--Market"
and "--Competition from Other Gaming Operations."

Project Sunburst

   In order to capitalize on the strong demand for gaming opportunities in the
northeastern United States and Mohegan Sun's popularity, the Authority decided
in 1998 to expand the casino significantly and to add a hotel, convention
facilities, an entertainment arena and additional retail establishments. We
refer to this expansion as Project Sunburst. The first phase of Project
Sunburst, the Casino of the Sky, opened on September 25, 2001. See "--Mohegan
Sun." The remaining components, including the majority of a 1,200 room luxury
hotel and approximately 100,000 square feet of convention space, are expected
to open in April 2002 and full completion of construction is expected in June
2002.

   The following is a summary of some of the attributes of Mohegan Sun before
and after the Project Sunburst expansion:

<TABLE>
<CAPTION>
                          Casino                                           Retail           Convention  Guest
                           Space     Slot   Table Poker  Restaurant Hotel   Space    Event    Space    Parking
                         (sq. ft.) Machines Games Tables   Seats    Rooms (sq. ft.) Seating (sq. ft.)  Spaces
                         --------- -------- ----- ------ ---------- ----- --------- ------- ---------- -------
<S>                      <C>       <C>      <C>   <C>    <C>        <C>   <C>       <C>     <C>        <C>
Resort before expansion
 (prior to September 25,
 2001) (1)..............  176,500   3,655    158    42     1,888        0    5,476   5,015         0    8,265
Resort after expansion
 (estimated) (2)........  295,500   6,219    240    42     2,976    1,200  135,476  10,350   100,000   12,865
</TABLE>
--------
(1) These figures include the effect of the establishment of the 4,665-seat
    Uncas Pavilion (a temporary entertainment structure for special events) and
    the effect of the opening of the Hall of the Lost Tribes smoke-free gaming
    venue which added an additional 637 slot machines as if both had occurred
    prior to the expansion. The Uncas Pavilion has been replaced by the 10,000
    seat Mohegan Sun Arena and is no longer being used.

(2) These figures include 2,700 additional parking spaces associated with the
    construction of the Indian Summer Parking Garage which is projected to be
    opened in the summer of 2002, an additional 1,700 space parking garage
    projected to be opened in the spring of 2002 and 200 additional valet
    parking spaces available in the spring of 2002.
 .

   The Tribe and the Authority continue to believe that the market favors
expansion for three primary reasons: (1) unsatisfied current patron demand for
gaming space at the existing facility; (2) growth of the gaming market in the
northeastern United States; and (3) patron length of stay data indicating the
need for a hotel and other amenities. We believe that Project Sunburst, upon
full completion in June 2002, will continue to attract a significant number of
guests to the facility, particularly during midweek periods. When fully
completed, we believe that the patron length of stay will increase, as well as
the average spending per guest.

                                      4

<PAGE>

   On October 13, 2000, the Tribal Council approved a formal resolution
increasing the expansion budget to $960.0 million (excluding capitalized
interest), from $800.0 million. The Project Sunburst budget was increased to
$960.0 million for three reasons: (1) enhancements in project scope such as an
increase in the number of slot machines scheduled to be placed on the gaming
floor; (2) quality improvements to the hotel and public areas; and (3)
increases in Project Sunburst labor costs because of the competitive nature of
the construction labor market in the northeastern United States.

   The increase in the Project Sunburst budget is being funded by the proceeds
from the Authority's issuance in July 2001 of $150.0 million of senior
subordinated notes and by internally generated funds. See "--Certain
Indebtedness." In addition to the Authority's cash on hand and its available
borrowing capacity under the Bank Credit Facility (see "--Certain
Indebtedness"), the Tribe has set aside, with a trustee, a $40.0 million, fully
funded construction reserve account that may be used to pay costs in excess of
the approved Project Sunburst budget.

Additional Mohegan Sun Enhancements

   In addition to Project Sunburst, we have scheduled or have completed the
following capital improvements to the Mohegan Sun facility:

   Smoke-free Slot Area. We converted the former High Stakes Bingo Hall into a
637-unit smoke-free slot area, which is named the Hall of the Lost Tribes.
Opened on April 18, 2001, the Hall of the Lost Tribes was completed for $14.9
million, which was $5.1 million below the $20.0 million original budget amount.
See "--Mohegan Sun."

   Parking Garages. The Indian Summer parking garage will provide 2,700
additional parking spaces and is currently being constructed. The approved
budget for the construction of the Indian Summer parking garage is $65.0
million. Construction began on the Indian Summer parking garage in August 2001,
and we anticipate that the project will be completed in the summer of 2002. A
second parking garage that will provide 1,700 additional parking spaces began
construction in December 2001 and is anticipated to be completed in the spring
of 2002 at an estimated cost of $25.0 million.

   Child Development Center. We plan to construct a 36,000 square foot employee
day care facility which will enhance the benefits and services provided to our
employees. The project is expected to cost approximately $10.0 million.
Construction began in November 2001, and we anticipate that the project will be
completed in January 2003.

   Project Sunburst Utilities. We currently are constructing various utility
upgrades and enhancements needed to support Project Sunburst. These
improvements originally were to be financed entirely by the Tribe from the
proceeds of tax-exempt financing. The Tribe, however, subsequently received an
opinion from its outside legal counsel advising it that a portion of the costs
for these improvements will not qualify for tax-exempt financing. Therefore,
the Authority will pay for this portion of the total costs, which we expect
will equal approximately $35.0 million. We anticipate that these improvements
will be completed concurrent with the opening of the final components of
Project Sunburst in April 2002.

Market

   Mohegan Sun and the Foxwoods Resort Casino ("Foxwoods") are the only two
legally authorized gaming operations offering both traditional slot machines
and table games in the northeastern United States outside of Atlantic City, New
Jersey, which is approximately 260 miles from Mohegan Sun. Foxwoods, operated
by the Mashantucket Pequot Tribe under a separate gaming compact with the State
of Connecticut, 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 rapid
growth of Mohegan

                                      5

<PAGE>

Sun, the Authority believes that the gaming market in the northeastern United
States remains underserved. See "--Competition from Other Gaming Operations."

   Mohegan Sun frequently operates at capacity on weekends. The addition of new
gaming space will accommodate more of this weekend demand. The Authority
estimates that the current average length of time that guests spend at Mohegan
Sun is approximately 130 minutes. The Authority believes that the addition of a
1,200 room hotel as well as convention and entertainment amenities will
increase the average length of time guests spend at Mohegan Sun.

   After opening in October 1996, the Authority marketed primarily to guests
living within 100 miles of Mohegan Sun. This excludes much of the New York City
metropolitan area. The Authority began a substantial marketing effort in 1999
to access a wider market, including the New York City metropolitan area. As a
result of this marketing effort, the number of guests from New York State has
grown from 11% of total guests in fiscal year 1999 to 18% of total guests in
fiscal year 2001, as measured by Mohegan Sun's guest database. The Authority
believes that the majority of this increase can be attributed to guests
residing within the New York City metropolitan area and that the New York City
market shows significant potential for additional growth. The Authority
believes that the expansion, particularly the addition of a large hotel, should
draw a significant number of additional customers from the New York City
metropolitan area and other more distant markets.

Competition from Other Gaming Operations

   The gaming industry is highly competitive. Mohegan Sun currently competes
primarily with Foxwoods and, to a lesser extent, with casinos in Atlantic City,
New Jersey. Foxwoods offers a number of amenities that Mohegan Sun does not
currently have, including hotel accommodations. Foxwoods has been in operation
for approximately ten years and may have greater financial resources and
greater operating experience than the Authority or the Tribe.

   Upon completion of the Project Sunburst expansion, the Authority will
broaden Mohegan Sun's target market beyond day-trip customers to include guests
making overnight stays at the resort. This means that Mohegan Sun will begin to
compete more directly for customers with casinos in Atlantic City, New Jersey
and, to a lesser extent, gaming resorts such as those on the Gulf Coast of
Mississippi and Las Vegas, Nevada. Many of these casinos and other resorts have
greater resources and greater name recognition than Mohegan Sun.

   Under current law, outside of Atlantic City, New Jersey, casino gaming in
the northeastern United States may be conducted only by federally recognized
Indian tribes operating under federal Indian gaming law or on cruise ships in
international waters. A number of states, including Connecticut, Massachusetts
and New York, also have considered legalizing casino gaming by non-Indians in
one or more locations. The Tribe cannot predict whether any of these individual
groups or other efforts to legalize casino gaming will be successful in
establishing casino gaming operations, and if established, whether such casino
gaming operations will have a material adverse effect on the Authority's
operations and its ability to meet its obligations.

   The following is an assessment of the competitive prospects in Connecticut
and the northeastern United States.

  Connecticut

   Currently, only the Tribe and the Mashantucket Pequot Tribe are authorized
to conduct casino gaming in Connecticut. As required by their tribal-state
gaming compacts, 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. Together, these payments totaled over $338.2 million for
the year ended September 30, 2001, of which the Authority contributed $144.6
million. These payments are linked to an exclusivity clause in a memorandum of
understanding between the Tribe and the State of Connecticut. Under the
memorandum of understanding the

                                      6

<PAGE>

payments will terminate if there is any change in state law that permits
operation of slot machines or other commercial casino games or, any other
person lawfully operates slot machines or other commercial casino games within
the state (except those consented to by the Tribe and the Mashantucket Pequot
Tribe).

   Currently, numerous groups in Connecticut are attempting to gain federal
recognition, a lengthy process managed by the Bureau of Indian Affairs (the
"BIA"). At least five groups recognized by the State of Connecticut as Indian
tribes have filed a letter of intent to petition the BIA for federal
recognition. Currently, though, only four of these groups are actively being
considered by the BIA:

  .  Schaghticoke Tribe of Kent, Connecticut--A federal district court has
     ruled that the BIA must issue a final decision on federal recognition of
     this group by June 2003.

  .  Golden Hill Paugussett Tribe of Trumbull, Connecticut--A petition
     currently is pending before the BIA. The Golden Hill Paugussett Tribe
     filed a motion for summary judgment in federal district court claiming
     that the BIA failed to timely act on the tribe's petition for federal
     recognition. A federal district court judge has scheduled a hearing on the
     motion for December 21, 2001. The city council of the City of Bridgeport,
     Connecticut has adopted a non-binding resolution supporting a Golden Hill
     Paugussett casino in Bridgeport.

  .  Eastern Pequot and the Paucatuck Eastern Pequot Tribe of
     Connecticut--These two groups share a reservation located next to that of
     the Mashantucket Pequot Tribe. Each is seeking federal recognition
     independently from the other. In March 2000, the Eastern Pequot and the
     Paucatuck Eastern Pequot Tribes received proposed findings from the BIA
     that they be federally recognized as Indian tribes. The State of
     Connecticut has commenced litigation challenging this decision. The BIA
     was expected to issue final determinations on these groups in the fall of
     2000, but extended the period for public comment through August 2, 2001.
     These groups had until September 4, 2001 to address the questions raised
     in the comment period. An existing federal district court order requires
     the BIA to make a final determination on federal recognition by early
     December 2001; however, the BIA has recently filed a request with the
     court for a six-month extension to make a final determination. Both of
     these groups have publicized the existence of financial backers for the
     construction of gaming facilities and it is likely that, if and when
     recognition is granted to these groups, each will seek to establish gaming
     facilities in southeastern Connecticut.

  .  Hassanamisco Band of the Nipmuc Tribe--In October 2001, the BIA reversed
     the prior administration's decision and rejected the Hassanamisco Band of
     the Nipmuc Tribe's petition to be recognized as an Indian tribe. The
     Hassanamisco Band has six months to appeal the BIA's decision. Although
     officially based in Massachusetts, the Hassanamisco Band could pursue land
     claims in Connecticut if granted federal recognition because of a
     significant historical presence within the boundaries of the State of
     Connecticut. If the Hassanamisco Band were ever to receive final federal
     recognition, it would likely attempt to develop a casino in northeastern
     Connecticut near the Connecticut/Massachusetts border. The Hassanamisco
     Band also has publicized the existence of financial backers for
     construction of gaming facilities.

   While the federal recognition process for the individual groups described
above is proceeding, it is not clear if or when federal recognition will be
achieved. Even upon gaining federal recognition, a tribe must, among other
things, have land taken into trust by the federal government, negotiate a
compact with the State of Connecticut, adopt a tribal gaming ordinance and
negotiate a gaming management agreement (both of which must be approved by the
National Indian Gaming Commission), obtain financing and construct a facility
before gaming operations may commence. Due to these factors, we anticipate it
would take at least three to five years before any of these individual groups
could open a new casino in the State of Connecticut.

  Rhode Island

   Commercial casino gaming does not exist in Rhode Island although the state's
two pari-mutuel facilities, Lincoln Greyhound Park and Newport Grand Jai Alai,
offer approximately 2,275 video slot machines and have

                                      7

<PAGE>

petitions pending before the Rhode Island Lottery Commission for additional
machines. In November 1994, Rhode Island voters defeated numerous local and
statewide gaming referenda and passed a referendum, which requires that any new
gaming proposals be approved in a statewide referendum. 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 federal
legislation, the Narragansett Tribe is legally barred from opening a gaming
facility unless it is successful in winning both local and statewide referenda.
In June 2000, the Rhode Island House Committee rejected putting the
Narragansett Tribe's proposed Indian casino on the November ballot. The House
Committee believed that the casino would negatively impact operations at
Lincoln Park and the Newport Jai Alai. While Rhode Island officials have
rejected such efforts in the past, the Narragansett Tribe has recently
announced that it will continue to pursue development of a casino in Rhode
Island. There are several pending federal recognition petitions from other
Rhode Island groups, but 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.

  Massachusetts

   Leisure Casino Cruises, located in Gloucester, Massachusetts, currently
operates a casino cruise ship with casino gaming amenities including 14 table
games and 175 slot machines. The casino cruise also offers a buffet style
dinner and live entertainment. 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. To date, Massachusetts has not prohibited such operations.
Due to the difference in the gaming experience, the Authority does not believe
the ''cruises to nowhere'' present potentially significant competition to
Mohegan Sun.

   The Wampanoag Tribe of Gay Head (Aquinnah) of Massachusetts, located on the
island of Martha's Vineyard, is currently the only federally recognized Indian
tribe in Massachusetts. This tribe has determined that a casino on the island
of Martha's Vineyard would not be economically feasible, and to date, the
Massachusetts legislature has rejected proposals to locate an Indian casino off
tribal lands. The Wampanoag Tribe has announced plans to open a high-stakes
bingo facility in Fall River, for which no state compact would be required, but
significant hurdles, including local government approval, still remain. More
recently, there have been reports that the Wampanoag Tribe seriously is
considering an effort to locate a casino in Fall River, New Bedford or Plymouth.

   The BIA has rejected petitions for federal recognition submitted by both the
Hassanamisco Band and the Chaubanagungamaug Band of the Nipmuc Tribe. In
January 2001, the BIA rejected the petition for federal recognition of the
Chaubanagungamaug Band. In October 2001, the BIA reversed the previous
administration's ruling and rejected the Hassanamisco Band's petition for
federal recognition. The Hassanamisco Band has six months to appeal the BIA's
decision. If the Hassanamisco Band were ever to receive final federal
recognition, it would likely attempt to develop a casino in northeastern
Connecticut near the Connecticut/Massachusetts border. A number of other
petitions for federal recognition are pending in Massachusetts, but we believe
potential recognition for these groups is several years away, if at all.

  New York

   Recently, New York approved legislation allowing an expansion of casino
gaming by Indian tribes that could result in as many as six additional gaming
operations within the state. This legislation approved the use of traditional,
rather than video slot machines, where the possession and use of traditional
slot machines is authorized pursuant to a tribal-state compact. The legislation
also authorized the use of video lottery games at certain racetracks in the
State of New York. As many as three of these potential gaming operations may be
operated by the Seneca Nation in Western New York pursuant to a gaming compact
that has been negotiated with the Governor of New York and was approved in
advance by the New York State Legislature. The legislation authorizes the
Governor of New York to negotiate and execute tribal-state compacts for the
remaining three

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gaming operations with yet to be determined tribes for sites in Ulster and
Sullivan counties, New York. The New York State Legislature must still approve
any tribal-state compact executed for these gaming operations. The development
and management of all of these Indian gaming projects, however, are contingent
upon various regulatory approvals, including receipt of approvals from the BIA,
the National Indian Gaming Commission (the "NIGC") and local planning and
zoning boards.

   New York has seven federally recognized tribes with reservations in the
northern part of the state. Two tribes, the Oneida Nation of New York and the
St. Regis Band of Mohawk Indians of New York, have executed gaming compacts
with New York. The New York State Legislature has also recently approved a
gaming compact with the Seneca Nation which would allow the Seneca Nation to
develop up to three casinos.

   The Oneida Nation operates Turning Stone Casino Resort ("Turning Stone") on
its reservation near Syracuse, New York, approximately 270 miles from Mohegan
Sun. The facility has 3,500 video lottery machines (which operate on a
pari-mutuel system as opposed to the traditional fixed odds reel-type machines
operated by most casinos), 150 table games and 285 hotel rooms. The Oneida
Nation recently began an expansion effort at Turning Stone, which will include
the addition of a clubhouse to its existing golf course and increase overall
gaming space by 50,000 square feet. Turning Stone currently draws customers
primarily from the Syracuse market.

   The St. Regis Mohawk Tribe opened a casino located in Hogansburg, New York
near the Canadian border in April 1999 with 78 table games and 400 video
lottery machines. In April 2000, they entered into an agreement with Park Place
Entertainment Corporation, a Nevada based gaming and entertainment company, for
exclusive rights to develop a casino project in New York for a period of three
years, extendable thereafter by mutual agreement. In the event such a casino
project is developed, the parties also agreed to enter into a seven-year
management agreement whereby Park Place will manage the casino and pay the St.
Regis Mohawk Tribe 70% of the net profits. This agreement is subject to the
approval of the NIGC. On May 1, 2000, Park Place announced it had entered into
an agreement to acquire 50 acres of the Kutsher's Resort Hotel and Country Club
in Sullivan County, New York, approximately 170 miles from Mohegan Sun.
Although any trust acquisition is subject to approval by the BIA, Park Place
has announced that it intends to transfer the 50-acre site to the United States
in trust for the St. Regis Mohawk Tribe; however, any trust acquisition is
subject to approval by the BIA. On August 17, 2001, the St. Regis Mohawk Tribe
signed an agreement with Sullivan County to build a $250.0 million resort at
this location in the Catskills.

   The Seneca Nation has bingo operations on two of its three reservations in
western New York. These bingo halls are located in Vandalia and Gowanda, New
York, both over 400 miles from Mohegan Sun. As discussed above, the Seneca
Nation has also reached an agreement with the Governor of New York for a gaming
compact that allows the Seneca Nation to develop three casinos. This
tribal-state compact was approved by the New York State Legislature in the
recently approved legislation; however, the Seneca Nation must still approve
the tribal-state compact at a tribal referendum. In addition, these gaming
projects are contingent upon various regulatory approvals, including receipt of
approvals from the BIA, NIGC and local planning and zoning boards. Possible
future gaming locations include sites in Niagara Falls and Buffalo, New York
and sites on the Seneca reservation in Vandalia and Gowanda, New York.

   The Stockbridge-Munsee Community of Mohican Indians of Wisconsin is
considering opening a casino in Sullivan County, New York, in connection with
the settlement of litigation regarding a Stockbridge-Munsee land claim in
Madison County, New York. TCA, the entity responsible for the administration
and supervision of the construction manager and the entire construction process
of Project Sunburst, has announced its intention to provide financial backing
for this group. This project is contingent upon various regulatory approvals,
including approval of any gaming compact by the New York State Legislature and
receipt of approvals from the BIA, the NIGC and local planning and zoning
boards.

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   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 area in January 1998. To date,
New York has not prohibited gambling boat operations. Only a small number of
operators have applied for licenses for offshore gambling cruises. Currently,
Long Island Casino Tours is the only "cruise to nowhere" in operation in New
York. Due to the difference in the gaming experience, the Authority does not
believe that the "cruises to nowhere" are potentially significant competition
to Mohegan Sun.

  Maine

   There are no casinos allowed in Maine other than at least one cruise boat
that operates out of Maine and provides gambling operations on board. In
addition, there are no significant legislative initiatives currently underway
to legalize casinos in Maine. There are four federally recognized tribes in
Maine, one of which, the Penobscot Tribe, operates a high stakes bingo facility
in the township of Albany in western Maine. None of the federally recognized
tribes in Maine have negotiated a tribal-state compact or otherwise
significantly begun the process of developing casino operations.

  New Hampshire

   There are no casinos allowed in New Hampshire and no significant initiatives
currently underway to facilitate legalization. Over the past several years, a
number of legislative initiatives to expand legalized gambling activities in
New Hampshire have been defeated. There are no federally recognized Indian
tribes in the state and no petitions for recognition pending.

  Vermont

   There are no casinos allowed in Vermont and no significant legislative
initiatives currently underway to allow casino gambling. There are no federally
recognized tribes in Vermont, but there is a petition pending from the St.
Francis/Sokoki Band of Abenakis in Swanton. We believe any approval of this
petition is still several years away.

Mohegan Tribe of Indians of Connecticut

  General

   The Mohegan Tribe of Indians of Connecticut became a federally recognized
Indian tribe in 1994. The Tribe currently has approximately 1,492 members and
approximately 883 adult voting members. Although it only recently received
federal recognition, the Tribe has lived in a cohesive community for hundreds
of years in what is today southeastern Connecticut. 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 Desert Storm. The Tribe believes that this philosophy of
cooperation exemplifies its approach to developing Mohegan Sun.

   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 gave up 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 building Mohegan Sun.

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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. All members of the Tribal Council and the Council of Elders
are elected by the registered voters of the Tribe and serve terms of five
years. Members of the Tribal Council must be at least 18, and members of the
Council of Elders must be at least 55 when elected. The current terms for the
Tribal Council and the Council of Elders expire in October 2005. The members of
the Tribal Council are the same individuals who serve on the Management Board
of the Authority. See "Part III--Item 10. Directors and Executive Officers of
the Registrant--Management Board and Executive Officers."

   The Tribe's Constitution vests all legislative and executive powers of the
Tribe in the Tribal Council, with the exception of the power to enroll Tribal
members which is 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 establish the
Authority and the Gaming Disputes Court, which is described below, with the
approval of two-thirds of the members of the Tribal Council and a ratifying
vote of a two-thirds majority of all votes cast, with at least 40% of the
registered voters of the Tribe voting. In addition, a certain provision of 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 will 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 which relate 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 for the Tribe over all
disputes related to gaming at Mohegan Sun. 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 they will be heard by a panel of three judges, one of
whom will be the Chief Judge, and none of whom will have presided over the
specific case being heard. Decisions of the Appellate Branch are final, and no
further appeal is available in the Gaming Disputes Court.

   The Gaming Disputes Court has jurisdiction over all disputes or
controversies related to gaming between any person or entity and the Authority,
the Tribe or Trading Cove Associates, who managed Mohegan Sun from its
inception until January 1, 2000. See "--Material Agreements." The Gaming
Disputes Court also has jurisdiction over all disputes arising out of the
Authority's 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.

   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.

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Judges are selected sequentially from this list 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. 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: 51. 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 Attorney State Trial Referee, Judicial District of New London since
1992.

   F. Owen Eagan, Judge. Age: 70. 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 1987.

   Frank A. Manfredi, Judge. Age: 50. 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: 61. Judge Wilson was appointed to the Gaming
Disputes Court in 1996. He has been a partner and director at Suisman, Shapiro,
Wool, Brennan & Gray, P.C. since 1967. 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.

The Authority

   The Tribe established the Authority in July 1995 with the exclusive power to
conduct and regulate gaming activities for the Tribe. The Authority is governed
by a nine-member Management Board, consisting of the same nine members as those
of the 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 General Manager and other senior officers of
Mohegan Sun are hired by the Management Board. The General Manager and other
senior officers are employees of the Authority. See "--Mohegan Tribe of Indians
of Connecticut" and "Part III--Item 10. Directors and Executive Officers of the
Registrant--Management Board and Executive Officers."

   The Authority has two major functions. The first function is to direct the
development, operation, management, promotion and construction of the gaming
enterprise and all related activities. The second major function is to regulate
gaming activities. The Authority's 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 vendors seeking to provide gaming products or services within the casino.

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Government Regulation

  General

   The Authority is subject to special 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.
In addition, the Authority is subject to federal and state laws applicable to
the gaming industry generally and to the distribution of gaming equipment. The
following description of the regulatory environment in which gaming takes place
and in which the Authority operates is only a summary and not a complete
recitation of all applicable law. Moreover, since this particular regulatory
environment is more susceptible to changes in public policy considerations than
others, 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 the Authority's 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
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 Indian 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 the Tribe or the Authority.
Under the federal law that recognizes the Tribe, the Tribe consented to the
extension of Connecticut criminal law and Connecticut state traffic controls
over Mohegan Sun.

   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 the Authority), 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 would otherwise 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 the Authority's outstanding indebtedness, the
Tribe and the Authority agreed to waive their sovereign immunity from
unconsented suit to permit any court of competent jurisdiction to (1) enforce
and interpret the terms of the Authority's 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 the Authority has been granted improperly or withheld
unreasonably; (3) enforce any judgment prohibiting the

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Tribe or the Authority from taking any action, or mandating or obligating the
Tribe or the Authority to take any action, including a judgment compelling the
Tribe or Authority to submit to binding arbitration; and (4) adjudicate any
claim under the Indian Civil Rights Act of 1968, 25 U.S.C. (S)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
the Indian Gaming Regulatory Act of 1988. The Indian Gaming Regulatory Act
("IGRA") is administered by the NIGC, an independent agency within the U.S.
Department of 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. These rules 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 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
("MICS") that require each tribe or its designated tribal government body or
agency to establish and implement tribal MICS by February 4, 2000. The
Authority is in compliance with all of the 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, the Authority's
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, recordkeeping
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

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individuals as part of, or in connection with, tribal ceremonies or
celebrations. "Class II Gaming" includes bingo, pulltabs, 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 slots, video blackjack and video poker), so-called "table
games" (e.g., blackjack, craps, 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. Congress has considered legislation that limits and/or prohibits gaming
conducted over the Internet. The use of technology to conduct gaming operations
and a state's ability to regulate such activity have been the subject of
several court cases in the past few years with no clear resolution of the issue.

   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 video gaming machines, 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. The Mohegan Compact, approved by the 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.

   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, Wisconsin and
Washington. 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 of IGRA 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

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Louisiana and Mississippi. The highest state courts of New Mexico, Rhode
Island, Kansas, New York, Arizona and Michigan 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 therefore 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
Legislature 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.

   The Authority's operation of gaming is subject to the requirements and
restrictions contained in the Mohegan Compact. The Mohegan Compact authorizes
the Tribe to conduct most forms of Class III Gaming.

   Possible Changes in Federal Law

   Several bills have been introduced in 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 of IGRA could change the
governmental structure and requirements within which the Tribe could conduct
gaming.

Material Agreements

   The following is a summary of the material terms of several of the
Authority's and the Tribe's material agreements. This summary does not restate
these agreements in their entirety. The agreements, and not these summaries,
define the rights and obligations of the Authority and 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 (the "Mohegan Compact"). The Mohegan Compact is substantively similar to
the agreement governing gaming operations of the Mashantucket Pequot Tribe in
Connecticut and provides, 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 of which 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.

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<PAGE>

         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 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 ("MOU") setting 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 (the
"Slot Win Contribution"). The Slot Win Contribution is 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 operators consented to by the Tribe and
the Mashantucket Pequot Tribe. The Authority's financial statements reflect
expenses associated with the Slot Win Contribution totaling $144.6 million,
$135.1 million and $121.1 million for the fiscal years ended September 30,
2001, 2000 and 1999, respectively. See also, "--Government Regulation."

  Agreement with the Town of Montville

   On June 16, 1994, the Tribe and the Town of Montville (the "Town") entered
into an agreement whereby the Tribe agreed to pay to the Town a recurring
annual payment of $500,000 to minimize the impact on the Town resulting from
the decreased tax revenues on reservation land held in trust. Additionally, the
Tribe agreed to make a one-time payment of $3.0 million towards infrastructure
improvements to the Town's water system. The Tribe has assigned its rights and
obligations in this agreement to the Authority. As of September 30, 2001, the
Authority has fulfilled this obligation and paid $3.0 million to the Town for
improvements to the municipal water system, which has been included in other
assets in the accompanying balance sheets and is being amortized over 40 years.

  Land Lease from the Tribe to the Authority

   The land upon which Mohegan Sun is situated is held in trust for the Tribe
by the United States. The Tribe and the Authority have entered into a land
lease 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

                                      17

<PAGE>

approved by the Secretary of the Interior on September 29, 1995. Summarized
below are several key provisions of this lease. See also, "--Item 2.
Properties."

   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 Mortgages

   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.

                                      18

<PAGE>

  Priority Distribution Agreement with the Tribe

   On August 1, 2001, the Authority and the Tribe entered into a priority
distribution 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 also clarifies and records the terms
pursuant to which the Authority made such payments to the Tribe prior to the
effective date of the Priority Distribution Agreement. The Priority
Distribution Agreement limits the maximum aggregate payments by the Authority
to the Tribe in each calendar year to $14.0 million, 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 pursuant to invoices 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 the Bank Credit Facility. See "--Certain
Indebtedness--Bank Credit Facility." The monthly payments under the Priority
Distribution Agreement are limited obligations of the Authority payable only to
the extent of its net cash flow and are not secured by a lien or encumbrance on
any assets or property of the Authority. The Authority's financial statements
reflect payments associated with the Priority Distribution Agreement of $14.0
million for the fiscal year ended September 30, 2001.

  Expansion Construction Management Agreement with Perini Building Company, Inc.

   The Authority engaged Perini Building Company, Inc. ("Perini") as
construction manager to provide construction management services for Project
Sunburst. As construction manager, Perini is receiving a fee of $25.5 million
for services including, but not limited to, pre-construction review and
construction phase contract administration. As of September 30, 2001, Perini
has received $14.0 million of the $25.5 million fee which has been included in
"construction in process" in the Authority's financial statements beginning on
page F-1 of this Form 10-K. The Construction Management Agreement contains a
limited waiver of sovereign immunity to permit the commencement, maintenance
and enforcement of any dispute, claim and/or cause of action arising under the
Construction Management Agreement. In conjunction with the limited waiver of
sovereign immunity, Perini may seek satisfaction of judgment against the
undistributed and/or future revenues of Project Sunburst and/or the existing
Mohegan Sun facility.

  Development Agreement

   On February 7, 1998, the Authority and TCA entered into a development
services agreement (the "Development Agreement"). Under the Development
Agreement, TCA is responsible for the administration and supervision of the
construction manager and the entire construction process of Project Sunburst.
TCA is acting as the Authority's representative in connection with construction
contracts that are approved by the Authority. Specifically, TCA is responsible
for overseeing all persons performing work on the expansion site, inspecting
the progress of construction, determining completion dates and reviewing
contractor payment requests submitted to the Authority. The Development
Agreement specifically gives TCA the right to include provisions in
construction contracts that impose liquidated damage payments in the event of
failure to meet construction schedules.

   Retail Facilities

   As permitted by the Development Agreement, the Authority elected to engage a
retail consultant to oversee the design and construction of the retail
facilities in the expansion. The Authority chose the Gordon Group Holdings,
Ltd. as the retail consultant for the retail portion of the expansion. This
work is under the overall supervision of TCA, which will integrate the design
and construction of the retail facilities with that of the other components of
the expansion.

                                      19

<PAGE>

   Engagement of Certified Entities; Staffing the Expansion

   The Development Agreement requires TCA to implement procedures described in
the Tribal Employment Rights Ordinance. See "Part III--Item 13. Certain
Relationships and Related Transactions." TCA is required to give preference to
business entities or persons, which have been approved by the Authority, in the
selection of all contractors, vendors and suppliers engaged in the development
of the expansion. In addition, in staffing the operation of the Project
Sunburst expansion, the Development Agreement requires that TCA give preference
first to qualified members of the Tribe (and their spouses and children) and
then to enrolled members of other federally recognized Indian tribes.

   Payment of the Development Fee

   Under the Development Agreement, the Authority is required to pay to TCA a
development fee of $14.0 million. Pursuant to the payment schedule described in
the Development Agreement, on January 15, 2000, the Authority began paying the
development fee to TCA on a quarterly basis, based upon the incremental
completion as of each payment date. As of September 30, 2001, the Authority has
incurred $11.3 million related to the TCA development fee, of which $9.3
million has been paid.

   Termination and Disputes

   The Development Agreement terminates upon the earlier of (a) completion of
Project Sunburst or (b) February 7, 2008. In addition, each party has the right
to terminate the Development Agreement if there is a material default or
failure to perform a material duty or obligation by the other party. The
parties must submit disputes arising under the Development Agreement to
arbitration and have agreed that punitive damages may not be awarded to either
party by an arbitrator. The Authority has also waived sovereign immunity for
the purpose of permitting, compelling or enforcing arbitration and has agreed
to be sued by TCA in any court of competent jurisdiction for the purposes of
compelling arbitration or enforcing any arbitration or judicial award arising
out of the Development Agreement.

  Previous Management Agreement with Trading Cove Associates

   Until January 1, 2000, TCA was the exclusive manager of Mohegan Sun pursuant
to a gaming facility management agreement among the Authority, the Tribe and
TCA (the "Management Agreement"), which was entered into on August 30, 1995.
The Management Agreement originally had a term of seven years. The Management
Agreement was terminated on January 1, 2000, and the Authority and TCA
subsequently signed the Relinquishment Agreement (see below). Under the
Management Agreement, TCA was responsible for the day-to-day management,
operation and maintenance of Mohegan Sun. The Management Agreement authorized
TCA to pay itself a management fee in monthly installments based on 30% to 40%
of net income, before management fees, as defined in the Management Agreement,
depending on profitability levels. Management fees for the years ended
September 30, 2000 and 1999 were $13.6 million and $59.5 million, respectively.
Management fees for fiscal year 2000 represent amounts earned from October 1,
1999 through December 31, 1999 due to the termination of the Management
Agreement on December 31, 1999.

  Relinquishment Agreement with Trading Cove Associates

   General

   Under the Relinquishment Agreement, the Authority and TCA agreed to
terminate the Management Agreement with TCA, pursuant to which TCA managed the
Authority's gaming operations. This termination occurred on December 31, 1999,
at which time the Authority assumed the day-to-day management of Mohegan Sun.
To compensate TCA for terminating its management rights, the Authority agreed
to pay to TCA 5% of the 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.

                                      20

<PAGE>

   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. 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
revenues, ticket revenues and other fees or receipts from the convention/events
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.

  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 the Bank Credit Facility and capital lease
obligations, and that the Junior Relinquishment Payments are further
subordinated to payment of all other senior obligations, including the
Authority's 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
the Authority to the Tribe to the extent then due.

   Trademarks

   In connection with the Relinquishment Agreement, TCA has granted to 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 Authority has
agreed, however, that it will only use the word "Sun" in conjunction with
Mohegan Sun and Project Sunburst facilities and together with "Mohegan" or
"Mohegan Tribe."

Certain Indebtedness

   The following is a summary of the material terms of several of the
Authority's material debt obligations. This summary does not restate in
entirety the terms of the agreements under which the Authority incurred this
indebtedness. The agreements, and not these summaries, define the rights and
obligations of the Authority and, in some cases, the Tribe. Copies of these
agreements are included as exhibits to this Form 10-K.

  Senior Notes

   On March 3, 1999, the Authority issued $200.0 million Senior Notes with
fixed interest payable at a rate of 8.125% per annum (the "Senior Notes"). The
proceeds from this financing were used to extinguish or defease existing debt,
pay transaction costs and fund initial costs related to Project Sunburst.
Interest on the Senior Notes is payable semi-annually on January 1 and July 1.
The Senior Notes mature on January 1, 2006. The Senior Notes are unsecured
general obligations of the Authority and are subordinated to the Bank Credit
Facility. The Senior Notes rank equally in right of payment with 50% of the
Authority's payment obligations under the Relinquishment Agreement and rank
senior to the remaining 50% of the Authority's payment obligations under the
Relinquishment Agreement. See "--Material Agreements--Relinquishment Agreement
with Trading Cove Associates" for a further description of the ranking of
payments under the Relinquishment Agreement.

  1999 Senior Subordinated Notes

   On March 3, 1999, the Authority issued the $300.0 million Senior
Subordinated Notes with fixed interest payable at a rate of 8.75% per annum
(the "1999 Senior Subordinated Notes"). The proceeds from this financing

                                      21

<PAGE>

were used to extinguish or defease existing debt, pay transaction costs and
fund initial costs related to Project Sunburst. Interest on the 1999 Senior
Subordinated Notes is payable semi-annually on January 1 and July 1. The 1999
Senior Subordinated Notes mature on January 1, 2009. The 1999 Senior
Subordinated Notes are unsecured general obligations of the Authority and are
subordinated to the Bank Credit Facility, the Senior Notes and 50% of the
Authority's payment obligations under the Relinquishment Agreement. The 1999
Senior Subordinated Notes rank equally with the remaining 50% of the
Authority's payment obligations under the Relinquishment Agreement. See
"--Material Agreements--Relinquishment Agreement with Trading Cove Associates"
for a further description of the ranking of payments under the Relinquishment
Agreement.

  2001 Senior Subordinated Notes

   On July 26, 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 Bank Credit Facility
(described below) and fund 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 2001 Senior Subordinated
Notes are unsecured general obligations of the Authority and are subordinated
to the Bank Credit Facility, the Senior Notes and 50% of the Authority's
payment obligations under the Relinquishment Agreement. The 2001 Senior
Subordinated Notes rank equally with the 1999 Senior Subordinated Notes and the
remaining 50% of the Authority's payment obligations under the Relinquishment
Agreement. See "--Material Agreements--Relinquishment Agreement with Trading
Cove Associates" for a further description of the ranking of payments under the
Relinquishment Agreement.

  Bank Credit Facility

   As of September 30, 2001, the Authority had $258.0 million outstanding under
a $500 million reducing, revolving, secured credit facility with a syndicate of
lenders led by Bank of America N.A. (formally known as Bank of America National
Trust and Savings Association). The Authority draws on the Bank Credit Facility
primarily in connection with Project Sunburst. The Bank Credit Facility is
secured by a lien on substantially all of the Authority's assets, by a
leasehold mortgage on the land and improvements which comprise Mohegan Sun and
by each of the Authority's cash operating accounts. The Bank Credit Facility
subjects the Authority to a number of restrictive covenants including financial
covenants. These financial covenants relate to the permitted maximums of the
Authority's total debt and senior debt leverage ratios, its minimum fixed
charge coverage ratio and maximum capital expenditures. The Bank Credit
Facility includes other affirmative and negative covenants by the Tribe and the
Authority customarily found in loan agreements for similar transactions. Such
covenants include provisions that:

  .  the Tribe preserve its existence as a federally recognized Indian tribe;

  .  the Tribe cause the Authority to continually operate Mohegan Sun in
     compliance with all applicable laws;

  .  except under specific conditions, the Authority not sell or dispose of
     assets, incur other debt or contingent obligations, extend credit, make
     investments or commingle its assets with assets of the Tribe; and

  .  permit a construction consultant to inspect and review the proposed
     expansion and all budgets, plans, designs and specifications on a periodic
     basis.

   At the Authority's option, each advance of loan proceeds will accrue
interest on the basis of a base rate or on the basis of a one-month, two-month,
three-month or six-month London Inter-Bank Offered Rate ("LIBOR") plus, in
either case, the applicable spread (based on the Authority's Total Leverage
Ratio as defined in the Bank Credit Facility). One-month LIBOR as of September
30, 2001 was 2.64% and the applicable spread on a LIBOR loan was 2.375%.
Interest on each LIBOR loan that is for a term of three months or less is due
and payable on the last day of the related interest period. Interest on each
base rate loan is due and payable quarterly in arrears. The Authority has no
base rate loans. Pursuant to the terms of the Bank Credit Facility, the
commitment (or the

                                      22

<PAGE>

maximum amount that may be borrowed under the Bank Credit Facility) will be
automatically reduced on the earlier of March 31, 2002 or the last day of the
first full fiscal quarter following the completion date of Project Sunburst,
and on the last day of each fiscal quarter thereafter. The amount of each such
reduction must equal 10% of the commitment as in effect immediately prior to
the first such reduction.

Environmental Matters

   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. 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
("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 insure 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 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.

   The Authority is not currently incurring, and did not incur in fiscal years
2001, 2000 and 1999, any material costs related to compliance with
environmental requirements with respect to the 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 or will be exposed due to the expansion. Should soil
or groundwater contamination be identified during the continuing course of the
expansion, Connecticut remediation standard requirements will have to be met,
in addition to any other applicable environmental remediation requirements. See
"--Risk Factors."

Employees and Labor Relations

   As of September 30, 2001, Mohegan Sun employed approximately 7,583 full-time
employees, and 1,631 seasonal and part-time 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 to Native
Americans. See "Part III--Item 13. Certain Relationships and Related
Transactions." In addition, when staffing the operations of the Project
Sunburst expansion, the Development Agreement requires TCA to give hiring and
recruiting preferences, first to qualified members of the Tribe (and their
spouses and children) and then to enrolled members of other federally
recognized Indian tribes. See "--Material Agreements--

                                      23

<PAGE>

Development Agreement--Engagement of Certified Entities; Staffing the
Expansion." None of Mohegan Sun's employees are covered by collective
bargaining agreements.

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. See also, "Cautionary Note Regarding Forward-Looking Statements" on
page 1 of this Form 10-K.

  The Authority's substantial indebtedness could adversely affect its financial
  health.

   The Authority currently has and will continue to have a significant amount
of indebtedness. As of September 30, 2001, the Authority had outstanding
long-term debt and capital lease obligations totaling $909.5 million. In
addition, the Authority has borrowing capacity under the Bank Credit Facility
of up to $500.0 million, of which $258.0 million was outstanding on September
30, 2001.

   If the Authority had fully drawn all possible amounts available under the
Bank Credit Facility, its total debt and capital lease obligations would have
been approximately $1.2 billion as of September 30, 2001.

   The Authority's substantial indebtedness and other obligations could have
important consequences to its business. For example, they could:

  .  increase the Authority's vulnerability to adverse economic and industry
     conditions;

  .  require the Authority to dedicate a substantial portion of its cash flow
     from operations to payments on its indebtedness, thereby reducing the
     availability of its cash flow to fund working capital, capital
     expenditures and other general operating requirements, including those
     with respect to Project Sunburst;

  .  limit the Authority's flexibility in planning for, or reacting to, changes
     in its business and the gaming industry, which may place the Authority at
     a disadvantage compared to its competitors that have less debt thereby
     hurting the Authority's results of operations and ability to meet its debt
     service obligations with respect to its outstanding indebtedness; and

  .  limit, along with the financial and other restrictive covenants in the
     Authority's outstanding indebtedness, the Authority's ability to borrow
     additional funds.

  If the Authority is not able to compete successfully with existing and
  potential competitors, it may not be able to generate sufficient cash flow.

   Existing Competitors

   Mohegan Sun currently competes primarily with Foxwoods and, to a lesser
extent, with casinos in Atlantic City, New Jersey. Foxwoods, operated by the
Mashantucket Pequot Tribe, is approximately 10 miles from Mohegan Sun and is
the largest gaming facility in the United States in terms of total gaming
positions. In addition, Foxwoods offers a number of amenities that, prior to
the completion of the remaining components of Project Sunburst, Mohegan Sun
does not have, including hotel accommodations and a convention center. Foxwoods
has been in operation for approximately ten years and may have greater
financial resources and greater operating experience than the Authority or the
Tribe.

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<PAGE>

   When Project Sunburst is completed, the Authority also intends to compete
for customers more directly with casinos in Atlantic City, New Jersey, and to a
lesser extent with other gaming resorts including those on the Gulf Coast of
Mississippi and in Las Vegas, Nevada. Many of these casinos and resorts have
greater resources and name recognition than Mohegan Sun.

   Potential New Competitors

   Due to various federal and state laws, casino gaming in the northeastern
United States may be conducted only in Atlantic City, New Jersey, by federally
recognized Indian tribes operating under federal Indian gaming law or on cruise
ships in international waters. Mohegan Sun currently faces competition from
several casinos and gaming facilities located on Indian tribal lands in the
State of New York. Also, other Indian tribes have announced casino projects in
the State of New York which, if completed, will add significant casino space
and hotel rooms to the northeastern United States market.

   In addition, several groups of individuals in Connecticut and Massachusetts
are seeking federal recognition as Indian tribes with the announced intent of
establishing gaming operations in or near Connecticut. Some of these groups
have publicized the existence of financial backers for the construction of
gaming facilities. A number of states, including Connecticut, Massachusetts and
New York, also have investigated legalizing casino gaming by non-Indians in one
or more locations.

   The Authority cannot predict whether any of these individual groups or other
efforts to legalize casino gaming will be successful in establishing gaming
operations, and if established, whether such proliferation of gaming operations
will have a material adverse effect on the Authority's operations. For a more
detailed description of the Authority's competition, see "--Competition from
Other Gaming Operations."

  Restrictions in the Bank Credit Facility and the indentures which govern the
  Authority's long-term debt obligations may impose limits on the Authority's
  ability to pursue its business strategies.

   The Bank Credit Facility and the indentures which govern the Authority's
long-term debt obligations contain customary operating and financial
restrictions that limit its discretion on various business matters. These
restrictions include covenants limiting its ability to:

  .  incur additional debt;

  .  grant liens;

  .  make investments;

  .  sell assets;

  .  pay dividends and other distributions;

  .  make capital expenditures; and

  .  enter into transactions with affiliates.

   The Bank Credit Facility also requires the Authority to maintain certain
financial ratios, including fixed charge coverage and leverage ratios, and not
to exceed certain fixed ratios of senior indebtedness to EBITDA (earnings
before interest, taxes, depreciation and amortization). If these ratios are not
maintained, it may be impossible for the Authority to borrow additional funds
to meet its obligations. See "--Certain Indebtedness."

   These restrictions may reduce the Authority's flexibility in planning for,
or reacting to, changes in its business and the gaming industry in general and
thereby hurt its results of operations and its ability to meet its debt service
obligations with respect to its outstanding indebtedness.

                                      25

<PAGE>

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

  Mohegan Sun's failure to generate sufficient cash flow could prevent the
  Authority from fulfilling its debt service obligations with respect to its
  outstanding indebtedness.

   The Authority relies on revenues from the gaming operations of Mohegan Sun
to meet its debt service obligations. Such operations are subject to many
financial, economic, political, competitive and regulatory factors beyond the
Authority's control. If Mohegan Sun is unable to generate sufficient cash flow,
the Authority may be unable to meet its debt service obligations with respect
to the its outstanding indebtedness. The Authority could be required to reduce
or delay planned capital expenditures, including Project Sunburst, dispose of
some of its assets and/or seek to restructure some or all of its debt. We
cannot assure you that any of these alternatives could be effected on
satisfactory terms, if at all.

  The Authority's obligations under the Relinquishment Agreement could
  adversely affect its financial health and prevent it from fulfilling its debt
  service obligations under its outstanding indebtedness.

   Pursuant to the terms of the Relinquishment Agreement, the Authority is
required, among other things, to pay to Trading Cove Associates five percent of
the revenues generated by Mohegan Sun and Project Sunburst during the 15-year
period which commenced on January 1, 2000. See "--Material
Agreements--Relinquishment Agreement with Trading Cove Associates." For the
fiscal year ended September 30, 2001, the Authority made payments totaling
$42.3 million pursuant to the Relinquishment Agreement.

   This obligation consumes a significant portion of the Authority's revenues
that might otherwise be available to fund working capital, capital expenditures
and other general operating requirements. As a result, the Authority's
flexibility in planning for, or reacting to, changes in its business and the
gaming industry in general is reduced. This may place the Authority at a
disadvantage compared to its competitors that do not have such an obligation
and thereby hurt its results of operations and its ability to meet its debt
service obligations with respect to its outstanding indebtedness. The
Relinquishment Agreement also contains operating and financial restrictions
similar to those contained in the Bank Credit Facility and the indentures which
govern the Authority's long-term debt obligations.

  Failure to complete Project Sunburst's planned construction within its budget
  and on time with minimal disruption to existing operations could adversely
  affect the financial health of the Authority.

   The anticipated construction costs and completion dates for Project Sunburst
are based on budgets, design documents and schedule estimates prepared by
Trading Cove Associates for the Authority with the assistance of architects and
contractors. Construction projects such as Project Sunburst are inherently
subject to significant development and construction risks. These include the
following:

  .  labor disputes;

  .  shortages of material and skilled labor;

  .  weather interference;

  .  engineering problems;

  .  environmental problems (including asbestos, lead and hazardous waste
     removal);

  .  fire, flood and other natural disasters; and

  .  geological, construction, demolition, excavation, regulatory and/or
     equipment problems.

                                      26

<PAGE>

   All of these risks and others could cause unanticipated cost increases.

   A major portion of Project Sunburst has been completed with the opening on
September 25, 2001 of the Casino of the Sky, the Shops at Mohegan Sun and
Mohegan Sun Arena. A partial opening of the hotel and convention center,
expected in April 2002, is currently on schedule and full completion of
construction is expected in June 2002. We cannot assure you that the
uncompleted portion of Project Sunburst will begin operations on time or that
construction costs for Project Sunburst will not exceed its budget. Failure to
complete Project Sunburst within its budget or on schedule may have a material
adverse effect on the results of Mohegan Sun's operations and the Authority's
financial condition.

   Furthermore, although construction activities related to Project Sunburst
have been planned in a manner as to minimize disruption, construction noise and
debris and the temporary closing of some of the facilities, such activities may
disrupt Mohegan Sun's current operations. Unexpected construction delays could
exacerbate or magnify these disruptions. We cannot assure you that construction
of Project Sunburst will not have a material adverse effect on the Authority's
results of operations.

  A downturn in the regional economy could negatively impact the Authority's
  financial performance.

   Ninety-five percent of Mohegan Sun's patrons arrive via automobile and are
assumed to work or live in the northeastern United States. Moderate or severe
economic downturns or adverse conditions in the northeastern United States may
negatively affect the Authority's operations. During periods of economic
contraction, the Authority's revenues may decrease while some of its costs
remain fixed, resulting in decreased earnings. This is because the gaming and
other leisure activities the Authority offers 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 adversely affect consumer spending in the Authority's gaming
operations and related facilities, as consumers spend less in anticipation of a
potential economic downturn. Accordingly, the Authority's business, assets,
financial condition and results of operations could be adversely affected by a
weakening of regional economic conditions.

  Mohegan Sun is subject to the risks of a new business.

   Although Mohegan Sun has been in operation since October 12, 1996, the
addition of a hotel and other new and untested amenities has many of the same
risks inherent in the establishment of a new business enterprise. The
Authority's lack of operating history in these new ventures could lead to
service disruptions and other operational and financial issues that may
adversely affect the Authority's future operating results and its ability to
meet its debt service obligations with respect to its outstanding indebtedness.

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

   Mohegan Sun, when Project Sunburst is completed, will have significantly
larger gaming facilities, entertainment venues and retail space, as well as new
hotel and convention facilities. There can be no assurance that the Authority
will be successful in integrating the planned casino and resort 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.

  The loss of a key management member could have a material adverse effect on
  Mohegan Sun.

   Mohegan Sun's success depends in large part on the continued service of key
management personnel, particularly William Velardo, the Authority's President
and General Manager, Mitchell Etess, the Authority's Executive Vice President
of Marketing, and Jeffrey Hartmann, the Authority's Executive Vice President of

                                      27

<PAGE>

Finance/Chief Financial Officer. The loss of the services of one or more of
these individuals or other key personnel could have a material adverse effect
on the Authority's business, operating results and financial condition.

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

   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. Notwithstanding the foregoing, we cannot
assure you that (1) the various environmental reports or any other existing
environmental studies revealed all environmental liabilities, (2) any prior
owners or tenants did not create any material environmental condition not known
to us, (3) future laws, ordinances or regulations will not impose any material
environmental liability or (4) a material environmental condition does not
otherwise exist on the site.

   Any of the above could have a material adverse effect upon the Authority's
future operating results. See "--Environmental Matters."

  Gaming is a highly regulated industry and changes in the law could have a
  material adverse effect on the Tribe's and the Authority's ability to conduct
  gaming operation.

   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 Division of Special Revenue, the State Police and the
Department 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 by the Authority and the revenues realized
therefrom.

   Currently, the operation of all gaming on Indian lands is subject to the
IGRA. For the past several years, legislation has been introduced in Congress
with the intent of modifying a variety of perceived problems with the 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. Various bills also have been
proposed, however, which would have the effect of repealing many of the key
provisions of the 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 the IGRA have been enacted, the Authority cannot predict the
ramifications 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, the Authority's results of operations and its
ability to meet its 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 the
ability of the Authority to conduct its gaming operations. Connecticut
currently permits, among other things, a state lottery, jai alai fronton
betting and off-track betting parlors. See "Government Regulation."

                                      28

<PAGE>

  A change in the Authority's current tax-exempt status could have a material
  adverse effect on the Authority's results of operations.

   Based on current interpretation of the Internal Revenue Code, which we refer
to as the Code, neither the Tribe nor the Authority is subject to federal
income or property taxes. However, we cannot assure you that Congress will not
reverse or modify the exemption for Indian tribes from federal income or
property taxation.

   Efforts have been made in 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,
some could be passed in the future. Future proposals or amendments in this area
could materially and adversely affect the Authority's results of operations.

  The Authority and the Tribe enjoy sovereign immunity from unconsented suit,
  and jurisdiction of state and federal courts may be difficult or impossible
  to obtain in commercial disputes against the Authority or the Tribe.

   The Authority and the Tribe 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 the
Authority), the tribe must have effectively waived its sovereign immunity with
respect to the matter in dispute. Both the Tribe and the Authority have granted
a limited waiver of sovereign immunity and consent to suit in connection with
some of the Authority's outstanding indebtedness (such as suits against the
Authority to enforce its obligation to repay certain outstanding indebtedness).
Generally, waivers of sovereign immunity have been held to be enforceable
against Indian tribes. However, with limited exceptions, the Tribe and the
Authority have not waived sovereign immunity from private civil suits,
including violations of the federal securities laws. For this reason, an
investor in the Authority may not have any remedy against the Authority or the
Tribe for violations of federal securities laws.

   Disputes against the Authority or the Tribe may be brought in a federal or
state court that has jurisdiction over the matter. However, as 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 because a commercial dispute is unlikely to present a federal question.
In addition, state courts may not exercise jurisdiction over disputes arising
on the Mohegan reservation. Also, 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 the federal
or state court. Thus, there may be no federal or state court forum with respect
to a dispute against the Authority or the Tribe. See "--Government
Regulation--Tribal Law and Legal Systems."

   The Tribe's Constitution, which established the Authority and the Gaming
Disputes Court, 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 and the provisions establishing the
Authority and the Gaming Disputes Court could be amended by the Tribe's
registered voters to impair the obligation of such contracts. For a more
detailed description of the Gaming Disputes Court and the amendment process for
the Tribe's Constitution, see "--Mohegan Tribe of Indians of Connecticut."

  Neither the Tribe nor the Authority may be subject to the federal bankruptcy
  laws, which could impair the ability of the Authority's creditors to be
  repaid from the sale of the Authority's assets if the Authority is unwilling
  or unable to meet its obligations.

   The Tribe and the Authority may not be subject to the federal bankruptcy
laws. Thus, if bankruptcy, liquidation, reorganization or other similar event
occurs, no assurance can be given that any forum will be

                                      29

<PAGE>

available to the creditors other than the Gaming Disputes Court. In such court,
there are presently no guiding precedents for the interpretation of Tribal law.
Any execution of a judgment of the Gaming Disputes Court 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 the casino facility
is located is owned by the United States in trust for the Tribe, and creditors
of the Authority or the Tribe may not foreclose upon or obtain title to the
land. See "--Mohegan Tribe of Indians of Connecticut--Gaming Disputes Court."

Item 2. Properties

   Mohegan Sun is located on 240 acres of the Tribe's reservation just outside
of Uncasville, Connecticut, approximately one mile from the interchange of
Interstate 395 and Connecticut Route 2A. The land 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, 100 miles from Boston, Massachusetts, 35 miles
from Hartford, Connecticut and 50 miles from Providence, Rhode Island.

   The Authority has 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 the Authority is 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 the Authority 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. See "--Item 1. Business--Material
Agreements--Land Lease from the Tribe to the Authority."

   The Authority has entered into various lease agreements for properties
adjacent to Mohegan Sun. The properties are owned by MTIC Acquisitions, L.L.C.,
a Connecticut limited liability company controlled by the Tribe. The properties
are used for providing access and/or parking for Mohegan Sun. For the fiscal
years ending September 30, 2001, 2000 and 1999, the Authority incurred charges
of $386,000, $386,000 and $412,000, respectively, relating to the lease
agreements.

Item 3. Legal Proceedings

   The Authority is a defendant in certain litigation incurred in the normal
course of business. The Authority believes that, based on the advice of
counsel, the aggregate liability, if any, arising from such litigation will not
have a materially adverse effect on the Authority's financial position or
results of operations.

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

   None.

                                      30

<PAGE>

                                    PART II

Item 5. Market for Registrant's Common Equity and Related Stockholders Matters

   The Authority has 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, 2001, 2000 and 1999, and as of September 30, 2001 and 2000, have been taken
from the Authority's audited financial statements included in this Form 10-K.
The selected financial data set forth below for the fiscal years ended
September 30, 1998 and 1997, and as of September 30, 1999, 1998 and 1997, have
been derived from the Authority's audited financial statements for those years,
which are not included in this Form 10-K. The selected financial data shown
below should be read in conjunction with the Authority's financial statements
and related notes beginning on page F-1 of this Form 10-K, the section entitled
"--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. Unless otherwise indicated, dollar amounts shown in the
following table are in thousands.

<TABLE>
<CAPTION>
                                                As of or for the Fiscal Year Ended September 30,
                                        ----------------------------------------------------------------
                                           2001          2000         1999          1998        1997(1)
                                        ----------     --------     ---------     ---------     --------
<S>                                     <C>            <C>          <C>           <C>           <C>
Operating Results:
   Gross revenues...................... $  857,977     $809,314     $ 725,510     $ 611,463     $506,911
   Promotional allowances..............    (71,372)     (70,044)      (56,827)      (42,501)     (43,276)
                                        ----------     --------     ---------     ---------     --------
   Net revenues........................ $  786,605     $739,270     $ 668,683     $ 568,962     $463,635
                                        ----------     --------     ---------     ---------     --------
   Income from operations.............. $  190,067     $204,304     $ 156,546     $ 135,687     $ 82,675
   Other income (expense), net.........     15,372 (2)  (57,696)(3)  (156,226)(4)   (47,539)     (43,301)
   Loss from discontinued operations...       (591)        (674)         (812)         (569)      (2,687)
   Extraordinary items.................         --           --       (38,428)(5)  (419,458)(6)       --
                                        ----------     --------     ---------     ---------     --------
   Net income (loss)................... $  204,848     $145,934     $ (38,920)    $(331,879)    $ 36,687
                                        ----------     --------     ---------     ---------     --------
Other Data:
   EBITDAR(7).......................... $  256,164     $253,955     $ 239,475     $ 200,658     $137,776
   Interest expense, net............... $   25,060     $ 37,799     $  55,595     $  50,172     $ 45,095
   Capital expenditures................ $  626,350     $288,278     $  62,795     $  32,731     $ 35,700
   Net cash flows provided by
     operating activities.............. $  274,294     $218,162     $ 144,724     $ 131,463     $115,906
Balance Sheet Data:
   Total assets........................ $1,452,735     $885,379     $ 914,962     $ 554,480     $386,974
   Long-term debt and capital lease
     obligations....................... $  909,514     $506,391     $ 519,298     $ 294,567     $298,237
</TABLE>
--------
(1) The Authority commenced operations at Mohegan Sun on October 12, 1996.

(2) Includes income of $38.6 million related to reassessment of the
    Relinquishment Agreement. A discussion of the estimation may be found under
    Note 13 to the Authority's financial statements beginning on page F-1 of
    this Form 10-K.

(3) Includes expense of $31.8 million related to the reassessment of the
    Authority's liability under the Relinquishment Agreement.

(4) Includes expense of $111.9 million related to the reassessment of the
    Authority's liability under the Relinquishment Agreement.

(5) Includes expense of $33.7 million related to the tender premium of the $175
    million senior secured notes, $5.2 million write-off of financing fees, net
    of $500,000 forgiveness of debt.

                                      31

<PAGE>

(6) Includes expense of $419.1 million related to the initial assessment of the
    Authority's liability under the Relinquishment Agreement.

(7) EBITDAR represents earnings before interest, taxes, depreciation,
    amortization, pre-opening costs and fees earned by TCA pursuant to the
    Management Agreement and the Relinquishment Agreement. See "--Item 7.
    Management's Discussion and Analysis of Financial Condition and Results of
    Operations."

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 the
Authority's financial statements and the related notes beginning on page F-1 of
this Form 10-K, "--Item 6. Selected Financial Data," and "Part I--Item 1.
Business."

   The Authority's sole business is the operation of Mohegan Sun, which opened
in October 1996. In order to capitalize on the strong demand for gaming
opportunities in the northeastern United States and Mohegan Sun's popularity,
the Authority decided in 1998 to expand the casino significantly and to add a
hotel, convention facilities, an entertainment arena and additional retail
establishments. We refer to this expansion as Project Sunburst. The first phase
of Project Sunburst, the Casino of the Sky, opened on September 25, 2001. The
remaining components, including the majority of a 1,200 room luxury hotel and
approximately 100,000 square feet of convention space, are expected to open in
April 2002 with full completion of construction expected in June 2002. See
"Part I--Item 1. Business--Mohegan Sun" and "Part I--Item 1. Business--Project
Sunburst."

   Slot gaming market. The Connecticut slot gaming market has expanded from
$907.9 million in 1997 to $1.4 billion in 2001 while Mohegan Sun's share of
this market has grown from $320.7 million or 35.3% in 1997 to $578.4 million or
41.3% in 2001.

   Gross revenues. The Authority derives most of its revenue from:

  .  Gaming revenues (including revenues from slot machines and table games)

  .  Food and beverage sales

  .  Retail and other revenues (including the Mohegan Sun gasoline and
     convenience center which opened in December 1998)

   The table below summarizes our percentage of gross revenues from each of
these sources:

<TABLE>
<CAPTION>
                                                      Year ended
                                                     September 30,
                                                   ----------------
           <S>                                     <C>   <C>   <C>
                                                   2001  2000  1999
                                                   ----  ----  ----
           Gaming revenues........................   88%   88%   88%
           Food and beverage......................    6%    6%    7%
           Retail and other revenues..............    6%    6%    5%
                                                   ----  ----  ----
              Total...............................  100%  100%  100%
</TABLE>

   Slot win. Gross slot win represents all amounts played in the slot machines
reduced by both (1) the winnings paid out and (2) all amounts deposited by the
Authority into the slot machines to ensure sufficient coins in each machine to
pay out the winnings. Progressive slot machines retain some 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. We refer to such aggregated amounts as
progressive jackpots. Progressive jackpots are accrued by the Authority until
paid and thus are deducted from gross slot win to arrive at net slot win.

                                      32

<PAGE>

   Promotional allowances. The Authority operates the Mohegan Sun complimentary
program in which food, beverage and other services are furnished to guests free
of charge. The retail value of these complimentary items is included in gross
revenue and then deducted as promotional allowances to arrive at net revenues.

   Mohegan Sun Player's Club. The Mohegan Sun Players's Club is a voluntary
program, without membership fees, which awards points to members based on their
gaming activities. These points may be used to purchase items at Mohegan Sun
restaurants, retail stores and the Mohegan Sun gasoline and convenience center,
as well as to purchase tickets to entertainment events held at the Mohegan Sun
facilities. The Authority includes the retail value of these purchases in gross
revenues and deducts the value as promotional allowances to arrive at net
revenues.

   EBITDAR. EBITDAR represents earnings before interest, taxes, depreciation,
amortization, pre-opening costs and fees earned by TCA pursuant to the
Management Agreement and the Relinquishment Agreement. The Authority stopped
paying management fees to TCA on January 1, 2000 due to the termination of the
Management Agreement but simultaneously began paying fees under the
Relinquishment Agreement. Under the Management Agreement, TCA was responsible
for the day-to-day management, operation and maintenance of Mohegan Sun. The
Management Agreement authorized TCA to pay itself a management fee in monthly
installments based on 30% to 40% of net income, before management fees, as
defined in the Management Agreement, depending on profitability levels. Under
the Relinquishment Agreement, the Authority and TCA agreed to terminate the
Management Agreement with TCA on January 1, 2000. To compensate TCA for
terminating its management rights, the Authority agreed to pay to TCA 5% of the
revenues, as defined in the Relinquishment Agreement, generated by Mohegan Sun
and any expansion during the 15-year period commencing on January 1, 2000 and
ending on December 31, 2014. This information should not be considered as an
alternative to any measure of performance as promulgated under accounting
principles generally accepted in the United States of America (such as
operating income or net income), nor should it be considered as an indicator of
our overall financial performance. Our calculation of EBITDAR is likely to be
different from the calculation of EBITDA or similar measurements used by other
companies and therefore comparability may be limited. See "Part I--Item 1.
Business--Material Agreements" for a further description of the Management
Agreement and the Relinquishment Agreement.

   Relinquishment liability and reassessment expense. The Authority has
recorded a relinquishment liability of the estimated present value of its
obligations under the Relinquishment Agreement. The relinquishment liability is
reassessed periodically to account for increases or decreases in projected
revenues as well as the effect of the passage of time on the present value of
the future payments to be made pursuant to the Relinquishment Agreement. In
addition, the Authority has capitalized $130.0 million of this relinquishment
liability in connection with the trademark value of the Mohegan Sun brand name.
See Note 13 to the Authority's financial statements beginning on page F-1 of
this Form 10-K for a further discussion of how the relinquishment liability and
related reassessments are calculated.

Results of Operations

  Comparison of Operating Results for the Fiscal Years Ended September 30, 2001
  and 2000

   Net revenues for fiscal year 2001 were $786.6 million, an increase of $47.3
million or 6.4% over fiscal year 2000 net revenues of $739.3 million. The
earnings before interest, taxes, depreciation, amortization, pre-opening costs
and relinquishment fees earned by TCA, or EBITDAR, for the fiscal year ended
September 30, 2001 increased $2.2 million or 0.9% to $256.2 million compared to
$254.0 million in fiscal year 2000. Mohegan Sun achieved a fiscal year 2001
EBITDAR margin of 32.6% compared to a 34.4% margin during the fiscal year ended
September 30, 2000. The decline in the margin was attributable to increased
labor, marketing and operating expenses and an increase in pre-opening costs
related to Project Sunburst. On October 13, 2000, the Authority announced that
bingo operations would be converted into a 637-unit smoke-free slot area.
Therefore, the corresponding revenues, promotional allowances, expenses and
interest income were reported as discontinued operations. See "Part I-- Item 1.
Business--Mohegan Sun."

                                      33

<PAGE>

   The Connecticut slot market continued to grow as did Mohegan Sun's market
share. The Connecticut slot market grew at a rate of 4.1% from fiscal year 2000
to fiscal year 2001. The State of Connecticut reported a gross slot win of $1.4
billion and $1.3 billion for the fiscal years ended September 30, 2001 and
2000, respectively. Mohegan Sun exceeded the market's growth in slot win as it
experienced a fiscal year 2001 increase in gross slot revenues of 7.0% over the
prior year. Gross slot revenues were $578.4 million and $540.3 million for the
fiscal years ended September 30, 2001 and 2000, respectively. Gross slot win
per unit per day was $471 and $488 for the respective periods. The decrease in
gross slot win per unit was due to an increase in the weighted average number
of slot machines year over year from 3,028 to 3,362.

   Gaming revenues for fiscal year 2001 increased $41.4 million or 5.8% to
$751.0 million compared to $709.6 million for the fiscal year 2000. The
increase in gaming revenues was primarily due to a 6.3% growth in Mohegan Sun
net slot revenues as a result of the continued growth of the Mohegan Sun
customer base, as well as the opening of the first phase of Project Sunburst
for six days during fiscal year 2001. Membership in the Mohegan Sun Player's
Club totaled approximately 1.6 million and 1.4 million members as of September
30, 2001 and 2000, respectively.

   For the fiscal year ended September 30, 2001, food and beverage revenues
were $49.5 million, an increase of $2.2 million or 4.6% compared to the prior
year. The increase in revenues was attributable to a higher average sale per
check primarily associated with new Project Sunburst restaurants. Food and
beverage revenues for the fiscal year ended September 30, 2000 were $47.3
million.

   Retail and other revenues were $57.5 million in fiscal year 2001, a growth
of $5.1 million or 9.8% over fiscal year 2000. Retail and other revenues for
the fiscal year ended September 30, 2000 were $52.4 million. This increase was
attributed to increased popularity of the Mohegan Sun gasoline and convenience
center.

   Promotional allowances totaled $71.4 million for the fiscal year ended
September 30, 2001, representing a $1.3 million or 1.9% increase over fiscal
year 2000 promotional allowances of $70.0 million. The increase in promotional
allowances was attributable to the increase in gross revenues. Promotional
allowances as a percentage of gross revenue decreased from 8.7% in fiscal year
2000 to 8.3% in fiscal year 2001 due to an increase in the redemption of
Mohegan Sun Player's Club points at retail outlets not managed by the
Authority. See Note 3 to the Authority's financial statements beginning on page
F-1 of this Form 10-K.

   Total costs and expenses were $596.5 million for the fiscal year ended
September 30, 2001, an increase of $61.6 million or 11.5% over the prior year's
costs and expenses of $535.0 million. The increase in expenses was primarily a
result of a 6.0% increase in gross revenues and pre-opening expenses related to
Project Sunburst.

   Gaming costs and expenses were $334.5 million for fiscal year 2001, an
increase of $27.3 million or 8.9% over gaming costs and expenses for fiscal
year 2000 of $307.2 million. The increase in gaming costs and expenses is
primarily due to increases in labor and benefit costs, Slot Win Contribution
and the allocation of complimentaries associated with gaming. The Slot Win
Contribution for the fiscal years ended September 30, 2001 and 2000 totaled
$144.6 million and $135.1 million, respectively. The increase in Slot Win
Contribution was directly related to the increase in slot revenues. See "Part
I--Item 1. Business--Material Agreements--Gaming Compact with the State of
Connecticut" for a description of the Slot Win Contribution.

   Food and beverage costs for fiscal year 2001 increased $702,000 to $24.4
million or 3.0% over fiscal year 2000 food and beverage costs of $23.7 million.
The increase was attributable to increased labor and benefit costs.

   Retail and other costs were $32.1 million for fiscal year 2001, an increase
of $5.0 million or 18.3% over retail and other costs of $27.1 million for
fiscal year 2000. The increase was primarily attributable to the increased
popularity of the Mohegan Sun gasoline and convenience center, as well as the
increase in expenses associated with the Uncas Pavilion. The Uncas Pavilion was
permanently closed in September 2001.

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<PAGE>

   General and administrative costs were $139.3 million and $127.2 million for
fiscal years ended September 30, 2001 and 2000, respectively. The increase of
$12.1 million or 9.5% was attributable to increases in marketing expenses aimed
at our direct mail and advertising programs.

   Pre-opening costs were $31.3 million for the fiscal year ended September 30,
2001, an increase of $26.1 million over pre-opening costs of $5.3 million for
fiscal year 2000. Pre-opening costs are primarily comprised of personnel costs
and marketing and advertising costs associated with the September 25, 2001
opening of Project Sunburst.

   There were no management fees earned by TCA for the fiscal year ended
September 30, 2001, compared to $13.6 million of management fees for fiscal
year 2000. The decrease in management fees was a direct result of the
termination of the Management Agreement on December 31, 1999. See "Part I--Item
1. Business--Material Agreements."

   For the fiscal year ended September 30, 2001, depreciation and amortization
increased $4.0 million to $34.8 million, an increase of 13.1% over depreciation
and amortization for fiscal year 2000 of $30.7 million. The increase was the
result of additional depreciation on capital expenditures made during the year.

   Income from operations for the fiscal year ended September 30, 2001 totaled
$190.1 million compared to $204.3 million in fiscal year 2000. The decrease was
primarily due to an increase in pre-opening costs and an increase in gaming
costs and expenses. The increase in gaming costs and expenses was due to
increases in labor and benefit costs and the Slot Win Contribution from the
previous fiscal year. The increase in pre-opening costs was associated with
Project Sunburst.

   For the fiscal year ended September 30, 2001, the relinquishment liability
reassessment income associated with the Relinquishment Agreement with TCA was
$38.6 million, compared to an expense of $31.8 million in fiscal year 2000. The
Authority reviewed current revenue forecasts and has reduced revenue
projections for the period in which the Relinquishment Agreement applies, due
to uncertainties involving economic market conditions and future competition
from potential Native American casinos. The reassessment represented the impact
of time on the value of money discounted to present value using the Authority's
current risk-free rate of investment and an adjustment for the difference
between forecasted and actual revenues. See Note 13 to the Authority's
financial statements beginning on page F-1 of this Form 10-K.

   Interest and other income was $2.9 million for the fiscal year ended
September 30, 2001, a decrease of $10.5 million or 78.3% over interest and
other income of $13.5 million for fiscal year 2000. The decrease in interest
and other income was related to declining interest rates during the year and a
decrease in the weighted average invested cash, which has been used in
financing Project Sunburst. Weighted average invested cash was $29.1 million
and $171.3 million for the fiscal years ended September 30, 2001 and 2000,
respectively.

   Interest expense, net, of $25.1 million for the fiscal year ended September
30, 2001 represents a decrease of $12.7 million or 33.7% over the prior year
interest expense. The decrease was mainly attributable to the capitalization of
$27.4 million in interest on the Bank Credit Facility, the $200.0 million
Senior Notes, the $300.0 million 1999 Senior Subordinated Notes and the $150.0
million 2001 Senior Subordinated Notes. During fiscal year 2000, $9.9 million
was capitalized. The increase in debt was the result of draws on the Bank
Credit Facility and the issuance of the $150.0 million 2001 Senior Subordinated
Notes. The weighted average interest rate was 8.04% and 8.39% for the fiscal
years ended September 30, 2001 and 2000, respectively. The weighted average
debt outstanding was $787.9 million and $512.6 million for the fiscal years
ended September 30, 2001 and 2000, respectively.

   Other expenses for the fiscal years ended September 30, 2001 and 2000 of
$116,000 and $1.5 million, respectively, were attributable to the disposal of
assets by the Authority.

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<PAGE>

   The change in fair value of derivative instruments of $949,000 represents
the change in time value of the derivative instruments. The decrease in the
market value of derivative instruments held at September 30, 2001 of $6.1
million was offset by a reclassification of $5.1 million of intrinsic value to
accumulated other comprehensive loss. The Authority held no derivative
instruments at September 30, 2000. See "Part II--Item 7. Quantitative and
Qualitative Disclosure of Market Risk" and Note 8 to the Authority's financial
statements beginning on page F-1 of this Form 10-K.

   Loss from discontinued operations totaled $591,000 for the fiscal year ended
September 30, 2001, a decrease of $83,000 or 12.3% over the loss from
discontinued operations of $674,000 for the fiscal year ended September 30,
2000. The loss was the result of the decision of the Authority, in conjunction
with the Tribe, to cease bingo operations in order to convert the floor space
into a 637-unit smoke-free slot area.

   Net income for the fiscal year ended September 30, 2001 increased $58.9
million to $204.8 million. The increase in net income was primarily
attributable to the decrease in the relinquishment liability reassessment
expense from $31.8 million in fiscal year 2000 to income of $38.6 million in
fiscal year 2001. The increase was partially offset by the decrease in income
from operations from $204.3 million in fiscal year 2000 to $190.1 million in
fiscal year 2001. Net income for fiscal year 2000 totaled $145.9 million.

  Comparison of Operating Results for the Fiscal Years Ended September 30, 2000
  and 1999

   Net revenues for fiscal year 2000 were $739.3 million, an increase of $70.6
million or 10.6% over fiscal year 1999 net revenues of $668.7 million. The
earnings before interest, taxes, depreciation, amortization, pre-opening costs
and relinquishment and management fees earned by TCA, or EBITDAR, for the
fiscal year ended September 30, 2000 increased $14.5 million or 6.0% to $254.0
million compared to $239.5 million in fiscal year 1999. Mohegan Sun achieved a
fiscal year 2000 EBITDAR margin of 34.4% compared to a 35.8% EBITDAR margin
during the fiscal year ended September 30, 1999. On October 13, 2000, the
Authority announced that bingo operations would be converted into the Hall of
the Lost Tribes; therefore, the corresponding revenues, promotional allowances,
expenses and interest income were consolidated in discontinued operations. See
"Part I--Item 1. Business--Mohegan Sun."

   The Connecticut slot market continued to grow as did Mohegan Sun's market
share. The Connecticut slot market grew at a rate of 8.5% from fiscal year 1999
to fiscal year 2000. The State of Connecticut reported a gross slot win of $1.3
billion and $1.2 billion for the fiscal years ended September 30, 2000 and
1999, respectively. Mohegan Sun exceeded the market's growth in slot win as it
experienced a fiscal year 2000 increase in net slot revenues of 11.6% over the
prior year. Gross slot revenues were $529.9 million and $474.9 million for the
fiscal years ended September 30, 2000 and 1999, respectively. Gross slot win
per unit per day was $488 and $439 for the respective periods.

   Gaming revenues for fiscal year 2000 increased $68.5 million or 10.7% to
$709.6 million compared to $641.1 million for the fiscal year 1999. The
increase in gaming revenues was primarily due to an 11.6% growth in Mohegan Sun
net slot revenues as a result of the continued growth of the Mohegan Sun
customer base. Membership in the Mohegan Sun Player's Club totaled
approximately 1.4 million members and approximately 1.2 million members as of
September 30, 2000 and 1999, respectively.

   For the fiscal year ended September 30, 2000, food and beverage revenues
were $47.3 million, a decrease of $591,000 or 1.2% compared to the prior year.
The decrease in revenues was attributable to reduced food servings and a patron
shift in Mohegan Sun Player's Club point redemption from the food and beverage
products toward retail and gas products. Food and beverage revenues for the
fiscal year ended September 30, 1999 were $47.9 million.

   Retail and other revenues were $52.4 million in fiscal year 2000, a growth
of $15.9 million or 43.5% over fiscal year 1999. Retail and other revenues for
the fiscal year ended September 30, 1999 were $36.5 million. This

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<PAGE>

increase was attributed to increased utilization of retail complimentaries and
the popularity of the Mohegan Sun gasoline and convenience center.

   Promotional allowances totaled $70.0 million for the fiscal year ended
September 30, 2000, representing a $13.2 million or 23.3% increase over fiscal
year 1999 promotional allowances of $56.8 million. The increase was
attributable to an increase in the customer base as well as increased
utilization of the Mohegan Sun Player's Club complimentary program.
Additionally, promotional allowances as a percentage of gross revenue increased
from 7.8% in fiscal year 1999 to 8.7% in fiscal year 2000.

   Total costs and expenses were $535.0 million for the fiscal year ended
September 30, 2000, an increase of $22.8 million or 4.5% over the prior year's
costs and expenses of $512.1 million. The increase in expenses was primarily a
result of an 11.6% increase in gross revenues and pre-opening expenses related
to Project Sunburst incurred during fiscal year 2000.

   Gaming costs and expenses were $307.2 million for fiscal year 2000, an
increase of $33.7 million or 12.3% over gaming costs for fiscal 1999 of $273.5
million. The increase in gaming costs and expenses is primarily due to
increases in Slot Win Contribution and the allocation of complimentaries
associated with gaming. The Slot Win Contribution for the fiscal years ended
September 30, 2000 and 1999 totaled $135.1 million and $121.1 million,
respectively. The increase in Slot Win Contribution was directly related to the
increase in slot revenues.

   Food and beverage costs for fiscal year 2000 increased $1.5 million to $23.7
million or 6.9% over fiscal year 1999 food and beverage costs of $22.2 million.
The increase was attributable to increased labor and benefit costs.

   Retail and other costs were $27.1 million for fiscal year 2000, an increase
of $4.6 million or 20.2% over retail and other costs of $22.6 million for
fiscal year 1999. The increase was primarily attributable to a full year of
operations for the Mohegan Sun gasoline and convenience center, which opened in
December 1998, as well as the increased utilization of the Mohegan Sun
complimentary program in the retail outlets.

   General and administrative costs were $127.2 million and $110.9 million for
fiscal years ended September 30, 2000 and 1999, respectively. The increase of
$16.3 million or 14.7% was partially attributable to continued marketing
campaigns associated with efforts to increase the frequency of patron visits.
Of the $16.3 million increase, $3.5 million was associated with the Uncas
Pavilion.

   Pre-opening costs were $5.3 million for the fiscal year ended September 30,
2000. Pre-opening costs were composed of labor and advertising costs associated
with Project Sunburst. Mohegan Sun did not incur any pre-opening costs for the
fiscal year ended September 30, 1999.

   Management fees earned by TCA totaled $13.6 million for the fiscal year
ended September 30, 2000, a decrease of $45.9 million or 77.1% over management
fees for fiscal year 1999 of $59.5 million. The decrease in management fees was
a direct result of the termination of the Management Agreement on January 1,
2000.

   For the fiscal year ended September 30, 2000, depreciation and amortization
increased $7.3 million to $30.7 million, an increase of 31.4% from depreciation
and amortization for fiscal year 1999 of $23.4 million. The increase was
primarily attributable to the $4.3 million amortization of the trademark asset
and the increase in depreciation of newly acquired capital assets including the
Riverview Garage and the Eagleview Center.

   Income from operations for the fiscal year ended September 30, 2000 totaled
$204.3 million compared to $156.5 million in fiscal year 1999. The increase was
primarily due to an increase in gaming revenues.

   For the fiscal year ended September 30, 2000, the relinquishment liability
reassessment expense associated with the Relinquishment Agreement with TCA was
$31.8 million, compared to $111.9 million in fiscal year

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<PAGE>

1999. The reassessment represents the impact of time on the value of money
discounted to present value using the Authority's current risk-free rate of
investment and an adjustment for the difference between forecasted and actual
revenues. See Note 13 to the Authority's financial statements beginning on page
F-1 of this Form 10-K.

   Interest and other income was $13.5 million for the fiscal year ended
September 30, 2000, an increase of $2.2 million over interest and other income
of $11.3 million for fiscal year 1999. The increase in interest and other
income was related to the investment of the remainder of the proceeds from the
Authority's Senior Notes and 1999 Senior Subordinated Notes issued on March 3,
1999. A portion of the financing was used to pay off existing debt and the
remainder was invested to be used later for construction of Project Sunburst.
The Authority's treasury program requires investment in investment-grade
commercial paper having maturities not more than six months from the date of
acquisition. Weighted average invested cash was $171.3 million and $151.8
million for the fiscal years ended September 30, 2000 and 1999, respectively.

   Interest expense of $37.8 million for the fiscal year ended September 30,
2000 represents a decrease of $17.8 million or 32.0% over the prior year
interest expense. The decrease was mainly attributable to the capitalization of
$9.9 million in interest on the $200 million Senior Notes and the $300 million
1999 Senior Subordinated Notes to Project Sunburst. The increase in debt was
the result of the payoff of the $175 million of the Authority's senior secured
notes due 2002 (the "Senior Secured Notes"), the defeasance of the $90 million
of the Authority's subordinated financing from Sun International and Waterford
Gaming L.L.C., which was in the form of notes (the "Subordinated Notes"), and
the issuance of the $200 million Senior Notes and $300 million 1999 Senior
Subordinated Notes in March 1999. The weighted average interest rate was 8.39%
and 10.45% for the fiscal years ended September 30, 2000 and 1999,
respectively. The weighted average debt outstanding was $512.6 million and
$435.1 million for the fiscal years ended September 30, 2000 and 1999,
respectively.

   Other expense for the fiscal year ended September 30, 2000 was $1.5 million
and was attributable to the disposal of assets having a net book value of $1.5
million. There were no costs attributed to other expense in fiscal year 1999.

   Loss from discontinued operations totaled $674,000 for the fiscal year ended
September 30, 2000, a decrease of $138,000 or 17.0% over the loss from
discontinued operations for the fiscal year ended September 30, 1999 of
$812,000. The loss was the result of the decision of the Authority, in
conjunction with the Tribe, to cease bingo operations in order to convert the
floor space into a 637-unit smoke-free slot area.

   Net income for the fiscal year ended September 30, 2000 increased $184.9
million to $145.9 million. The increase in net income was primarily
attributable to the decrease in the relinquishment liability reassessment
expense from $111.9 million in fiscal year 1999 to $31.8 million in fiscal year
2000 and the increase in income from operations of $47.8 million over the prior
year. Net loss for fiscal year 1999 totaled $38.9 million, which was primarily
attributable to the relinquishment reassessment expense of $111.9 million and
the extraordinary item of $38.4 million, of which $33.7 million related to the
early extinguishment of the Senior Secured Notes, $5.2 million related to the
write-off of financing fees associated with the original facility construction
and $500,000 related to the forgiveness of debt associated with the defeasance
of the Subordinated Notes (see Note 15 to the Authority's financial statements
beginning on page F-1 of this Form 10-K).

Liquidity, Capital Resources and Capital Spending

  Cash and Available Borrowings

   As of September 30, 2001, 2000 and 1999, the Authority held cash and cash
equivalents of $74.3 million, $115.7 million and $276.6 million, respectively.
Cash provided by operating activities for the fiscal year ended September 30,
2001 was $274.3 million, compared with $218.2 million and $144.7 million for
the fiscal years ended September 30, 2000 and 1999, respectively.

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<PAGE>

   During fiscal year 2000, the Authority tendered for and repaid the $90.0
million principal amount of the Subordinated Notes using the funds in the
defeasance trust that was established in fiscal year 1999, for a total cost of
$140.3 million, including all accrued and deferred interest on December 30,
1999.

   On March 3, 1999, the Authority entered into a syndicated $425.0 million
Bank Credit Facility maturing in March 2004. The Bank Credit Facility Agreement
allowed the Authority to increase the Bank Credit Facility to an aggregate
amount of $500.0 million within two years subsequent to the closing. In
November 2000, the Authority exercised its right to arrange for increases in
the Bank Credit Facility to an aggregate amount of $500.0 million. 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 or
six-month London Inter-Bank Offered Rate ("LIBOR") plus, in either case, the
applicable spread (based on the Authority's Total Leverage Ratio as defined in
the Bank Credit Facility). One-month LIBOR as of September 30, 2001 was 2.64%
and the applicable spread on a LIBOR loan was 2.375%. Interest on each LIBOR
loan that is for a term of three months or less is due and payable on the last
day of the related interest period. Interest on each LIBOR loan that is for a
term of more than three months is due and payable on the date which is three
months after the date such LIBOR loan was made, every three months thereafter
and, in any event, on the last day of the related interest period. Interest on
each base rate loan is due and payable quarterly in arrears. The Authority has
no base rate loans. Pursuant to the terms of the Bank Credit Facility, the
commitment (or the maximum amount that may be borrowed under the Bank Credit
Facility) will be automatically reduced on the earlier of March 31, 2002 or the
last day of the first full fiscal quarter following the completion date of
Project Sunburst, and on the last day of each fiscal quarter thereafter. The
amount of each such reduction must equal 10% of the commitment as in effect
immediately prior to the first such reduction. The Authority draws on the Bank
Credit Facility primarily in connection with Project Sunburst.

   On July 30, 2001 the Authority paid down $90.0 million on the Bank Credit
Facility. As of September 30, 2001, the Authority has drawn $258.0 million from
the Bank Credit Facility. The Authority has entered into hedging transactions
effective October 1, 2000 and January 2, 2001, to mitigate against its exposure
to interest rate fluctuations on the Bank Credit Facility. (See "--Item 7A.
Quantitative and Qualitative Disclosure of Market Risk" and Note 8 to the
Authority's financial statements beginning on page F-1 of this Form 10-K).

  Capital Expenditures

   The Authority's capital spending has increased significantly with the
commencement of the Project Sunburst expansion. Capital expenditures totaled
$626.4 million including capitalized interest for the fiscal year ended
September 30, 2001, versus $288.3 million and $62.8 million for the fiscal
years ended September 30, 2000 and 1999, respectively. These capital
expenditures were an aggregate of the following:

  .  Project Sunburst construction costs, including capitalized interest,
     totaled $844.3 million, including $37.8 million in capitalized interest
     and net of $1.4 million expensed or recorded as inventory, through
     September 30, 2001, of which $569.0 million was expended in fiscal year
     2001 and $275.3 million was expended in prior periods. Under the
     Development Agreement, TCA will oversee the planning, design and
     construction and will receive a development fee of $14.0 million for such
     services. As of September 30, 2001, TCA has earned $11.3 million in
     development fees, of which $9.3 million has been paid and is included in
     Project Sunburst construction costs presented above.

  .  Property maintenance capital expenditures for furniture, fixtures and
     equipment totaled $23.6 million in fiscal year 2001, $19.5 million in
     fiscal year 2000, and $11.2 million in fiscal year 1999.

  .  Capital expenditures on the Authority's electrical and water systems
     infrastructure ("infrastructure improvements") and the Eagleview employee
     parking center ("Employee Parking Center") totaled $12.5 million and $1.3
     million, respectively, for the fiscal year ended September 30, 2001.

  .  Capital expenditures for the Indian Summer Garage, which will provide
     2,700 extra parking spaces, totaled $4.5 million for fiscal year 2001.

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<PAGE>

  .  Capital expenditures for the construction of the Hall of the Lost Tribes,
     the new 637-unit smoke-free slot area which opened on April 18, 2001, were
     $14.9 million as of September 30, 2001, $5.1 million below the $20.0
     million original budget amount. The Authority did not have any
     expenditures for the construction of the Hall of the Lost Tribes for the
     fiscal year ended September 30, 2000.

  .  Capital expenditures for the construction of an employee day care facility
     was $568,000 during the fiscal year ended September 30, 2001, with
     construction expected to be completed in August 2002. The employee day
     care facility is expected to have a total cost of $10.0 million.

   Employee Parking Center. The Authority, in conjunction with the Project
Sunburst expansion, commenced construction on the Employee Parking Center in
March 1999. The Employee Parking Center includes 2,550 parking spaces and
amenities such as a dry cleaning service, on-site banking, an employee
computer/training center and a 15,000 square foot exercise facility. A portion
of the Employee Parking Center opened in June 2000 with the remainder opening
in January 2001. The total cost of the Employee Parking Center was $25.0
million.

   Public safety facility. The Tribe commenced construction of a public safety
facility within the Eagleview Complex that will service the Mohegan
Reservation, including Mohegan Sun. The Authority initially funded the
construction and was subsequently reimbursed by the Tribe. Approximately $1.6
million was reflected as amounts due from the Tribe in the Authority's balance
sheet as of September 30, 2000. No amounts were due as of September 30, 2001 as
the Authority was reimbursed for amounts due from the Tribe. See "Part
III--Item 13. Certain Relationship and Related Transactions."

   Infrastructure improvements. The Authority commenced construction of the
infrastructure improvements, estimated to cost $35.0 million, that will service
Mohegan Sun and other Tribal facilities. Such infrastructure improvements will
handle the increased utility demands of the expanded facility that are
attributable to the Project Sunburst expansion. The infrastructure improvements
were funded by the Authority and are expected to be completed concurrent with
the completion of Project Sunburst. As of September 30, 2001, approximately
$29.5 million has been incurred, of which $12.5 million was expended in fiscal
year 2001.

   As a construction industry standard, the Authority retains a portion of the
construction expenditures until satisfactory completion of individual
contracts. As of September 30, 2001, construction retainage totaled $23.3
million, which has been included in accounts payable and accrued expenses in
the Authority's financial statements beginning on page F-1 of this Form 10-K.

   Expected future capital expenditures. During fiscal year 2002, the Authority
expects capital expenditures to total approximately $277.5 million and to be
allocated as follows:

  .  $25.0 million on maintenance capital expenditures

  .  $152.1 million on Project Sunburst construction

  .  $9.4 million on the new employee day care center

  .  $60.5 million on the Indian Summer parking garage and $25.0 million on a
     new 1,700 space parking garage. The Indian Summer parking garage is
     expected to have a total cost of $65.0 million and be completed in the
     summer of 2002. The 1,700 space parking garage is expected to have a total
     cost of $25.0 million and is expected to be completed in the spring of 2002

  .  $5.5 million on infrastructure improvements.

  Relinquishment Agreement

   Under the terms of the Relinquishment Agreement, TCA continued to manage
Mohegan Sun under the Management Agreement until December 31, 1999. On January
1, 2000, the Management Agreement terminated,

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<PAGE>

and the Authority assumed day-to-day management of Mohegan Sun. As a result of
the termination of the Management Agreement, the Authority has agreed to pay
TCA 5% of gross revenues (as defined in the Relinquishment Agreement) generated
from Mohegan Sun including the planned expansion, beginning January 1, 2000 and
ending December 31, 2014. We refer to these payments as the relinquishment
payments. The present value of this liability is estimated at $592.0 million as
of September 30, 2001, a decrease of $80.9 million over the $672.9 million
liability recognized as of September 30, 2000. The Authority reviewed current
revenue forecasts and has reduced revenue projections for the period in which
the Relinquishment Agreement applies, due to uncertainties involving economic
market conditions and future competition from potential Native American
casinos. See Note 13 to the Authority's financial statements beginning on page
F-1 of this Form 10-K. The relinquishment liability will be reassessed
periodically to account for increases or decreases in projected revenues and
the impact on the time value of money due to the passage of time. The Authority
has capitalized $130.0 million of the relinquishment liability associated with
the trademark value of the Mohegan Sun brand name. The Authority paid $42.3
million in relinquishment payments in fiscal year 2001. Of the $42.3 million in
relinquishment payments, 50% are related to Senior Relinquishment Payments and
50% are related to Junior Relinquishment Payments (as defined in the
Relinquishment Agreement). As of September 30, 2001, relinquishment payments
earned but unpaid were $11.5 million. During fiscal year 2000, the Authority
made relinquishment payments of $20.0 million. See "Part I--Item 1.
Business--Material Agreements--Relinquishment Agreement with Trading Cove
Associates."

   During fiscal year 1998, the Authority finalized contract negotiations with
TCA for Project Sunburst, which is currently estimated to cost $960.0 million,
excluding capitalized interest. Under the Development Agreement, TCA will
oversee the planning, design and construction of the expansion at Mohegan Sun
and will receive a development fee of $14.0 million for such services. As of
September 30, 2001, TCA has earned $11.3 million in development fees, of which
$9.3 million has been paid.

  Distributions to the Tribe

   During fiscal years 2001, 2000 and 1999, the Authority, subsequent to
meeting its operating expenses, distributed a total of $44.0 million, $50.0
million and $138.4 million, respectively, to the Tribe. In fiscal year 1999,
$51.2 million was subsequently returned to the Authority by the Tribe as a
capital contribution to partially finance Project Sunburst. Also in fiscal year
1999, $45.9 million previously held in escrow pursuant to certain contractual
obligations of the Authority was distributed to the Tribe, and subsequently
returned as a capital contribution towards Project Sunburst.

  Debt Service Costs

   For fiscal years 2001 and 2000, the Authority made interest payments on
January 1 and July 1 of $8.1 million and $13.1 million each to the holders of
the $200 million Senior Notes and $300 million 1999 Senior Subordinated Notes,
respectively. Interest payments on the Bank Credit Facility totaled $7.3
million for fiscal year 2001. There were no interest payments on the Bank
Credit Facility during fiscal 2000. In March 1999, the Authority redeemed the
Senior Secured Notes for $220.0 million, including accrued interest of $11.3
million and a tender premium of $33.7 million. There were no cash interest
payment requirements on the Subordinated Notes as interest was accrued and
deferred until the payoff date. In March 1999, the Authority established a
defeasance trust of $135.5 million in conjunction with the defeasance of the
Subordinated Notes, which fully satisfied the principal and accrued interest
due on the Subordinated Notes on January 1, 2000, the first permitted
redemption date. The total tender of the Subordinated Notes was $140.3 million,
including all accrued and deferred interest on December 30, 1999, two days
prior to the redemption date for year 2000 contingency purposes.

  Sufficiency of Resources

   The Authority believes that existing cash balances, financing arrangements
and operating cash flow will provide the Authority with sufficient resources to
meet its existing debt obligations, relinquishment payments, distributions to
the Tribe and foreseeable capital expenditure requirements with respect to
current operations and Project Sunburst for at least the next 12 months. Due to
delays in the construction schedule of the Project Sunburst hotel, the
Authority has initiated discussions with its lenders regarding possible
amendments to its financial covenants under the Bank Credit Facility. These
amendments would be intended to address the impact

                                      41

<PAGE>

of the extended construction borrowing period and the delay in achieving the
full cash flows anticipated from the fully completed hotel. The Authority also
is considering the issuance of additional senior subordinated notes in 2002 in
order to curtail a portion of the outstanding balance of the Bank Credit
Facility.

Impact of Inflation

   Absent changes in competitive and economic conditions or in specific prices
affecting the hotel and casino industry, the Authority does not expect that
inflation will have a significant impact on its 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 hotel and casino industry
in general.

New Accounting Pronouncements

   In November 2000, the Emerging Issues Task Force ("EITF") on the Financial
Accounting Standards Board ("FASB") reached a consensus on EITF Issue No.
00-14, "Accounting for Certain Sales Incentives." EITF 00-14 requires that
discounts which result in a reduction in or refund of the selling price of a
product or service in a single exchange transaction be recorded as a reduction
of revenues. The Authority's accounting policy related to free or discounted
food and beverage and other services already complies with EITF 00-14, and
those free or discounted services are generally deducted from gross revenues as
"promotional allowances."

   In February 2001, the EITF reached a partial consensus on EITF Issue No.
00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume Based
Sales Incentive Offers, and Offers for Free Products or Services to be
Delivered in the Future." EITF 00-22 requires that the redemption of points for
cash be recognized as a reduction of revenue. The adoption of this Issue will
not impact the Authority as it currently does not offer cash rebates on its
Mohegan Sun Player's Club points.

   In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
of Disposal of Long-Lived Assets." SFAS No. 144 modifies the rules for
accounting for the impairment or disposal of long-lived assets. The new rules
become effective for fiscal years beginning after December 15, 2001, with
earlier application encouraged. The Authority has not yet quantified the impact
of implementing SFAS No. 144 on the Authority's financial statements, but does
not anticipated a negative effect on the Authority's operating income upon
adoption of the standard.

   On June 30, 2001, the FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets" to be effective for fiscal years beginning after December
15, 2001. The Authority adopted SFAS No. 142 on October 1, 2001. Under SFAS No.
142, the trademark is no longer subject to amortization over its estimated
useful life as it has been deemed to have an indefinite useful life. However,
SFAS No. 142 requires the trademark to be evaluated at least annually for
impairment by applying a fair-value based test and, if impairment occurs, the
amount of impaired trademark must be written off immediately. With the adoption
of SFAS No. 142, the Authority no longer records amortization of the trademark.
For the year ended September 30, 2001, the Authority recorded $3.4 million of
amortization. The Authority is required to apply the initial fair value test by
March 31, 2002. The Authority has not yet determined whether the initial fair
value test will result in any impairment changes, but does not anticipate a
negative effect on its operating income upon completing the fair value
assessment.

Item 7A. Quantitative and Qualitative Disclosure of Market Risk

   The Authority is exposed to inherent market risk on the following:

   At the Authority's option, Bank Credit Facility interest will accrue on the
basis of a base rate formula or a LIBOR-based formula, plus applicable spreads.
As of September 30, 2001, the Authority has drawn $258.0 million from the Bank
Credit Facility. The Authority expects to continue to draw down on the Bank
Credit Facility in fiscal year 2002 primarily in connection with Project
Sunburst.

                                      42

<PAGE>

   The Authority uses derivative instruments, including interest rate caps,
collars and swaps in its strategy to manage interest rate risk associated with
the variable interest rate on the Bank Credit Facility. The Authority's
objective in managing interest rate risk is to ensure the Authority has
appropriate income and sufficient liquidity to meet its obligations. The
Authority does not believe that there is any material risk of exposure with
respect to derivative or other financial instruments. The Authority continually
monitors these exposures and makes the appropriate adjustments to manage these
risks within management's established limits.

   The Authority analyzes interest rate risk using various models that forecast
cash flows of the liabilities and their supporting assets, including derivative
instruments.

   The Authority is considered an "end user" of derivative instruments and
engages in derivative transactions for risk management purposes only. On
October 1, 2000 the Authority adopted SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities," designated all derivative instruments as
cash flow hedging instruments and marked them to market. The impact of the
adoption of SFAS No. 133 was not material to the financial position of the
Authority taken as a whole. The Authority excludes the change in time value
when assessing the effectiveness of the hedging relationships. All derivatives
are evaluated quarterly and were deemed to be effective at September 30, 2001.

   Derivative instruments held by the Authority at September 30, 2001 are as
follows:

<TABLE>
<CAPTION>
                         Effective Date   Maturity Date    Notional     Cost     Market
                         --------------   -------------    --------     ----     ------
<S>                      <C>             <C>             <C>          <C>      <C>
Interest Rate Cap
 Strike Rate--8%........ October 1, 2000 October 1, 2003 $ 61,038,000 $410,000 $     1,000
Interest Rate Collar
 Ceiling Strike Rate--8%
 Floor Strike Rate--6%.. January 2, 2001 March 1, 2004     56,356,800  295,000  (3,310,295)
Interest Rate Swap
 Pay fixed--6.35%
 Receive Variable....... January 2, 2001 March 1, 2004     28,178,400  221,000  (1,840,126)
                                                         ------------ -------- -----------
     Total..............                                 $145,573,200 $926,000 $(5,149,421)
                                                         ============ ======== ===========
</TABLE>

   All derivative instruments are based on one-month LIBOR. One-month LIBOR was
2.64% on September 30, 2001.

   For the year ended September 30, 2001, the Authority recognized a net loss
of $949,000 relating to the change in time value of its derivative instruments,
as reflected in the statement of income(loss). See also Note 8 to the
Authority's financial statements beginning on page F-1 of this Form 10-K.

Item 8. Financial Statements and Supplementary Data

   The Authority's financial statements and notes thereto, referred to in Item
14(A)(1) of this Form 10-K, are included in this Form 10-K beginning on page
F-1.

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

   None.

                                      43

<PAGE>

                                   PART III

Item 10. Directors and Executive Officers of the Registrant

   The Authority is governed by a nine-member Management Board, consisting of
the same nine members on the 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 General Manager and other
executive officers of Mohegan Sun are hired by the Management Board. The
General Manager and other executive officers are employees of the Authority.
See "Part I--Item 1. Business--Mohegan Tribe of Indians of Connecticut" and
"Part I--Item 1. Business--The Authority."

Management Board and Executive Officers

   The following table provides information as of September 30, 2001 with
respect to each of (i) the members of the Management Board and (ii) the
executive officers of Mohegan Sun.

<TABLE>
<CAPTION>
Name                                    Age Position
----                                    --- --------
<S>                                     <C> <C>
Mark F. Brown.......................... 44  Chairman and Member, Management Board
Peter J. Schultz....................... 46  Vice Chairman and Member, Management Board
Christine Damon-Murtha................. 53  Corresponding Secretary and Member, Management Board
Donald M. Chapman...................... 75  Treasurer and Member, Management Board
Shirley M. Walsh....................... 56  Recording Secretary and Member, Management Board
Jayne G. Fawcett....................... 65  Member, Management Board
Roland J. Harris....................... 54  Member, Management Board
Glenn R LaVigne........................ 40  Member, Management Board
Maynard L. Strickland.................. 60  Member, Management Board
William J. Velardo..................... 46  President and General Manager, Mohegan Sun
Mitchell Grossinger Etess.............. 42  Executive Vice President, Marketing, Mohegan Sun
Jeffrey E. Hartmann.................... 39  Executive Vice President, Finance and Chief Financial Officer,
                                              Mohegan Sun
</TABLE>

   Mark F. Brown--Mr. Brown has been a member of the Management Board since
October 1995 and served as the Public Safety liaison for the Tribal Council. As
of October 2000, Mr. Brown became the Chairman of the Management Board. 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. Prior to his work in law
enforcement, Mr. Brown was involved in retail sales and management.

   Peter J. Schultz--Mr. Schultz was seated on the Management Board and was
elected Vice Chairman of the Management Board in October 2000. Mr. Schultz held
the position of Human Resources Director for the Tribe from 1997 to September
2000. From 1982 to 1997, Mr. Schultz was employed by Aetna Life and Casualty
culminating with the position of Manager of Organizational Development at the
Aetna Institute.

   Christine Damon-Murtha--Ms. Murtha was seated on the Management Board and
was elected Corresponding Secretary in October 2000. Ms. Murtha was employed in
the Finance Department for the Tribe from 1996 to 1998 and as a reporter and
photographer for the Tribe's Communication Department from 1998 to September
2000. Ms. Murtha held the position of Supervisor/Senior Accounting Analyst with
Travelers Insurance Company from 1984 to 1992. Ms. Murtha serves as council
liaison for the Environmental Department of the Tribe.

   Donald M. Chapman--Mr. Chapman was seated on the Management Board and was
elected Treasurer in October 2000. Mr. Chapman retired from the United States
Coast Guard at the rank of Commander. Following

                                      44

<PAGE>

Mr. Chapman's retirement, he held management positions with the Urban Mass
Transportation Administration in Washington, D.C. Mr. Chapman was also employed
as a stockbroker with Legg Mason & Company.

   Shirley M. Walsh--Ms. Walsh has been the Recording Secretary of the
Management Board since October 1995 and has been a member of the Management
Board since July 1995. Ms. Walsh has worked for the Tribe in various capacities
for almost nine years. Prior to that time, she was employed for 13 years by a
local certified public accountant. Ms. Walsh chaired the Tribal Election
Committee from 1994 to 1995 and has served on several other committees for the
Tribe.

   Jayne G. Fawcett--Ms. Fawcett has been a member of the Management Board
since its inception in July 1995. Ms. Fawcett served as the Vice Chair of the
Management Board and the Tribal Council from December 1995 until October 2000.
Ms. Fawcett worked as a social worker for the State of Connecticut in 1987 and
is a retired teacher after 27 years of service. Ms. Fawcett was a Chairman of
the Tribe's Constitutional Review Board from 1992 to 1993. Currently, she
oversees the Tribe's public relations and serves as the Tribe's Public
Relations Ambassador.

   Roland J. Harris--Mr. Harris has been a member of the Management Board since
October 1995. He served as Chairman of the Management Board and the Tribal
Council from October 1995 until October 2000. Mr. Harris was the founder of
Harris and Clark, Inc., a firm specializing in civil engineering, land
surveying and land planning, which has performed and continues to perform
services for the Authority. This firm, now known as McFarland Johnson, Inc.,
retained Mr. Harris as a consultant for a fixed fee under an agreement which
expired in May 2001. Mr. Harris has served as First Selectman and CEO of the
Town of Griswold, Connecticut, and also as its Planning and Zoning
Commissioner. He has also served as Deputy Chief of the Griswold Fire
Department and as Fire Marshal and Inspector of the Town of Griswold. Prior to
assuming the Chairmanship of the Management Board in 1995, Mr. Harris served as
the Tribal Planner.

   Glenn R. LaVigne--Mr. LaVigne has been a member of the Management Board
since January 1996. Mr. LaVigne was previously employed by the Town of
Montville, Connecticut and oversaw building and maintenance for Montville's
seven municipal buildings. Mr. LaVigne serves as council liaison for
development and construction.

   Maynard L. Strickland--Mr. Strickland has been a member of the Management
Board since October 1995. Before that, Mr. Strickland owned and operated
several restaurants in Norwich, Connecticut and Florida for 20 years.

   William J. Velardo--Mr. Velardo currently serves as President and General
Manager of Mohegan Sun. Mr. Velardo has served as Mohegan Sun's President and
General Manager since October 1995 and has over 24 years of experience in
gaming operations. Prior to his employment with the Authority, Mr. Velardo was
Chief Operating Officer for River City, a riverboat gaming venture in New
Orleans, Louisiana. From 1991 to 1994, Mr. Velardo served as Senior Vice
President, Casino Operations at Trump Plaza Hotel and Casino in New Jersey. Mr.
Velardo participated in the opening of the Mirage in Las Vegas, Nevada where he
served as Vice President, Table Games from 1989 to 1991. Mr. Velardo also
worked as Assistant Casino Manager and Pit Manager at Caesar's Tahoe and
Caesar's Palace.

   Mitchell Grossinger Etess--Mr. Etess has been Executive Vice President of
Marketing at Mohegan Sun since November 1995 and has 20 years experience in the
casino and hotel industry. Prior to his employment with the Authority, 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 has been Executive Vice President of
Finance and the Chief Financial Officer of Mohegan Sun since December 1996 and
has ten years of experience in the casino and hotel industry.

                                      45

<PAGE>

Prior to joining the Authority, Mr. Hartmann worked for Foxwoods Resort Casino
from August 1991 to December 1996, most recently as Vice President of Finance
for Foxwoods Management Company. Mr. Hartmann was employed by
PriceWaterhouseCoopers, LLP as an Audit Manager from 1984 to 1991. Mr. Hartmann
is a certified public accountant.

Item 11. Executive Compensation

Compensation of the Management Board

   The individual members of the Management Board do not receive any direct
compensation from the Authority. The Tribe compensates members of the
Management Board for the services they render as members of the Tribal Council
and of the Management Board.

Compensation of Executive Officers

   The following table provides summary information concerning compensation
paid by the Authority to all of its executive officers during the three fiscal
years ended September 30, 2001, 2000 and 1999:

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                 Annual Compensation
                                                  -------------------------------------------------

                                                                                   Other(2)
                                                                            -----------------------
                                                                                       401(k) Plan
                                                  Fiscal                      Life      Matching
Name and Principal Position                        Year  Salary(1)  Bonus   Insurance Contributions
---------------------------                       ------ --------- -------- --------- -------------
<S>                                               <C>    <C>       <C>      <C>       <C>
William J. Velardo...............................  2001  $830,000  $271,000  $64,000     $5,100
President and General Manager....................  2000  $789,000  $264,000  $27,000     $5,100
                                                   1999  $503,000  $150,000  $    --     $4,800

Mitchell Grossinger Etess........................  2001  $523,000  $164,000  $30,000     $5,100
Executive Vice President, Marketing..............  2000  $463,000  $164,000  $ 8,000     $5,100
                                                   1999  $306,000  $100,000  $    --     $4,800

Jeffrey E. Hartmann..............................  2001  $471,000  $150,000  $24,000     $5,100
Executive Vice President, Finance................  2000  $401,000  $158,000  $12,000     $5,100
and Chief Financial Officer......................  1999  $250,000  $100,000  $    --     $4,800
</TABLE>
--------
(1) Amounts reflect total base salary earned. Employee contributions to the
    Authority's 401(k) plan and non-qualified deferred compensation plan are
    deducted from such amounts.
(2) The only compensation received by these employees other than salary and
    bonus was employer matching contributions to the Authority's 401(k) plan
    and the payment by the Authority of premiums on life insurance policies for
    which the employee is the owner and beneficiary.

Employment Agreements

   On April 22, 1999, the Authority entered into employment agreements with
William J. Velardo, Mitchell Grossinger Etess and Jeffrey E. Hartmann. These
employment agreements set forth the terms and conditions for the respective
employment of Messrs. Velardo, Etess and Hartmann. The term of each agreement
runs until December 31, 2004, with automatic renewal for an additional term of
five years unless either party provides notice to the other of its intention to
terminate. These employment agreements provide that the applicable employee may
not, without prior written consent of the Authority, compete with the Authority
in specified states in the northeastern United States during the term of his
employment and for a one-year period following a termination for cause or a
voluntary termination of employment. Also, during this period, the applicable
employee may not hire or solicit other employees of the Authority or encourage
any such employees to leave

                                      46

<PAGE>

employment with the Authority. Under these employment agreements, the
applicable employee may not disclose any of the Authority's confidential
information while employed by the Authority or thereafter. This confidentiality
obligation will survive the termination of such employee's employment and
employment agreement. Copies of these employment agreements are included as
exhibits to this Form 10-K.

Item 12. Security Ownership of Certain Beneficial Owners and Management

   The Authority has no outstanding equity securities.

Item 13. Certain Relationships and Related Transactions

   The Tribe provides governmental and administrative services to the Authority
in conjunction with the operation of Mohegan Sun. During the fiscal year ended
September 30, 2001, the Authority incurred $10.9 million of expenses for such
services. The Authority incurred $9.9 million and $8.3 million of expenses for
such services during fiscal years 2000 and 1999, respectively.

   Prior to October 1, 2000, the Authority operated a retail outlet at Mohegan
Sun and purchased goods for resale at this location from a limited liability
company ("Little People, LLC") owned by the Tribe. For the fiscal year ended
September 30, 2000 and 1999 the Authority purchased $348,000 and $417,000,
respectively, of such goods from Little People, LLC. On October 1, 2000, the
Tribe assumed the management of this retail outlet from the Authority and
purchased the remaining inventory from the Authority. The Tribe paid the
Authority approximately $172,000 for such remaining inventory. The Authority
and Little People, LLC have entered into a lease agreement, whereby Little
People, LLC leases retail space located in the casino from the Authority. The
lease term expires on June 30, 2002 and may be renewed on a monthly basis.
Little People, LLC is not obligated to pay any base rent. The Authority
reimburses the Tribe for sales where patron player's club points are utilized.

   The Tribe, through one of its limited liability companies, has entered into
various land lease agreements with the Authority for access, parking and
related purposes for Mohegan Sun. For the fiscal years ended September 30,
2001, 2000 and 1999, the Authority expended $386,000, $386,000 and $412,000,
respectively, relating to these land lease agreements.

   The Tribe provided services through its Development Department for projects
related to Mohegan Sun and Project Sunburst. The Authority incurred $954,000 of
such expenses associated with the Development Department for the fiscal year
ended September 30, 2000. There were no expenses incurred during the year ended
September 30, 2001.

   On August 7, 2001, the Tribe issued Gaming Authority Priority Distribution
Payment Public Improvement Bond Anticipation Notes (the "Series 2001 BANS").
Debt service on the Series 2001 BANS is paid from 95% of amounts received from
the Authority under the Priority Distribution Agreement. The Priority
Distribution Agreement obligates the Authority 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 the Authority's obligations to make payments pursuant to invoices
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 the Bank Credit Facility. See "Part I--Item 1. Business--Certain
Indebtedness--Bank Credit Facility." The priority distribution payments 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 remaining
5% of each priority distribution payment is remitted to the Tribe free and
clear of any lien. The Authority's financial statements reflect payments
associated with the Priority Distribution Agreement of $14.0 million for the
fiscal year ended September 30, 2001. See "Part I--Item 1. Business--Material
Agreements--Priority Distribution Agreement with the Tribe."

                                      47

<PAGE>

   In compliance with the restrictive provisions of the Bank Credit Facility
and the Authority's indentures, the Authority distributed to the Tribe $30.0
million in cash, net of $14.0 million related to the Priority Distribution
Agreement, during the fiscal year 2001.

   On September 25, 1995, the Tribe adopted the Mohegan Tribal Employment
Rights Ordinance (the "TERO"), which sets forth hiring and contracting
preference requirements for employers and entities conducting business on
Tribal land or working on behalf of the Tribe. Pursuant to the TERO, an
employer is 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. In addition, when staffing the operations of the Project Sunburst
expansion, the Development Agreement requires TCA to give hiring and recruiting
preferences, first to qualified members of the Tribe (and their spouses and
children) and then to enrolled members of other federally recognized Indian
tribes. See "Part I--Item 1. Business--Material Agreements--Development
Agreement--Engagement of Certified Entities; Staffing the Expansion."

   Similarly, any entity awarding a contract to be performed on Tribal land or
on behalf of the Tribe must give preference, first to certified Mohegan
entities and second to other certified Indian 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 (unless the preferred
certified entity's bid exceeds $100,000 of the lowest bid by a non-certified
entity). The TERO establishes procedures and requirements for certifying
Mohegan entities and other Indian entities. Certification is based largely on
the level of ownership and control exercised by the members of the Tribe or
other Indian tribes, as the case may be, over the entity bidding on a contract.
A number of contracts for Project Sunburst were awarded to companies controlled
by Tribal members under the TERO provision described above.

   The Authority engages McFarland Johnson, Inc. for surveying, civil
engineering and professional design services. Roland Harris, a current member
and a former Chairman of the Management Board and the Tribal Council, was a
consultant for this firm pursuant to a consulting agreement which expired in
May 2001. For the fiscal years ended September 30, 2001, 2000 and 1999, the
Authority incurred $175,000, $792,000 and $373,000, respectively, for such
services provided by McFarland Johnson. McFarland Johnson formerly conducted
business as Harris and Clark, Inc. The Authority believes that the terms of
this engagement are comparable to those that would pertain to arms length
engagement with an unaffiliated firm.

   As of September 30, 2001, 146 employees of the Authority were members of the
Tribe.

   The Tribe commenced construction of a public safety facility within the
Eagleview Complex that will service the Mohegan Reservation, including Mohegan
Sun. The Authority initially funded the construction and was subsequently
reimbursed by the Tribe. The total cost of the public safety facility is
anticipated to be $7.5 million, of which $7.1 million has been incurred. The
Authority has also initially funded other Tribal projects and has subsequently
been reimbursed by the Tribe, including the construction of a temporary Tribal
office, construction of roads and improvements made to the Town of Montville's
wastewater collection and treatment facilities. The total amount incurred by
the Authority for these projects, including the public safety spaces referred
to above, is $45.6 million. The Authority anticipates the total incurred to be
$50.7 million. Approximately $1.6 million was reflected as amounts due from the
Tribe in the Authority's balance sheet as of September 30, 2000. No amounts
were due as of September 30, 2001, as the Authority was reimbursed for amounts
due from the Tribe.

                                      48

<PAGE>

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports of Form 8-K

A(1). Financial Statements

     See Index to financial statements included herein.

A(2). Financial Statement Schedules

     Included in Part IV of this Report:

     Schedule II--Valuation and Qualifying Accounts and Reserves

   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
financial statements or notes to the financial statements.

A(3). Exhibits

<TABLE>
<CAPTION>
Exhibit
  No.   Description
------- -----------
<C>     <S>

  3.1   Constitution of the Mohegan Tribe of Indians of Connecticut*

  3.2   Ordinance No. 95-2 of the Mohegan Tribe of Indians of Connecticut for Gaming on Tribal Lands,
          enacted on July 15, 1995*

  4.1   Indenture dated March 3, 1999 among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of
          Indians of Connecticut and First Union National Bank, as Trustee, relating to the 8 1/8% Senior
          Notes Due 2006 of the Mohegan Tribal Gaming Authority**

  4.2   Form of Global 8 1/8% Senior Notes Due 2006 of the Mohegan Tribal Gaming Authority (contained in
          the Indenture filed as Exhibit 4.1)**

  4.3   Indenture dated as of March 3, 1999 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 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority**

  4.4   Form of Global 8 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority
          (contained in the Indenture filed as Exhibit 4.3)**

  4.5   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 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority***

  4.6   Form of Global 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority
          (contained in the Indenture filed as Exhibit 4.5)***

 10.1   The Mohegan Tribe--State of Connecticut Gaming Mohegan Compact between the Mohegan Tribe
          of Indians of Connecticut and the State of Connecticut (the "Compact")*

 10.2   Agreement dated April 25, 1994 between the Mohegan Tribe of Indians of Connecticut and the State
          of Connecticut resolving certain land claims (the "Resolution Agreement")*

 10.3   Memorandum of Understanding dated May 17, 1994 between the Mohegan Tribe of Indians of
          Connecticut and the State of Connecticut regarding implementation of the Compact and the
          Resolution Agreement*

 10.4   Agreement between the Mohegan Tribe of Indians of Connecticut and the Town of Montville,
          Connecticut*
</TABLE>

                                      49

<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.   Description
------- -----------
<C>     <S>

 10.5   Land Lease dated September 29, 1995 between the Mohegan Tribe of Indians of Connecticut and the
          Mohegan Tribal Gaming Authority; Amendment of Land Lease dated September 29, 1995*

 10.5   Land Lease dated September 29, 1995 between the Mohegan Tribe of Indians of Connecticut and the
          Mohegan Tribal Gaming Authority; Amendment of Land Lease dated September 29, 1995*

 10.6   Amendment to the Land Lease dated February 18, 1999 between the Mohegan Tribe of Indians of
          Connecticut and the Mohegan Tribal Gaming Authority**

 10.7   Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 between the
          Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority and Trading
          Cove Associates*

 10.8   Development Services Agreement dated February 7, 1998 by and among the Mohegan Tribal Gaming
          Authority, the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates+

 10.9   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+

 10.10  The Loan Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming
          Authority, the Mohegan Tribe of Indians of Connecticut, Bank of America National Trust and
          Savings Association as Administrative Agent, Salomon Smith Barney Inc. as Syndication Agent,
          Societe Generale as Documentation Agent, NationsBanc Montgomery Securities LLC as Lead
          Arranger and each lender named therein (the "Loan Agreement")**

 10.11  Escrow Deposit Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming
          Authority, the Mohegan Tribe of Indians of Connecticut and First Union National Bank**

 10.12  Construction Reserve Disbursement Agreement dated March 3, 1999 among the Mohegan Tribal
          Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Fleet National Bank**

 10.13  The Merrill Lynch Non-Qualified Deferred Compensation Plan Trust Agreement dated September 1,
          1998 between the Mohegan Tribal Gaming Authority and Merrill Lynch Trust+

 10.14  Employment Agreement dated April 22, 1999 by and between the Mohegan Tribal Gaming Authority
          and William J. Velardo**

 10.15  Employment Agreement dated April 22, 1999 by and between the Mohegan Tribal Gaming Authority
          and Mitchell Grossinger Etess**

 10.16  Employment Agreement dated April 22, 1999 by and between the Mohegan Tribal Gaming Authority
          and Jeffrey E. Hartmann**

 10.17  Amendment No. 1 to the Loan Agreement dated as of November 30, 2000 by and among the
          Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Bank of
          America National Trust and Savings Association++

 10.18  Priority Distribution Agreement between Mohegan Tribal Gaming Authority and the Mohegan Tribe
          of Indians of Connecticut dated August 1, 2001+++

 10.19  Administrative Services Agreement between Mohegan Tribal Gaming Authority and Fleet Retirement
          Plan Services dated July 30, 2001+++

 12.1   Computation of Ratio of Earnings to Fixed Charges
</TABLE>
--------
  * Filed by the Authority with its Registration Statement on Form S-1 (file
    no. 33-80655), filed with the SEC on December 21, 1995, as amended, and
    incorporated herein by reference.
 ** Filed by the Authority with its Registration Statement on Form S-4 (file
    no. 333-76753), filed with the SEC on April 21, 1999, and incorporated
    herein by reference.

                                      50

<PAGE>

*** Filed by the Authority with it Registration Statement on Form S-4 (file no.
    333-69472), filed with the SEC on September 17, 2001, and incorporated
    herein by reference.
  + Filed by the Authority with its Form 10-K for the fiscal year ended
    September 30, 1998 and incorporated herein by reference.
 ++ Filed by the Authority with its Form 10-K for the fiscal year ended
    September 30, 2000 and incorporated herein by reference.
+++ Filed by the Authority with its Form 10-Q for the quarter ended June 30,
    2001 and incorporated herein by reference.

B. Reports on Form 8-K

   On July 18, 2001, the Authority filed a Current Report on Form 8-K to report
a press release announcing the Authority's financial results for the quarter
ended June 30, 2001.

C. Exhibits

   See A(3) above.

D. Financial Statement Schedule

   See A(1) and (2) above.



                                      51

<PAGE>

                                  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 14, 2001.

                                              MOHEGAN TRIBAL GAMING AUTHORITY

                                          By: /s/ Mark F. Brown
                                             __________________________________
                                             Mark F. Brown
                                             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 14, 2001.

<TABLE>
<CAPTION>
           Signature                                       Title
           ---------                                       -----
<C>                             <S>

       /s/ Mark F. Brown        Chairman and Member, Management Board
-------------------------------
         Mark F. Brown

     /s/ Peter J. Schultz       Vice Chairman and Member, Management Board
-------------------------------
       Peter J. Schultz

    /s/ William J. Velardo      President and General Manager, Mohegan Sun (Principal
-------------------------------   Executive Officer)
      William J. Velardo

    /s/ Jeffrey E. Hartmann     Executive Vice President, Finance & Chief Financial Officer
-------------------------------   Mohegan Sun (Principal Financial and Accounting Officer)
      Jeffrey E. Hartmann

     /s/ Shirley M. Walsh       Recording Secretary and Member, Management Board
-------------------------------
       Shirley M. Walsh

    /s/ Christine D. Murtha     Corresponding Secretary and Member, Management Board
-------------------------------
      Christine D. Murtha

     /s/ Donald M. Chapman      Treasurer and Member, Management Board
-------------------------------
       Donald M. Chapman

     /s/ Jayne G. Fawcett       Ambassador and Member, Management Board
-------------------------------
       Jayne G. Fawcett

     /s/ Roland J. Harris       Member, Management Board
-------------------------------
       Roland J. Harris

   /s/ Maynard L. Strickland    Member, Management Board
-------------------------------
     Maynard L. Strickland

     /s/ Glenn R. LaVigne       Member, Management Board
-------------------------------
       Glenn R. LaVigne
</TABLE>

                                      52

<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                                                                  <C>
Report of Independent Public Accountants............................................................ F-2

Balance Sheets of the Mohegan Tribal Gaming Authority as of September 30, 2001 and 2000............. F-3

Statements of Income (Loss) of the Mohegan Tribal Gaming Authority for the Years Ended September 30,
  2001, 2000 and 1999............................................................................... F-4

Statements of Capital of the Mohegan Tribal Gaming Authority for the Years Ended September 30, 2001,
  2000 and 1999..................................................................................... F-5

Statements of Cash Flows of the Mohegan Tribal Gaming Authority for the Years Ended September 30,
  2001, 2000 and 1999............................................................................... F-6

Notes to Financial Statements of the Mohegan Tribal Gaming Authority................................ F-7
</TABLE>

                                      F-1

<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Mohegan Tribal Gaming Authority:

   We have audited the accompanying balance sheets of the Mohegan Tribal Gaming
Authority (the Authority) as of September 30, 2001 and 2000 and the related
statements of income (loss), capital and cash flows for the each of the three
years in the period ended September 30, 2001. These financial statements and
the schedule referred to below are the responsibility of the Authority's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

   In our opinion, the financial statements referred to above present fairly,
in all material aspects, the financial position of the Mohegan Tribal Gaming
Authority as of September 30, 2001 and 2000, and the results of its operations
and its cash flows for the each of the three years in the period ended
September 30, 2001, in conformity with accounting principles generally accepted
in the United States.

   Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in Item 14 is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Hartford, Connecticut
December 14, 2001

                                      F-2

<PAGE>

                        MOHEGAN TRIBAL GAMING AUTHORITY

                                BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>
                                                            September 30,
                                                       ----------------------
                                                          2001        2000
                                                       ----------  ----------
 <S>                                                   <C>         <C>
                        ASSETS
 Current assets:
    Cash and cash equivalents......................... $   74,284  $  115,731
    Receivables, net..................................      7,163       6,337
    Due from Tribe....................................         --       1,648
    Inventories.......................................     11,455       7,577
    Other current assets..............................     12,706       4,478
                                                       ----------  ----------
        Total current assets..........................    105,608     135,771

 Non-current assets:
    Property and equipment, net.......................    935,016     338,243
    Construction in process...........................    267,653     264,999
    Trademark, net....................................    119,692     123,128
    Other assets, net.................................     24,766      23,238
                                                       ----------  ----------
        Total assets.................................. $1,452,735  $  885,379
                                                       ==========  ==========

               LIABILITIES AND CAPITAL
 Current liabilities:
    Current portion of capital lease obligations...... $    1,514  $    4,055
    Current portion of relinquishment liability.......     68,272      56,646
    Accounts payable and accrued expenses.............    139,316      57,601
    Accrued interest payable..........................     13,062      10,625
                                                       ----------  ----------
        Total current liabilities.....................    222,164     128,927

 Non-current liabilities:
    Long-term debt....................................    908,000     500,000
    Relinquishment liability, net of current portion..    523,736     616,234
    Other long-term liabilities.......................      5,232          --
    Capital lease obligations, net of current portion.         --       2,336
                                                       ----------  ----------
        Total liabilities.............................  1,659,132   1,247,497
                                                       ----------  ----------

 COMMITMENTS AND CONTINGENCIES (NOTE 12)

 Capital:
    Retained Deficit..................................   (201,270)   (362,118)
    Accumulated other comprehensive loss..............     (5,127)         --
                                                       ----------  ----------
        Total capital.................................   (206,397)   (362,118)
                                                       ----------  ----------
        Total liabilities and capital................. $1,452,735  $  885,379
                                                       ==========  ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                      F-3

<PAGE>

                        MOHEGAN TRIBAL GAMING AUTHORITY

                          STATEMENT OF INCOME (LOSS)
                                (in thousands)

<TABLE>
<CAPTION>
                                                   For the Year Ended September 30,
                                                   -------------------------------
                                                     2001        2000      1999
                                                   --------    --------  ---------
<S>                                                <C>         <C>       <C>
Revenues:
   Gaming......................................... $750,988    $709,627  $ 641,117
   Food and beverage..............................   49,508      47,316     47,907
   Retail and other...............................   57,481      52,371     36,486
                                                   --------    --------  ---------
   Gross revenues.................................  857,977     809,314    725,510
   Less--Promotional allowances...................  (71,372)    (70,044)   (56,827)
                                                   --------    --------  ---------
Net revenues......................................  786,605     739,270    668,683
                                                   --------    --------  ---------
Cost and expenses:
   Gaming.........................................  334,537     307,202    273,488
   Food and beverage..............................   24,447      23,745     22,218
   Retail and other...............................   32,114      27,142     22,583
   General and administration.....................  139,343     127,226    110,919
   Pre-opening costs..............................   31,344       5,278         --
   Management fee.................................       --      13,634     59,532
   Depreciation and amortization..................   34,753      30,739     23,397
                                                   --------    --------  ---------
       Total costs and expenses...................  596,538     534,966    512,137
                                                   --------    --------  ---------
   Income from operations.........................  190,067     204,304    156,546
                                                   --------    --------  ---------
Other income (expense):
   Relinquishment liability reassessment..........   38,577     (31,843)  (111,885)
   Interest and other income......................    2,920      13,469     11,254
   Interest expense, net..........................  (25,060)    (37,799)   (55,595)
   Other expense..................................     (116)     (1,523)        --
   Change in fair value of derivative instruments.     (949)         --         --
                                                   --------    --------  ---------
                                                     15,372     (57,696)  (156,226)
                                                   --------    --------  ---------
   Income from continuing operations..............  205,439     146,608        320
   Loss from discontinued operations..............     (591)       (674)      (812)
                                                   --------    --------  ---------
   Income (loss) before extraordinary items.......  204,848     145,934       (492)
   Extraordinary items............................       --          --    (38,428)
                                                   --------    --------  ---------
   Net income (loss).............................. $204,848    $145,934  $ (38,920)
                                                   ========    ========  =========
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                      F-4

<PAGE>

                        MOHEGAN TRIBAL GAMING AUTHORITY

                             STATEMENTS OF CAPITAL
                                (in thousands)

<TABLE>
<CAPTION>
                                                For the Year Ended September 30,
                                                -------------------------------
                                                  2001       2000       1999
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
Beginning balance.............................. $(362,118) $(458,052) $(377,874)
Net income.....................................   204,848    145,934    (38,920)
Accumulated other comprehensive loss...........    (5,127)        --         --
Capital contribution by Tribe..................        --         --     97,096
Distributions to Tribe.........................   (44,000)   (50,000)  (138,354)
                                                ---------  ---------  ---------
Ending balance................................. $(206,397) $(362,118) $(458,052)
                                                =========  =========  =========
</TABLE>



   The accompanying notes are an integral part of these financial statements

                                      F-5

<PAGE>

                        MOHEGAN TRIBAL GAMING AUTHORITY

                           STATEMENTS OF CASH FLOWS
                                (in thousands)

<TABLE>
<CAPTION>
                                                                         For the Year Ended September 30,
                                                                         -------------------------------
                                                                           2001       2000       1999
                                                                         ---------  ---------  ---------
<S>                                                                      <C>        <C>        <C>
Cash flows provided by operating activities:
   Net income (loss).................................................... $ 204,848  $ 145,934  $ (38,920)
   Adjustments to reconcile net income (loss) to net cash flow provided
     by operating activities:
       Depreciation and amortization....................................    34,753     30,739     23,397
       Relinquishment reassessment......................................   (38,577)    31,843    111,885
       Change in fair value of derivative instruments...................       949         --         --
       Loss on asset disposal...........................................       116      1,705        453
       Provision for losses on receivables..............................       411        617        679
       Loss on early extinguishment of debt.............................        --         --     33,217
       Write-off of financing fees......................................        --         --      5,211
   Changes in operating assets and liabilities:
       (Increase) decrease in current assets............................   (11,695)    (6,150)       759
       Increase in other assets.........................................    (5,894)    (2,390)    (6,000)
       Increase in current liabilities..................................    84,151     15,864     14,043
       Increase in other liabilities....................................     5,232         --         --
                                                                         ---------  ---------  ---------
       Net cash flows provided by operating activities..................   274,294    218,162    144,724
                                                                         ---------  ---------  ---------

Cash flows used in investing activities:
   Purchase of property and equipment...................................  (623,696)   (75,310)   (17,772)
   Increase in construction in process, net.............................    (2,654)  (212,968)   (45,023)
   Proceeds from asset sale.............................................        95         --         --
                                                                         ---------  ---------  ---------
       Net cash flows used in investing activities......................  (626,255)  (288,278)   (62,795)
                                                                         ---------  ---------  ---------

Cash flows provided by (used in) financing activities:
   Proceeds from issuance of long-term debt.............................   498,000         --    500,000
   Credit Facility payments.............................................   (90,000)        --         --
   Distributions to Tribe...............................................   (44,000)   (50,000)  (138,354)
   Relinquishment liability payments....................................   (42,295)   (19,973)        --
   Capitalized financing fees...........................................    (6,314)    (3,034)   (20,309)
   Payments on capital lease obligations................................    (4,877)   (12,907)   (11,148)
   Defeasance liability.................................................        --   (140,344)        --
   Defeasance trust asset...............................................        --    135,507   (135,507)
   Extinguishment of Senior Secured Notes...............................        --         --   (208,717)
   Capital contribution by Tribe........................................        --         --     97,096
   Proceeds from equipment financing....................................        --         --        878
                                                                         ---------  ---------  ---------
       Net cash flows provided by (used in) financing activities........   310,514    (90,751)    83,939
                                                                         ---------  ---------  ---------
       Net (decrease) increase in cash and cash equivalents.............   (41,447)  (160,867)   165,868
   Cash and cash equivalents at beginning of period.....................   115,731    276,598    110,730
                                                                         ---------  ---------  ---------
   Cash and cash equivalents at end of period........................... $  74,284  $ 115,731  $ 276,598
                                                                         =========  =========  =========
   Supplemental disclosures:
       Cash paid during the period for interest......................... $  50,031  $  43,558  $  44,981
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                      F-6

<PAGE>

                        MOHEGAN TRIBAL GAMING AUTHORITY

                         NOTES TO FINANCIAL STATEMENTS

Note 1--Organization and Basis of Presentation

   The Tribe established the Authority in July 1995 with the exclusive power to
conduct and regulate gaming activities for the Tribe. The Authority is governed
by a nine-member Management Board, consisting of the same nine members as those
of the 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 General Manager and other senior officers of
Mohegan Sun are hired by the Management Board. The General Manager and other
senior officers are employees of the Authority.

Note 2--Discontinued Operations

   On November 29, 2000, the Authority discontinued bingo operations in order
to build the Hall of the Lost Tribes, a smoke-free slot machine venue. Pursuant
to Accounting Principles Board Opinion No. 30 "Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions"
("APB 30"), the financial statements of the Authority have been restated to
reflect the disposition of bingo operations as discontinued operations.
Accordingly, the revenues, costs and expenses have been excluded from the
captions in the Statements of Income (Loss) and have been reported as "Loss
from discontinued operations." The loss for fiscal 2001 relates to severance
pay and disposal of bingo inventory.

Note 3--Summary of Significant Accounting Policies

  Cash and Cash Equivalents

   The Authority classifies as cash and cash equivalents all highly liquid
investments with a maturity of three months or less when purchased. Cash
equivalents are carried at cost, which approximates market value.

  Inventories

   Inventories are stated at weighted average cost.

  Due from Tribe

   Due from Tribe represents amounts paid by the Authority on behalf of the
Tribe for certain public safety facility projects that were reimbursed by the
Tribe subsequent to the fiscal year ended September 30, 2000.

  Property and Equipment

   Property and equipment are stated at cost. Depreciation is provided over the
estimated useful lives of the assets using the straight-line basis. Useful life
estimates of asset categories are as follows:

<TABLE>
          <S>                                               <C>
          Buildings and land improvements..................  40 years
          Furniture and equipment.......................... 3-7 years
</TABLE>

   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
income. Interest incurred for the construction of Project Sunburst is
capitalized at the Authority's weighted-average borrowing rate and amortized
over the life of the related asset. Interest capitalized for the years ended
September 30, 2001, 2000 and 1999 were $27.4 million, $9.9 million and
$534,000, respectively.

                                      F-7

<PAGE>

   The carrying value of the Authority's assets are reviewed when event 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 Statement of
Income (loss). The Authority believes no such impairment exists at September
30, 2001.

  Fair Value of Financial Instruments

   The fair value amounts presented below are reported to satisfy the
disclosure requirements of Statement of Financial Accounting Standards No. 107
("SFAS No. 107"), "Disclosures about Fair Values of Financial Instruments" and
are not necessarily indicative of the amounts that the Authority could realize
in a current market exchange.

   The carrying amount of cash and cash equivalents, receivables, accounts
payable and accrued expenses, financing facilities and capital lease
obligations approximate fair value.

   The fair value of the Authority's financing facilities is as follows:

<TABLE>
<CAPTION>
                                             September 30,  September 30,
                                                 2001           2000
                                             -------------- --------------
     <S>                                     <C>            <C>
     $200M Senior Notes..................... $200.0 million $196.0 million
     $300M Senior Subordinated Notes........ $303.0 million $294.0 million
     $150M Senior Subordinated Notes........ $152.3 million             --
</TABLE>

   The estimated fair value of the Authority's financing facilities was based
on quoted market prices on or about September 30, 2001.

  Casino Revenues and Promotional Allowances

   The Authority recognizes casino revenue as gaming wins less gaming losses.
Revenues from food and beverage, retail and special events are recognized at
the time the service is performed.

   The retail value of food and beverage sales and other services furnished to
casino guests, mainly through the use of the Mohegan Sun complimentary program,
is included in gross revenues and then deducted as promotional allowances to
arrive at net revenues.

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

<TABLE>
<CAPTION>
                                                  For the Year Ended
                                                     September 30,
                                                -----------------------
                                                 2001    2000    1999
                                                ------- ------- -------
        <S>                                     <C>     <C>     <C>
        Food and beverage...................... $26,215 $25,466 $26,724
        Retail and other.......................  45,157  44,578  30,103
                                                ------- ------- -------
                                                $71,372 $70,044 $56,827
                                                ======= ======= =======
</TABLE>

  Advertising

   The Authority expenses the production costs of advertising the first time
the advertising takes place, with the exception of billboard advertising, which
is treated as a prepaid and amortized over the expected period of future
benefits.

                                      F-8

<PAGE>

  Pre-Opening Expenses

   Pre-opening expenses consist principally of direct incremental personnel
costs, marketing and advertising expenses related to Project Sunburst. 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 expenses are expensed as incurred. Previously, these costs were
capitalized prior to the opening of a specific project and were charged to
expense at the commencement of operations.

  Derivative Instruments

   The Authority utilizes derivative instruments including interest rate swaps,
collars and caps to manage interest rate risk associated with the variable
interest rates. The Authority accounts for these derivative instruments in
accordance with SFAS No. 133 "Accounting for Derivative Instruments and Hedging
Activities." The derivative instruments are designated as cash flow hedging
instruments and are marked to market with unrealized gains (losses) included as
a component of accumulated other comprehensive income (loss). All derivatives
are evaluated quarterly and are deemed effective.

  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, is not subject to federal, state or
local income taxes.

  Trademarks

   In connection with the Relinquishment Agreement (see Note 13), 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.

  Management's Use of Estimates

   The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The most significant estimate included in the
accompanying financial statements relates to the relinquishment liability (see
Note 13). Actual results could differ from those estimates.

  New Accounting Pronouncements

   In November 2000, the Emerging Issues Task Force ("EITF") on the Financial
Accounting Standards Board (FASB) reached a consensus on EITF Issue No. 00-14,
"Accounting for Certain Sales Incentives." EITF 00-14 requires that discounts
which result in a reduction in or refund of the selling price of a product or
service in a single exchange transaction be recorded as a reduction of
revenues. The Authority's accounting policy related to free or discounted food
and beverage and other services already complies with EITF 00-14, and those
free or discounted services are generally deducted from gross revenues as
"promotional allowances."

   In February 2001, the EITF reached a partial consensus on EITF Issue No.
00-22, "Accounting for 'Points' and Certain Other Time-Based or Volume Based
Sales Incentive Offers, and Offers for Free Products or Services to be
Delivered in the Future." EITF 00-22 requires that the redemption of points for
cash be recognized as a reduction of revenue. The adoption of this Issue will
not impact the Authority as it does not currently offer cash rebates on its
players club points.

                                      F-9

<PAGE>

   On June 30, 2001, the FASB issued SFAS No. 142 "Goodwill and Other
Intangible Assets" to be effective for fiscal years beginning after December
15, 2001. The Authority adopted SFAS No. 142 on October 1, 2001. Under SFAS No.
142, the trademark will no longer be subject to amortization over its estimated
useful life as it has been deemed to have an indefinite useful life. However,
SFAS No. 142 requires the trademark to be evaluated at least annually for
impairment by applying a fair-value based test and, if impairment occurs, the
amount of impaired trademark must be written off immediately. With the adoption
of SFAS No. 142, the Authority no longer records amortization of the trademark.
For the year ended September 30, 2001, the Authority recorded $3.4 million of
amortization. The Authority is required to apply the initial fair value test by
March 31, 2002. The Authority has not yet determined whether the initial fair
value test will result in any impairment changes, but does not anticipate a
negative effect on its operating income upon completing the fair value
assessment.

   In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
of Disposal of Long-Lived Assets." SFAS No. 144 modifies the rules for
accounting for the impairment or disposal of long-lived assets. The new rules
become effective for fiscal years beginning after December 15, 2001, with
earlier application encouraged. The Authority has not yet quantified the impact
of implementing SFAS No. 144 on the Authority's financial statements, but does
not anticipated a negative effect on the Authority's operating income upon
adoption of the standard.

  Reclassifications

   Certain amounts in the 2000 and 1999 financial statements have been
reclassified to conform with the 2001 presentation.

Note 4--Cash and Cash Equivalents

   At September 30, 2001 and 2000, the Authority had cash and cash equivalents
of $74.3 million and $115.7 million, respectively, of which, $5.3 million and
$81.4 million, respectively, were invested in highly liquid investments with
original maturities not to exceed three months. For reporting purposes, cash
and cash equivalents include all operating cash, in-house funds, and cash set
aside for the expansion of Mohegan Sun ("Project Sunburst").

Note 5--Accounts Receivable

   Accounts receivable consists primarily of casino receivables which represent
credit extended to approved casino customers. The Authority maintains an
allowance for 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 credit worthiness of the customer.
The collectibility of these receivables could be affected by future business or
economic trends. At September 30, 2001 and 2000, the allowance for doubtful
accounts was approximately $765,000 and $736,000, respectively.

Note 6--Property and Equipment, Net

   Components of property and equipment were as follows (in thousands):

<TABLE>
<CAPTION>
                                              September 30, September 30,
                                                  2001          2000
                                              ------------- -------------
      <S>                                     <C>           <C>
      Land...................................  $   28,581     $ 28,581
      Land improvements......................      44,119       44,834
      Buildings and improvements.............     675,301      251,931
      Furniture and equipment................     265,161       80,476
                                               ----------     --------
      Subtotal...............................   1,013,162      405,822
      Less: accumulated depreciation.........     (78,146)     (65,579)
                                               ----------     --------
      Property and Equipment, net............     935,016      338,243
      Construction in Process................     267,653      264,999
                                               ----------     --------
      Total Property and Equipment...........  $1,202,669     $603,242
                                               ==========     ========
</TABLE>

                                     F-10

<PAGE>

Note 7--Accounts Payable and Accrued Expenses

   Components of accounts payable and accrued expenses were as follows (in
thousands):

<TABLE>
<CAPTION>
                                              September 30, September 30,
                                                  2001          2000
                                              ------------- -------------
      <S>                                     <C>           <C>
      Trade payables.........................   $ 56,243       $ 6,486
      Construction retainage.................     23,334        11,790
      Accrued payroll and related taxes and
        benefits.............................     25,474        15,733
      Accrued gaming taxes...................     13,504        11,842
      Other accrued liabilities..............     20,761        11,750
                                                --------       -------
                                                $139,316       $57,601
                                                ========       =======
</TABLE>

Note 8--Financing Facilities

   During fiscal year 1999, the Authority issued $200.0 million in Senior Notes
and $300.0 million in Senior Subordinated Notes. The proceeds from these
financings were used to extinguish the then existing Senior Secured Notes,
defease the then existing Subordinated Notes, pay transaction costs for the
newly issued Senior and Senior Subordinated Notes, and fund initial costs
related to Project Sunburst (see Note 15).

   During fiscal year 2001, the Authority issued $150.0 million in new Senior
Subordinated Notes. A portion of the proceeds from this financing, net of fees,
were used in conjunction with Project Sunburst. On July 30, 2001, the Authority
paid down $90.0 million on the Bank Credit Facility with a portion of the
proceeds from the financing.

   Financing facilities, as described below, consisted of the following (in
thousands):

<TABLE>
<CAPTION>
                                              September 30, September 30,
                                                  2001          2000
                                              ------------- -------------
      <S>                                     <C>           <C>
      Bank Credit Facility...................   $258,000            --
      $200M Senior Notes.....................    200,000      $200,000
      $300M Senior Subordinated Notes........    300,000       300,000
      $150M Senior Subordinated Notes........    150,000            --
                                                --------      --------
                                                $908,000      $500,000
                                                ========      ========
</TABLE>

  Bank Credit Facility

   As of September 30, 2001, the Authority had $258.0 million outstanding under
a $500 million reducing, revolving, secured credit facility (the "Bank Credit
Facility") with a syndicate of lenders led by Bank of America N.A. (formally
known as Bank of America National Trust and Savings Association). The Authority
draws on the Bank Credit Facility primarily in connection with Project
Sunburst. The Bank Credit Facility is secured by a lien on substantially all of
the Authority's assets, by a leasehold mortgage on the land and improvements
which comprise Mohegan Sun and by each of the Authority's cash operating
accounts

   At the Authority's option, each advance of loan proceeds will accrue
interest on the basis of a base rate or on the basis of a one-month, two-month,
three-month or six-month London Inter-Bank Offered Rate ("LIBOR") plus, in
either case, the applicable spread (based on the Authority's Total Leverage
Ratio as defined in the Bank Credit Facility). One-month LIBOR at September 30,
2001 was 2.64% and the applicable spread on a LIBOR loan was 2.375%. Interest
on each LIBOR loan that is for a term of three months or less is due and
payable on the last day of the related interest period. Interest on each base
rate loan is due and payable quarterly in arrears.

   Pursuant to the terms of the Bank Credit Facility, the commitment (or the
maximum amount that may be borrowed under the Bank Credit Facility) will be
automatically reduced on the earlier of March 31, 2002 or the

                                     F-11

<PAGE>

last day of the first full fiscal quarter following the completion date of
Project Sunburst, and on the last day of each fiscal quarter thereafter. The
amount of each such reduction must equal 10% of the commitment as in effect
immediately prior to the first such reduction. Project Sunburst is tentatively
scheduled to be completed on June 1, 2002.

   The Authority's debt agreements require, among other restrictions, the
maintenance of various financial covenants and terms including a fixed charge
coverage ratio, and certain debt leverage ratios. As of September 30, 2001 and
2000, the Authority was in compliance with all financial covenant requirements.

   The Authority uses derivative instruments, including interest rate caps,
collars, and swaps in its strategy to manage interest rate risk associated with
the variable interest rate on the Bank Credit Facility. The Authority's
objective in managing interest rate risk is to ensure the Authority has
appropriate income and sufficient liquidity to meet the Tribe and debt-holder
obligations. The Authority does not believe that there is any material risk
exposure with respect to derivative or other financial instruments. The
Authority continually monitors these exposures and makes the appropriate
adjustments to manage these risks within management's established limits.

   The Authority analyzes interest rate risk using various models that forecast
cash flows of the liabilities and their supporting assets, including derivative
instruments.

   The Authority is considered an "end user" of derivative instruments and
engages in derivative transactions for risk management purposes only. The
following is a summary of the Authority's derivative instruments at September
30, 2001:

<TABLE>
<CAPTION>
                                        Notional     Cost     Market
                                      ------------ -------- -----------
       <S>                            <C>          <C>      <C>
       Interest Rate Cap
         Strike Rate--8%............. $ 61,038,000 $410,000 $     1,000
       Interest Rate Collar
         Ceiling Strike Rate--8%
         Floor Strike Rate--6%.......   56,356,800  295,000  (3,310,295)
       Interest Rate Swap
         Pay fixed--6.35%
         Receive Variable............   28,178,400  221,000  (1,840,126)
                                      ------------ -------- -----------
            Total.................... $145,573,200 $926,000 $(5,149,421)
                                      ============ ======== ===========
</TABLE>

   All derivative instruments are based on one-month LIBOR. One-month LIBOR was
2.64% on September 30, 2001.

   For the year ended September 30, 2001, the Authority recognized a net loss
of $949,000 relating to the change in time value of its derivative instruments,
as reflected in the statement of income (loss).

  Senior Notes

   On March 3, 1999, the Authority issued $200.0 million Senior Notes with
fixed interest payable at a rate of 8.125% per annum (the "Senior Notes").
Interest on the Senior Notes is payable semi-annually on January 1 and July 1.
The Senior Notes mature on January 1, 2006. The Senior Notes are unsecured
general obligations of the Authority rank pari passu in right of payment with
all current and future unsecured senior indebtedness of the Authority. However,
borrowing under the syndicated $500.0 million Bank Credit Facility and other
capital lease obligations are secured by first priority liens on substantially
all of the assets of the Authority. As a result, upon any distribution to
creditors in a bankruptcy, liquidation or reorganization or similar proceeding
relating to the Authority or the Tribe, the holders of secured debt may be paid
in full in cash before any payment may be made with respect to the Senior
Notes. The Senior Notes rank equally in right of payment with 50% of the
Authority's

                                     F-12

<PAGE>

payment obligations under the Relinquishment Agreement (see Note 13) and rank
senior to the remaining 50% of the Authority's payment obligations under the
Relinquishment Agreement. As of September 30, 2001 and 2000, accrued interest
on the Senior Notes was $4.1 million.

  1999 Senior Subordinated Notes

   On March 3, 1999, the Authority issued the $300.0 million Senior
Subordinated Notes with fixed interest payable at a rate of 8.75% per annum
(the "1999 Senior Subordinated Notes"). Interest on the 1999 Senior
Subordinated Notes is payable semi-annually on January 1 and July 1. The 1999
Senior Subordinated Notes mature on January 1, 2009. The 1999 Senior
Subordinated Notes are unsecured general obligations of the Authority and are
subordinated to the Bank Credit Facility, the Senior Notes and 50% of the
Authority's payment obligations under the Relinquishment Agreement. The 1999
Senior Subordinated Notes rank equally with the remaining 50% of the
Authority's payment obligations under the Relinquishment Agreement. As of
September 30, 2001 and 2000, accrued interest on the 1999 Senior Subordinated
Notes was $6.6 million.

  2001 Senior Subordinated Notes

   On July 26, 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"). 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 2001 Senior Subordinated Notes are unsecured
general obligations of the Authority and are subordinated to the Bank Credit
Facility, the Senior Notes and 50% of the Authority's payment obligations under
the Relinquishment Agreement. The 2001 Senior Subordinated Notes rank equally
with the 1999 Senior Subordinated Notes and the remaining 50% of the
Authority's payment obligations under the Relinquishment Agreement. As of
September 30, 2001 and 2000, accrued interest on the 2001 Senior Subordinated
Notes was $2.3 million.

  Letters of Credit

   The Authority has available a $250,000 unsecured letter of credit that will
expire in August 2002 and a $550,000 letter of credit with Bank of America that
expires in April 2002. The $550,000 letter of credit was reduced from $1.0
million on April 13, 2001. As of September 30, 2001 and 2000, no amounts were
drawn on the letters of credit.

Note 9--Leases

   At September 30, 2001, the Authority was obligated under capital leases to
make future minimum lease payments of $1.6 million, of which $54,000 represents
interest for the fiscal year ending September 30, 2002.

   In October and November 2001, the Authority repaid the total obligation
under the capital leases.

   Operating lease expenses, excluding costs to obtain assets, were $2.5
million and $3.6 million for the years ended September 30, 2000 and 1999,
respectively. During fiscal 2000, the Authority purchased equipment previously
used under operating leases for $2.7 million. No operating leases existed as of
September 30, 2001.

Note 10--Related Party Transactions

   The Tribe provides governmental and administrative services to the Authority
in conjunction with the operation of Mohegan Sun. During the fiscal years ended
September 30, 2001, 2000 and 1999, the Authority incurred $10.9 million, $9.9
million and $8.3 million, respectively, of expenses for such services.

   Prior to October 1, 2000, the Authority operated a retail outlet at Mohegan
Sun and purchased goods for resale at this location from a limited liability
company ("Little People, LLC") owned by the Tribe. For the fiscal

                                     F-13

<PAGE>

years ended September 30, 2000 and 1999 the Authority purchased $348,000 and
$417,000, respectively, of such goods from Little People, LLC. On October 1,
2000, the Tribe assumed the management of this retail outlet from the Authority
and purchased the remaining inventory from the Authority for approximately
$172,000. The Authority and Little People, LLC have entered into a lease
agreement, whereby Little People, LLC leases retail space located in the casino
from the Authority. The lease term expires on June 30, 2006 and may be renewed
on a monthly basis. Little People, LLC is not obligated to pay any base rent.
The Authority reimburses the Tribe for sales where patron player's club points
are utilized.

   The Tribe, through one of its limited liability companies, has entered into
various land lease agreements with the Authority for access, parking and
related purposes for Mohegan Sun. For the fiscal years ended September 30,
2001, 2000 and 1999, the Authority expended $386,000, $386,000 and $412,000,
respectively, relating to these land lease agreements.

   The Tribe provided services through its Development Department for projects
related to Mohegan Sun and Project Sunburst. The Authority incurred $954,000 of
such expenses associated with the Development Department for the fiscal year
ended September 30, 2000. There were no expenses incurred during the year ended
September 30, 2001.

   On August 7, 2001, the Tribe issued Gaming Authority Priority Distribution
Payment Public Improvement Bond Anticipation Notes (the "Series 2001 BANS").
Debt service on the Series 2001 BANS is paid from 95% of amounts received from
the Authority under the Priority Distribution Agreement. The Priority
Distribution Agreement obligates the Authority 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 the Authority's obligations to make payments pursuant to invoices
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 the Bank Credit Facility. The priority distribution payments 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 remaining
5% of each priority distribution payment is remitted to the Tribe free and
clear of any lien. The Authority's financial statements reflect payments
associated with the Priority Distribution Agreement of $14.0 million for the
fiscal year ended September 30, 2001. The Authority's payment obligations under
the Relinquishment Agreement (see Note 13) are subordinated in right of payment
to the minimum distribution payment as defined in the Relinquishment Agreement,
from the Authority to the Tribe to the extent then due.

   In compliance with the restrictive provisions of the Bank Credit Facility
and the Authority's indentures, the Authority distributed to the Tribe $30.0
million, net of $14.0 million related to the Priority Distribution Agreement,
during the fiscal year 2001.

   On September 25, 1995, the Tribe adopted the Mohegan Tribal Employment
Rights Ordinance (the "TERO"), which sets forth hiring and contracting
preference requirements for employers and entities conducting business on
Tribal land or working on behalf of the Tribe. Pursuant to the TERO, an
employer is 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. In addition, when staffing the operations of the Project Sunburst
expansion, the Development Agreement requires TCA to give hiring and recruiting
preferences, first to qualified members of the Tribe (and their spouses and
children) and then to enrolled members of other federally recognized Indian
tribes.

   Similarly, any entity awarding a contract to be performed on Tribal land or
on behalf of the Tribe must give preference, first to certified Mohegan
entities and second to other certified Indian entities. This contracting
preference is conditioned upon the bid by the preferred certified entity being
within 5% of the lowest bid by a

                                     F-14

<PAGE>

non-certified entity (unless the preferred certified entity's bid exceeds
$100,000 of the lowest bid by a non-certified entity). The TERO establishes
procedures and requirements for certifying Mohegan entities and other Indian
entities. Certification is based largely on the level of ownership and control
exercised by the members of the Tribe or other Indian tribes, as the case may
be, over the entity bidding on a contract. A number of contracts for Project
Sunburst were awarded to companies controlled by Tribal members under the TERO
provision described above.

   The Authority engages McFarland Johnson, Inc. for surveying, civil
engineering and professional design services. Roland Harris, a current member
and a former Chairman of the Management Board and the Tribal Council, was a
consultant for this firm pursuant to a consulting agreement which expired in
May 2001. For the fiscal years ended September 30, 2001, 2000 and 1999, the
Authority incurred $175,000, $792,000 and $373,000, respectively, for such
services provided by McFarland Johnson. McFarland Johnson formerly conducted
business as Harris and Clark, Inc. The Authority believes that the terms of
this engagement are comparable to those that would pertain to arms length
engagement with an unaffiliated firm.

   As of September 30, 2001, 146 employees of the Authority were members of the
Tribe.

Note 11--Employee Benefit Plans

   The Authority maintains a retirement savings plan for its employees under
Section 401(k) of the Internal Revenue Code ("401(k) Plan"). The plan allows
employees of the Authority to defer up to the lesser of the maximum amount
prescribed by the Internal Revenue Code or 15% 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. The Authority recorded matching contributions of approximately $2.7
million, $2.9 million and $2.0 million, respectively, to this plan for the
years ended September 30, 2001, 2000 and 1999, respectively.

   The Authority, together with the Tribe, maintains a Non-Qualified Deferred
Compensation Plan (the "Deferred Compensation Plan") for certain key employees.
This plan allows participants to defer up to 100% of their pre-tax income to
the plan. For the fiscal years ended September 30, 2001, 2000 and 1999,
contributions, net of withdrawals, totaled $657,000, $703,000 and $144,000,
respectively.

   On April 18, 2001, the Authority announced a Deferred Retirement Plan (the
"Retirement Plan") for all employees sponsored by the Authority. The Retirement
Plan was effective July 2, 2001 and contributions by the Authority are based on
hours worked. Employee become eligible after 90 days of employment and will be
fully vested at the completion of seven years of employment. For the year ended
September 30, 2001 the Authority has contributed $986,000 to the Retirement
Plan.

Note 12--Commitments and Contingencies

  Project Sunburst

   The Authority has received authorization from the Tribe to expend up to
$960.0 million, excluding capitalized interest for completion of Project
Sunburst. As of September 30, 2001, the Authority has spent $807.9 million,
excluding capitalized interest on Project Sunburst. The remaining $152.1
million is anticipated to be spent during fiscal 2002.

  The Mohegan Compact

   The Mohegan Compact stipulates that a portion of the revenues earned on slot
machines must be paid to the State of Connecticut ("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.

                                     F-15

<PAGE>

   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. The Authority reflected expenses
associated with the Slot Win Contribution totaling $144.6 million, $135.1
million and $121.1 million, respectively for the fiscal years ended September
30, 2001, 2000 and 1999.

  Agreement with the Town of Montville

   On June 16, 1994, the Tribe and the Town of Montville (the "Town") entered
into an agreement whereby the Tribe agreed to pay to the Town a recurring
annual payment of $500,000 to minimize the impact on the Town resulting from
the decreased tax revenues on reservation land held in trust. Additionally, the
Tribe agreed to make a one-time payment of $3.0 million towards infrastructure
improvements to the Town's water system. The Tribe has assigned its rights and
obligations in this agreement to the Authority. As of September 30, 2001, the
Authority has fulfilled this obligation and paid $3.0 million to the Town for
improvements to the municipal water system, which has been included in other
assets in the accompanying balance sheets and is being amortized over 40 years.

  Land Lease from the Tribe to the Authority

   The land upon which Mohegan Sun is situated is held in trust for the Tribe
by the United States. The Tribe and the Authority have entered into a land
lease 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 approved by the Secretary of the Interior on September
29, 1995. Summarized below are several key provisions of this lease.

   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 Mortgages

   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

                                     F-16

<PAGE>

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.

  Expansion Construction Management Agreement with Perini Building Company, Inc.

   The Authority engaged Perini Building Company, Inc. ("Perini") as
construction manager to provide construction management services for Project
Sunburst. As construction manager, Perini is receiving a fee of $25.5 million
for services including, but not limited to, pre-construction review and
construction phase contract administration. As of September 30, 2001, Perini
has received $14.0 million of the $25.5 million fee which has been included in
"construction in process" in the accompanying balance sheets. The Construction
Management Agreement contains a limited waiver of sovereign immunity to permit
the commencement, maintenance and enforcement of any dispute, claim and/or
cause of action arising under the Construction Management Agreement. In
conjunction with the limited waiver of sovereign immunity, Perini may seek
satisfaction of judgment against the undistributed and/or future revenues of
Project Sunburst and/or the existing Mohegan Sun facility.

  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 materially adverse effect on the Authority's financial position or
results of operations.

Note 13--TCA Agreements

  Management Agreement

   On September 30, 1995, the Tribe and TCA entered into the Amended and
Restated Gaming Facility Management Agreement (the "Management Agreement"),
pursuant to which the Tribe retained and engaged TCA, on an independent
contractor basis, to operate, manage and market Mohegan Sun.

   The Tribe assigned its rights and obligations under the Management Agreement
to the Authority. TCA had a responsibility to manage Mohegan Sun in exchange
for payments ranging from 30% to 40% of net income, before management fees, as
defined, depending upon profitability levels. Management fees totaled $13.6
million and $59.5 million, respectively, for the fiscal years ended September
30, 2000 and 1999. The amount for fiscal 2000 represents only the amounts
earned from the period October 1, 1999 through December 31, 1999, the date upon
which the Management Agreement was terminated.

                                     F-17

<PAGE>

  Relinquishment Agreement

   In February 1998, the Authority and TCA entered into an agreement, (the
"Relinquishment Agreement"). The Relinquishment Agreement superceded the
Management Agreement effective January 1, 2000 (the "Relinquishment Date"), and
provides that the Authority is to make certain payments to TCA out of, and
determined as a percentage of, the gross revenues generated by the Mohegan Sun
over a 15-year period commencing on the Relinquishment Date. The payments
("Senior Relinquishment Payments" and "Junior Relinquishment Payments"), each
of which are calculated as 2.5% of revenues, as defined, have separate payment
schedules and priority. Payment of Senior Relinquishment Payments commenced on
April 25, 2000, twenty-five days following the end of the first three-month
period following the Relinquishment Date and continue at the end of each
three-month period occurring thereafter until December 31, 2014. Junior
Relinquishment Payments commenced on July 25, 2000, twenty-five days following
the end of the first six-month period following the Relinquishment Date and
continue at the end of each six-month period occurring thereafter until
December 31, 2014. 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 as gross gaming revenues (other than Class
II gaming revenue) and all other facility revenues (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).

   In the fourth quarter of 2000, TCA notified the Authority that it did not
agree with the Authority's treatment of certain promotional transactions that,
in TCA's opinion, has resulted in a reduction in revenues subject to the
Relinquishment Agreement. The Authority and TCA have agreed on the accounting
for Revenues related to certain promotional allowances in accordance with the
Relinquishment Agreement. As a result, in August 2001, the Authority paid TCA
approximately $137,000 of additional relinquishment fees.

   The Authority, in accordance with Financial Accounting Standards Board
Statement No. 5 ("SFAS No. 5"), "Accounting for Contingencies", has recorded a
relinquishment liability of the estimated present value of its obligations
under the Relinquishment Agreement. 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, 2001, the relinquishment liability was
reassessed to be $592.0 million from $672.9 million at September 30, 2000. The
decrease is due to $38.6 million in relinquishment liability reassessment
income less $42.3 million in relinquishment payments. This reassessment
resulted from the impact on the time value of money due to the passage of time
and the impact of actual revenues compared to original estimates on the
determination of the relinquishment liability for the fiscal year 2001. The
Authority reviewed current revenue forecasts and has reduced revenue
projections for the period in which the Relinquishment Agreement applies, due
to uncertainties involving economic market conditions and future competition
from potential Native American casinos. Of the $42.3 million in relinquishment
payments, 50% are Senior Relinquishment Payments and 50% are Junior
Relinquishment Payments. At September 30, 2001 relinquishment payments earned
but unpaid, were $11.5 million.

  Development Agreement

   On February 7, 1998, the Authority and TCA entered into a development
services agreement (the "Development Agreement"). Under the Development
Agreement, TCA is responsible for the administration and supervision of the
construction manager and the entire construction process of Project Sunburst.
TCA is acting as the Authority's representative in connection with construction
contracts that are approved by the Authority. Specifically, TCA is responsible
for overseeing all persons performing work on the expansion site, inspecting
the progress of construction, determining completion dates and reviewing
contractor payment requests submitted to the Authority. The Development
Agreement specifically gives TCA the right to include provisions in
construction contracts that impose liquidated damage payments in the event of
failure to meet construction schedules.

                                     F-18

<PAGE>

   Payment of the Development Fee

   Under the Development Agreement, the Authority is required to pay to TCA a
development fee of $14.0 million. Pursuant to the payment schedule described in
the Development Agreement, on January 15, 2000, the Authority began paying the
development fee to TCA on a quarterly basis, based upon the incremental
completion as of each payment date. As of September 30, 2001, the Authority has
incurred $11.3 million related to the TCA development fee, of which $9.3
million has been paid.

   Termination and Disputes

   The Development Agreement terminates upon the earlier of (a) completion of
Project Sunburst or (b) February 7, 2008. In addition, each party has the right
to terminate the Development Agreement if there is a material default or
failure to perform a material duty or obligation by the other party. The
parties must submit disputes arising under the Development Agreement to
arbitration and have agreed that punitive damages may not be awarded to either
party by an arbitrator. The Authority has also waived sovereign immunity for
the purpose of permitting, compelling or enforcing arbitration and has agreed
to be sued by TCA in any court of competent jurisdiction for the purposes of
compelling arbitration or enforcing any arbitration or judicial award arising
out of the Development Agreement.

Note 14--Comprehensive Income

   SFAS No. 130 "Reporting Comprehensive Income", requires that the Authority
disclose comprehensive income and its components. The objective of SFAS No. 130
is to report a measure of all changes in the equity of a company that result
from transactions and other economic events of the period other than
transactions with stockholders. Comprehensive income is the total of net income
and all other non-stockholder changes in equity ("Other Comprehensive Income").

   The Authority has recognized the intrinsic value associated with its
derivative instruments in accordance with SFAS No. 133 upon becoming effective
as of January 1, 2001.

<TABLE>
<CAPTION>
                                                      For the Year
                                                         Ended
                                                     September 30,
                                                          2001
                                                     --------------
                                                     (in thousands)
             <S>                                     <C>
             Net Income.............................    $204,848
             Derivative instruments adjustment......      (5,127)
                                                        --------
             Comprehensive Income...................    $199,721
                                                        ========
</TABLE>

Note 15--Extraordinary Items

   The Authority incurred $38.4 million in extraordinary items for the year
ended September 30, 1999. Included in the expense is $33.7 million related to
the early extinguishment of the Senior Secured Notes and $5.2 million related
to the write-off of financing fees associated with the original facility
construction. Also included is an extraordinary gain for the forgiveness of
debt of $500,000 associated with the defeasance of the Subordinated Notes (See
Note 8).


                                     F-19

<PAGE>

SCHEDULE II

                        MOHEGAN TRIBAL GAMING AUTHORITY
          SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 and 1999
                                (in thousands)

<TABLE>
<CAPTION>
    Column A                                           Column B       Column C       Column D    Column E
    --------                                          ---------- ------------------ ----------- ----------
                                                                 Charged
                                                                 to costs
                                                      Balance at   and     Charged  Deductions  Balance at
                                                      beginning  expenses  to other    from       end of
                                                      of period  (income)  accounts reserves(1)   period
Description:                                          ---------- --------  -------- ----------- ----------
<S>                                                   <C>        <C>       <C>      <C>         <C>
Year Ended September 30, 2001
Reserves and allowances deducted from asset accounts:
   Allowance for doubtful accounts...................  $    736  $    411    $ --     $   382    $    765

   Relinquishment liability..........................  $672,880  $(38,577)   $ --     $42,295    $592,008

Year Ended September 30, 2000
Reserves and allowances deducted from asset accounts:
   Allowance for doubtful accounts...................  $    834  $    617    $ --     $   715    $    736

   Relinquishment liability..........................  $661,010  $ 31,843    $ --     $19,973    $672,880

Period ended September 30, 1999
Reserves and allowances deducted from asset accounts:
   Allowance for doubtful accounts...................  $    348  $    679    $ --     $   193    $    834

   Relinquishment Liability..........................  $549,125  $111,885    $ --     $    --    $661,010
</TABLE>
--------
Note (1): Deductions from reserves include the write-off of uncollectible
accounts, net of recoveries of accounts previously written off and payments
under the Relinquishment Agreement.

                                      S-1

<PAGE>

                                EXHIBITS INDEX

<TABLE>
<CAPTION>
Exhibit
  No.   Description
------- -----------
<C>     <S>

  3.1   Constitution of the Mohegan Tribe of Indians of Connecticut*

  3.2   Ordinance No. 95-2 of the Mohegan Tribe of Indians of Connecticut for Gaming on Tribal Lands,
          enacted on July 15, 1995*

  4.1   Indenture dated March 3, 1999 among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of
          Indians of Connecticut and First Union National Bank, as Trustee, relating to the 8 1/8% Senior
          Notes Due 2006 of the Mohegan Tribal Gaming Authority**

  4.2   Form of Global 8 1/8% Senior Notes Due 2006 of the Mohegan Tribal Gaming Authority (contained in
          the Indenture filed as Exhibit 4.1)**

  4.3   Indenture dated as of March 3, 1999 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 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority**

  4.4   Form of Global 8 3/4% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority
          (contained in the Indenture filed as Exhibit 4.3)**

  4.5   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 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority***

  4.6   Form of Global 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority
          (contained in the Indenture filed as Exhibit 4.5)***

 10.1   The Mohegan Tribe--State of Connecticut Gaming Mohegan Compact between the Mohegan Tribe
          of Indians of Connecticut and the State of Connecticut (the "Compact")*

 10.2   Agreement dated April 25, 1994 between the Mohegan Tribe of Indians of Connecticut and the State
          of Connecticut resolving certain land claims (the "Resolution Agreement")*

 10.3   Memorandum of Understanding dated May 17, 1994 between the Mohegan Tribe of Indians of
          Connecticut and the State of Connecticut regarding implementation of the Compact and the
          Resolution Agreement*

 10.4   Agreement between the Mohegan Tribe of Indians of Connecticut and the Town of Montville,
          Connecticut*

 10.5   Land Lease dated September 29, 1995 between the Mohegan Tribe of Indians of Connecticut and the
          Mohegan Tribal Gaming Authority; Amendment of Land Lease dated September 29, 1995*

 10.6   Amendment to the Land Lease dated February 18, 1999 between the Mohegan Tribe of Indians of
          Connecticut and the Mohegan Tribal Gaming Authority**

 10.7   Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 between the
          Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority and Trading
          Cove Associates*

 10.8   Development Services Agreement dated February 7, 1998 by and among the Mohegan Tribal Gaming
          Authority, the Mohegan Tribe of Indians of Connecticut and Trading Cove Associates+

 10.9   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+
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Exhibit
  No.   Description
------- -----------
<C>     <S>

 10.10  The Loan Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming
          Authority, the Mohegan Tribe of Indians of Connecticut, Bank of America National Trust and
          Savings Association as Administrative Agent, Salomon Smith Barney Inc. as Syndication Agent,
          Societe Generale as Documentation Agent, NationsBanc Montgomery Securities LLC as Lead
          Arranger and each lender named therein (the "Loan Agreement")**

 10.11  Escrow Deposit Agreement dated as of March 3, 1999 by and among the Mohegan Tribal Gaming
          Authority, the Mohegan Tribe of Indians of Connecticut and First Union National Bank**

 10.12  Construction Reserve Disbursement Agreement dated March 3, 1999 among the Mohegan Tribal
          Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Fleet National Bank**

 10.13  The Merrill Lynch Non-Qualified Deferred Compensation Plan Trust Agreement dated September 1,
          1998 between the Mohegan Tribal Gaming Authority and Merrill Lynch Trust+

 10.14  Employment Agreement dated April 22, 1999 by and between the Mohegan Tribal Gaming Authority
          and William J. Velardo**

 10.15  Employment Agreement dated April 22, 1999 by and between the Mohegan Tribal Gaming Authority
          and Mitchell Grossinger Etess**

 10.16  Employment Agreement dated April 22, 1999 by and between the Mohegan Tribal Gaming Authority
          and Jeffrey E. Hartmann**

 10.17  Amendment No. 1 to the Loan Agreement dated as of November 30, 2000 by and among the
          Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Bank of
          America National Trust and Savings Association++

 10.18  Priority Distribution Agreement between Mohegan Tribal Gaming Authority and the Mohegan Tribe
          of Indians of Connecticut dated August 1, 2001+++

 10.19  Administrative Services Agreement between Mohegan Tribal Gaming Authority and Fleet Retirement
          Plan Services dated July 30, 2001+++

 12.1   Computation of Ratio of Earnings to Fixed Charges
</TABLE>
--------
  * Filed by the Authority with its Registration Statement on Form S-1 (file
    no. 33-80655), filed with the SEC on December 21, 1995, as amended, and
    incorporated herein by reference.
 ** Filed by the Authority with its Registration Statement on Form S-4 (file
    no. 333-76753), filed with the SEC on April 21, 1999, and incorporated
    herein by reference.
*** Filed by the Authority with it Registration Statement on Form S-4 (file no.
    333-69472), filed with the SEC on September 17, 2001, and incorporated
    herein by reference.
  + Filed by the Authority with its Form 10-K for the fiscal year ended
    September 30, 1998 and incorporated herein by reference.
 ++ Filed by the Authority with its Form 10-K for the fiscal year ended
    September 30, 2000 and incorporated herein by reference.
+++ Filed by the Authority with its Form 10-Q for the quarter ended June 30,
    2001 and incorporated herein by reference.