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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-K



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

For the fiscal year ended September 30, 2007

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



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MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)



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

(860) 862-8000

(Registrants telephone number, including area code)

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



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

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

Title of Class

NONE



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

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

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

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

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



|                         |  |                    |  |                         
|------------------------ |  | ------------------ |  | ------------------------
|Large accelerated filer ̈ |  | Accelerated filer ̈ |  | Non-accelerated filer  x

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



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-K



|                                                           |  |                                                                                                              |  |   
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------ |  | --
|                                                           |  | PageNumber                                                                                                  
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS       |  | 1                                                                                                           
|                                                           | 
|PART I                                                     |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 1.                                                    |  | Business                                                                                                     |  | 2 
|                                                           |  |                                                                                                             
|Item 1A.                                                   |  | Risk Factors                                                                                                 |  | 33
|                                                           |  |                                                                                                             
|Item 1B.                                                   |  | Unresolved Staff Comments                                                                                    |  | 44
|                                                           |  |                                                                                                             
|Item 2.                                                    |  | Properties                                                                                                   |  | 44
|                                                           |  |                                                                                                             
|Item 3.                                                    |  | Legal Proceedings                                                                                            |  | 45
|                                                           |  |                                                                                                             
|Item 4.                                                    |  | Submission of Matters to a Vote of Security Holders                                                          |  | 45
|                                                           | 
|PART II                                                    |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 5.                                                    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 46
|                                                           |  |                                                                                                             
|Item 6.                                                    |  | Selected Financial Data                                                                                      |  | 46
|                                                           |  |                                                                                                             
|Item 7.                                                    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |  | 47
|                                                           |  |                                                                                                             
|Item 7A.                                                   |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |  | 77
|                                                           |  |                                                                                                             
|Item 8.                                                    |  | Financial Statements and Supplementary Data                                                                  |  | 78
|                                                           |  |                                                                                                             
|Item 9.                                                    |  | Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure                          |  | 78
|                                                           |  |                                                                                                             
|Item 9A.                                                   |  | Controls and Procedures                                                                                      |  | 78
|                                                           |  |                                                                                                             
|Item 9B.                                                   |  | Other Information                                                                                            |  | 78
|                                                           | 
|PART III                                                   |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 10.                                                   |  | Directors, Executive Officers and Corporate Governance                                                       |  | 79
|                                                           |  |                                                                                                             
|Item 11.                                                   |  | Executive Compensation                                                                                       |  | 82
|                                                           |  |                                                                                                             
|Item 12.                                                   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 91
|                                                           |  |                                                                                                             
|Item 13.                                                   |  | Certain Relationships and Related Transactions, and Director Independence                                    |  | 92
|                                                           |  |                                                                                                             
|Item 14.                                                   |  | Principal Accountant Fees and Services                                                                       |  | 94
|                                                           | 
|PART IV                                                    |  |                                                                                                             
|                                                           |  |                                                                                                             
|Item 15.                                                   |  | Exhibits and Financial Statement Schedules                                                                   |  | 95
|                                                           | 
|Signatures                                                 |  | 96                                                                                                          
|                                                           | 
|Supplemental Information                                   |  |                                                                                                             
|                                                           | 
|Index to Consolidated Financial Statements                 |  | F-1                                                                                                         
|                                                           | 
|Schedule IIValuation and Qualifying Accounts and Reserves |  | S-1                                                                                                         



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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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



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



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



| |  |  | our ability to develop an approximately 1.35 million square-foot expansion at Mohegan Sun, known as Project Horizon, which includes a new 922-room hotel, on
time and within budget;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | our ability to develop a Phase II gaming facility at Mohegan Sun at Pocono Downs, known as Project Sunrise, on time and within budget;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



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



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



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



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



| |  |  | our leverage and ability to meet our debt service obligations, including significant increases expected to finance Project Horizon and Project Sunrise;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | the continued availability of financing, including obtaining modifications to the new bank credit facility to address the revisions to Project Horizon and the
revised cost projection for Project Sunrise.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



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##### Table of Contents

PART I

Item 1. Business

Overview

The Tribe and the Authority

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

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

Mohegan Sun

In October 1996, we opened a gaming and entertainment complex known as Mohegan Sun. Mohegan Sun is located on a 185-acre site on the Tribes
reservation overlooking the Thames River with direct access from Interstate 395 and Connecticut Route 2A via a four-lane access road. Mohegan Sun is approximately 125 miles from New York City and approximately 100 miles from Boston, Massachusetts.
In fiscal year 2002, we completed a major expansion of Mohegan Sun known as Project Sunburst. The first phase of Project Sunburst, the Casino of the Sky, which included increased gaming, restaurant and retail space and an entertainment arena, opened
in September 2001. The remaining components, including the approximately 1,200-room luxury Sky hotel and approximately 100,000 square feet of convention space, were fully opened in June 2002.

Mohegan Sun operates in an approximately 3.0 million square-foot facility, which includes the following:

Casino of the Earth

As of
September 30, 2007, the Casino of the Earth had approximately 188,000 square feet of gaming space and offered:



| |  |  | approximately 3,775 slot machines and 210 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including the Birches Bar & Grill (formerly Uncas American Indian Grill), a 285-seat full-service restaurant and bar, three
full-service themed fine dining restaurants, with
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | a fourth area featuring cuisine from all three adjacent restaurant themes, a 610-seat buffet, a ten-station food court featuring international and domestic
cuisine, Hong Kong Street food outlet offering authentic Southeast Asian cuisine and multiple service bars, all operated by us, for a current total of approximately 1,700 restaurant seats;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | five retail shops providing shopping opportunities ranging from Mohegan Sun logo souvenirs to cigars.
| | - |  | -----------------------------------------------------------------------------------------------------

Casino of the Sky

As of
September 30, 2007, the Casino of the Sky had approximately 119,000 square feet of gaming space and offered:



| |  |  | approximately 2,410 slot machines and 120 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including two full-service restaurants, two quick-service restaurants, a 24-hour coffee shop, a 320-seat buffet and five lounges and
bars operated by us, as well as four full-service restaurants, three quick-service restaurants and a multi-station food court operated by third parties, for a total of approximately 2,600 restaurant seats;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



| |  |  | the Shops at Mohegan Sun containing 32 different retail shops, eight of which we own;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | an approximately 1,200-room luxury hotel with a private high limit table games suite on the 36thfloor;
| | - |  | ------------------------------------------------------------------------------------------------------



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



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



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

Mohegan Sun has parking spaces for approximately 13,000 guests and 3,100 employees. In addition, we operate a gasoline and convenience center, an
approximately 4,000 square foot, 20-pump facility located adjacent to Mohegan Sun.

Project Horizon

We have undertaken a major expansion of Mohegan Sun, known as Project Horizon. Project Horizon consists of four major components (Sunrise Square, Property
Infrastructure, Casino of the Wind and the Earth Expansion). The plans for Project Horizon currently include adding substantially more hotel rooms, gaming space and other new non-gaming amenities to Mohegan Sun. The total number of slot machines at
Mohegan Sun is projected to increase to approximately 7,000 units, complemented by approximately 380 table games (including poker tables) when the project is completed.

Groundbreaking occurred in November 2006 with the construction of Sunrise Square, a new Asian themed gaming area, which includes a new 5,000-square-foot bus lobby, a 4,000-square-foot Hong Kong Street food
outlet and 8,500 square feet of gaming space offering 46 table games such as Mini-Baccarat, Sic Bo and Pai Gow Poker. The gaming component of Sunrise Square partially opened in July 2007, and the remainder of the new facility opened in August 2007.
The estimated cost of this component totaled $17.0 million.



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The Property Infrastructure component of the project is underway and includes a 1,700-space parking
garage and additional surface parking lots, site development and road improvements on or adjacent to the property. The estimated cost of this component is $101.0 million.

We are also developing the Casino of the Wind, a new gaming area adjacent to the Casino of the Sky, which is expected to include approximately 45,000 square feet of gaming space with approximately 825 slot machines,
28 table games and a themed poker room with 42 tables, as well as approximately 20,000 square feet of new dining and retail amenities, including a two-level 16,000-square-foot Jimmy Buffetts Margaritaville Restaurant. Groundbreaking for the
Casino of the Wind occurred in June 2007, and the new casino is scheduled to open in the fall of 2008. The estimated cost of this component is $125.0 million.

Project Horizon also is planned to include the Earth Expansion, featuring the Earth hotel which is expected to include approximately 922 rooms, including approximately 261 House of Blues-themed hotel rooms and a House
of Blues Foundation Room. The Earth Expansion is also planned to include new House of Blues-themed dining and entertainment amenities, including an approximately 19,400 square foot music hall. In addition, the Earth Expansion will include a special
events facility, approximately 35,000 square feet of retail space, additional food and beverage facilities, including two fine-dining options, a burger restaurant, four bars, a pizzeria and a three-station food court. The Earth hotel and related
facilities are expected to open in October 2010. The estimated cost of this component is $682.0 million.

Total costs for Project Horizon,
inclusive of costs incurred to date for Sunrise Square and the Casino of the Wind, currently are estimated to be approximately $925.0 million. Remaining project costs are estimated to be incurred as follows: fiscal year 2008 $252.0 million, fiscal
year 2009 $303.0 million, fiscal year 2010 $294.0 million and fiscal year 2011 $30.0 million.

Connecticut Sun

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

Mohegan Golf

In November 2006, we formed a wholly owned subsidiary, Mohegan Golf, LLC, or Mohegan Golf, to purchase and operate a golf course in southeastern Connecticut. In May 2007, Mohegan Golf acquired substantially all of the assets of Pautipaug
Country Club Inc., or PCC, which included a golf course located in Sprague and Franklin, Connecticut. Mohegan Golf incurred total acquisition costs of $4.7 million for the golf course and other items acquired from PCC. The club was renamed Mohegan
Sun Country Club at Pautipaug and opened for the season in June 2007.

Mohegan Sun at Pocono Downs

Through Downs Racing, we own and operate the slot machine and harness racing facility known as Mohegan Sun at Pocono Downs located on approximately 400
acres in Plains Township, Pennsylvania, as well as several Pennsylvania OTWs located in Carbondale, East Stroudsburg, Hazleton and Lehigh Valley (Allentown), collectively known as the Pocono Downs entities. Harness racing has been conducted at
Pocono Downs since 1965. The Lehigh Valley (Allentown) OTW is a 28,000 square-foot facility and is the largest OTW in the Commonwealth of Pennsylvania. Another OTW in Erie, Pennsylvania was sold to a third party in July 2007 for consideration of
$7.0 million in cash, pursuant to an agreement we assumed in connection with our purchase of the Pocono Downs entities (see Note 17 to our consolidated financial statements).



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Downs Racing completed the 2007 harness racing season at Pocono Downs in November 2007 and will continue
the harness racing activities when the 2008 racing season begins in the spring of 2008. Year round simulcast pari-mutuel wagering activities also are conducted at Mohegan Sun at Pocono Downs and the OTW facilities. A new state of the art,
pari-mutuel simulcast facility at Mohegan Sun at Pocono Downs opened in March 2006.

On August 7, 2006, we entered into an amendment
of the Pocono Downs purchase agreement with the seller, a subsidiary of Penn National Gaming, Inc. Pursuant to the amendment, in exchange for our agreement to modify certain provisions of the purchase agreement, including the elimination of our
post-closing termination rights, we will receive an aggregate refund of $30.0 million of the original purchase price for the Pocono Downs entities, payable in five annual installments of $7.0 million, $7.0 million, $6.5 million, $6.0 million and
$3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. The first installment of $7.0 million was received in November 2007.

Downs Racing has secured a permanent Category One slot machine license, which permits the installation and operation of up to 3,000 slot machines at Mohegan Sun at Pocono Downs. Under certain circumstances, Downs Racing may be permitted to
install up to a total of 5,000 slot machines at Pocono Downs. A minimum of 1,500 slot machines were required to be in operation by November 2007; however, in November 2007, the Pennsylvania Gaming Control Board, or the PGCB, granted Downs Racing a
one-year extension to reach the 1,500 slot machine threshold.

After the satisfaction of certain regulatory conditions and the payment of a
one-time slot machine license fee of $50.0 million to the PGCB in October 2006, Downs Racing was the first to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of its gaming and entertainment facility opened to the public on
November 14, 2006. The total cost incurred for development of the Phase I facility was approximately $70.0 million, excluding the $50.0 million one-time slot machine license fee. The two-level casino includes 90,000 square feet of gaming space,
operates 24 hours a day, seven days a week and houses approximately 1,100 new slot machines with denominations ranging from one cent to $25. The facility also offers two casino bars, a food court and a retail shop. In June 2007, renovations were
completed in the current food court to accommodate the installation of approximately 80 additional slot machine gaming positions. Approximately 40 of these new positions are comprised of video blackjack units approved by the PGCB.

Project Sunrise, the Phase II gaming and entertainment facility at Mohegan Sun at Pocono Downs, is being developed on land adjacent to the existing
gaming facility. When completed, the combined facility is anticipated to include approximately 2,500 slot machines, three fine dining restaurants, a 300-seat buffet, an expanded food court, retail shopping, nightlife venues, additional parking and
bus amenities. Construction commenced in May 2007 with a grand opening planned in the summer of 2008. Development of Project Sunrise is anticipated to cost approximately $208.0 million.

Other Diversification Projects

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



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Cowlitz Project

In July 2004, we formed Mohegan Ventures-Northwest, LLC, or Mohegan Ventures-NW, one of three members in Salishan-Mohegan LLC, or Salishan-Mohegan.
Salishan-Mohegan was formed to participate in the development and management of a casino to be located in Clark County, Washington and owned by the Cowlitz Indian Tribe, or the Cowlitz Project. Mohegan Ventures-NW holds a 49.15% membership interest,
the Mohegan Tribe holds a 7.85% membership interest and Salishan Company, LLC, or Salishan Company, holds a 43.0% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Mohegan Tribe each hold one of four seats on the Board of Managers
of Salishan-Mohegan.

In September 2004, Salishan-Mohegan entered into development and management agreements with the Cowlitz Tribe
regarding the Cowlitz Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing, development, construction, and furnishing, as well as providing assistance with the financing of the
Cowlitz Project. The development agreement provides for certain development fees of 3% of total Project Costs, as defined in the development agreement, which are to be distributed to Mohegan VenturesNW and the Mohegan Tribe pursuant to the
Salishan-Mohegan operating agreement. In April 2006, Salishan-Mohegan purchased the land to be used as the site for the planned casino, which will be transferred to the Cowlitz Tribe or the United States under certain conditions in the development
agreement. The management agreement is for a period of seven years commencing with the opening of the planned casino, during which Salishan-Mohegan will manage, operate and maintain the planned casino. The management agreement provides for a
management fee of 24% of Net Revenues, as defined in the management agreement, which approximates net income from the Cowlitz Project. Pursuant to the operating agreement, management fees will be allocated to the members of Salishan-Mohegan based on
their respective membership percentages. Development of the Cowlitz Project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of Washington and the United States
Department of the Interior accepting land into trust on behalf of the Cowlitz Tribe. The management agreement is subject to approval by the National Indian Gaming Commission, or the NIGC.

Menominee Project

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

In March 2007, Wisconsin Tribal Gaming, LLC, or WTG, was formed to participate in the development of the proposed casino to be owned by the Menominee
Tribe. WTG consists of two members, one of which is Mohegan Ventures Wisconsin, LLC (a wholly owned subsidiary of the Authority formed in March 2007), or MVW, which holds an 85.4% membership interest in WTG, and the other is Mohegan Ventures, LLC (a
wholly owned subsidiary of the Mohegan Tribe), or MV, which holds a 14.6% membership interest in WTG. Following formation in March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed
certain liabilities from Kenesah Gaming Development, LLC for consideration of $6.4 million. As a result of the purchase, the Authority and the Mohegan Tribe, through MVW and MV, respectively, will receive development fees payable to WTG of 13.4% of
Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and the Menominee Kenosha Gaming Authority, which approximates net income from the Menominee Project over a period of seven years following the opening of the
casino. Development of the Menominee Project is subject to certain governmental and regulatory approvals, including but not limited to, the United States Department of the Interior accepting new land into trust for gaming at the project site in
Kenosha, Wisconsin.



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Other Projects

New York

In October 2007,
through our wholly owned subsidiary, MTGA Gaming, LLC, or MTGA Gaming, we submitted a proposal to the State of New York, along with Capital Play, Inc., to manage the proposed Video Lottery Terminal, or VLT, facility at Aqueduct Racetrack in Jamaica,
New York. If MTGA Gamings bid is selected, we would manage the proposed 4,500 VLT facility at Aqueduct Racetrack, expected to open in June 2009.

Kansas

In September 2007, MTGA Gaming, along with Olympia Gaming-KC, LLC, and RED Leg Sun,
LLC, or RED, formed Leg Sun, LLC, a joint venture which was created to submit an application to the Kansas Lottery Commission for the proposed development of a gaming facility and destination resort to be named Legends Sun and located in Wyandotte
County, Kansas. In accordance with the Kansas Expanded Lottery Act, which is subject to a pending constitutional challenge in Kansas state court, the project would be subject to various reviews, requirements and approvals by the Kansas Lottery
Commission, which is considering several other bids for the right to develop a single resort casino in Wyandotte County. Three applicants, including Leg Sun, LLC, have received the conditional endorsement of the Unified Government of Wyandotte
County/Kansas City, Kansas for their proposals.

The proposed $770.0 million Legends Sun complex would feature a wide array of attractions
and amenities that include a casino with approximately 2,000 slot machines, 60 table games and 25 poker tables, a Robert Trent Jones II designed championship golf course, a luxury hotel with approximately 350 rooms, a convention and conference
facility, approximately 200,000 square feet of high-end retail and approximately 200,000 square feet of residential development. If selected, we would also manage the casino and related operations and RED would manage the retail and residential
components of the project.

Strategy

Our overall strategy is to profit from expanding demand in the gaming market in our market areas as well as to diversify the Tribes business interests in the gaming industry outside of Mohegan Sun, as discussed above. Mohegan
Suns initial success has resulted primarily from patronage from guests residing within 100 miles of Mohegan Sun, which represents our primary market. We have also enjoyed additional patronage from guests residing within a 100 to 200 mile
radius of Mohegan Sun, which represents our secondary market. Based upon Mohegan Suns results and experience, we believe the gaming market in these markets continues to be strong. With the completion of Project Sunburst in 2002, we have
developed Mohegan Sun into a full-scale entertainment and destination resort, which has led to increases in the number of guests and lengthened the duration of their stays at our facility. We believe our Project Horizon expansion will enable us to
further strengthen our position in the northeastern gaming market by capitalizing on the increasing demand for gaming and non-gaming amenities and enhancing our premier destination resort to mitigate impacts from future competition.

With the opening of the slot machine facility at Mohegan Sun at Pocono Downs in November 2006, we have taken a significant step in our diversification
efforts. After the completion of Project Sunrise, expected in the summer of 2008, we believe we will have another first class gaming and entertainment property that will enable us to profit from a new gaming market outside of Mohegan Sun.

Market and Competition from Other Gaming Operations

Mohegan Sun and Foxwoods Resort Casino, or Foxwoods, are the only two legally authorized gaming operations offering both traditional slot machines and table games in New England. Foxwoods, operated by the Mashantucket
Pequot Tribe under procedures approved by the United States Department of the Interior, is located approximately 10 miles from Mohegan Sun and is currently the largest gaming facility in the



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United States in terms of total gaming positions. Based on the size and success of Foxwoods and the rapid growth of Mohegan Sun, we believe that the gaming
market in New England and our remaining market area remains underserved.

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

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

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

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

Mohegan Sun

The following is an assessment of the competitive prospects in Connecticut and the northeastern United
States affecting Mohegan Sun:

Connecticut

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

In February 2005, the Mashantucket Pequot Tribe announced its plans to
undertake a three-year, $700.0 million expansion at Foxwoods, which is expected to add over two million square feet to the facility, including



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an 825-room hotel tower, a spa, a theater, additional retail, entertainment and parking spaces and additional meeting, convention and reception facilities.
In addition, the expansion is expected to include 50,000 square feet of gaming space and will accommodate an additional 1,500 slot machines and 45 table games. Groundbreaking activities occurred in November 2005, and the facility is scheduled to
open in May of 2008. On December 8, 2006, the Mashantucket Pequot Tribe and MGM Mirage, Inc. announced that they had completed agreements that include the development of the new hotel and casino described above. The new hotel and casino will be
known as the MGM Grand at Foxwoods and will be owned and operated by the Mashantucket Pequot Tribe but with marketing and other services available under license from MGM Mirage. In May 2005, the Mashantucket Pequot Tribe completed the
construction of two golf courses and a clubhouse and subsequently opened eight golf villas and a golf academy. In November 2007, Foxwoods announced an additional investment of $55.0 million to add additional restaurants and shops to MGM Grand at
Foxwoods.

In May 2005, the Interior Board of Indian Appeals, or IBIA overturned the federal recognition of the Historical Eastern Pequot
Tribe and the Schaghticoke Tribe. Both tribes have since filed several appeals seeking to reverse the 2005 ruling, all of which have been unsuccessful. The Golden Hill Paugussett Tribe and the Hassanamisco Band of the Nipmuc Tribe have also been
unsuccessful in their attempts to pursue gaming in Connecticut.

Rhode Island

Commercial casino gaming does not exist in Rhode Island, although the states two pari-mutuel facilities, Twin River and Newport Grand, together
offer approximately 5,700 video lottery terminals or VLTs.

BLB Investors, LLC, or BLB, operates the Twin River complex (formerly known as
Lincoln Park), with approximately 4,700 VLTs and themed bars, upscale restaurants, a 350-seat buffet and a 2,000-seat entertainment venue. Additional expansion, which is to include renovation of existing gaming space, is scheduled for completion in
2008.

In addition to approving the increase in VLTs at Twin River, the Rhode Island legislature approved the addition of 800 VLTs at
Newport Grand. After several delays, in August 2007, the owners of Newport Grand broke ground on a $20.0 million project, which includes a 90-room hotel and is slated to increase the number of VLTs to over 2,100. The projected opening date is summer
2008.

The Narragansett Indian Tribe of Rhode Island, with a reservation in Charlestown, is the only federally recognized Indian tribe in
Rhode Island. However, under specific terms of the Narragansett Land Claims Settlement Act passed by Congress in 1983, the Narragansett Tribe is prohibited from opening a gaming facility under IGRA on its reservation. The Narragansett Tribe and an
affiliate of Harrahs Entertainment have pursued a license to operate a casino in West Warwick, Rhode Island on 86 acres of non-tribal land. On November 7, 2006, a proposed amendment to the state constitution to allow such a venture was
rejected by approximately a two-to-one margin. The Narragansett Tribe has indicated in published reports that it will continue to pursue the development of a $50.0 million to $100.0 million casino on its tribal lands in Charlestown. On July 20,
2007, the U.S. Court of Appeals for the First Circuit ruled that the federal government could take an additional 31 acres of land in Charlestown into trust for the Narragansett Tribe. The tribe has stated the purpose of the land is for housing of
elderly tribal members; however, published reports indicate that the Narragansett Tribe may attempt to use this land or future parcels for gaming.

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



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New York

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

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

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



| |  |  | Oneida NationThe Oneida Nation of New York operates Turning Stone Casino Resort in Verona, New York, near Syracuse, approximately 270 miles from Mohegan Sun.
Turning Stone Casino Resort currently has approximately 2,100 VLTs, 100 table games, 20 tables for live poker and 350 hotel rooms. Published reports indicate the Oneida Nation has also completed an approximately $308.0 million expansion effort at
Turning Stone, which includes, among other things, the addition of approximately 400 hotel rooms and suites and 30,000 square feet of gaming space. Turning Stone currently draws customers primarily from the Syracuse market. After the Oneida Nation
gaming compact with the State of New York was invalidated by New York state courts, in June 2007, the Oneida Nation announced that the Department of Interior determined that it would not review the legality of the tribes gaming compact with
the State of New York. After the 2005 U.S. Supreme Court decision ruling that Oneida Nation-owned properties in the City of Sherrill were subject to local taxes and regulations, the Oneida Nation applied to place approximately 35,000 acres of land
into trust, including the Turning Stone Casino Resort property. State and county tax actions have been rejected at the federal district court level, but those actions continue.
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| |  |  | St. Regis Mohawk TribeIn March 2006, Empire Resorts announced an agreement with the St. Regis Mohawk Tribe to develop a casino resort adjacent to the
Monticello Raceway in Monticello, New York. Prior agreements (relating to an abandoned project) for municipal and county assistance and payments in lieu of taxes also have been extended to apply to the St. Regis Mohawk Tribes ownership of the
approximately 29 acre site in Monticello. Plans for the project include 160,000 square feet of gaming space for 3,500 slot machines and 125 table games, with sufficient space to accommodate an additional 500 slot machines, and a variety of food and
beverage offerings and entertainment venues.
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In connection with the St. Regis Mohawk Tribes application to acquire
the Monticello site, the tribe submitted an environmental assessment for the project, which received final approval by the Bureau of Indian Affairs, or BIA in December 2006. In February 2007, the Governor of New York and the St. Regis Mohawk Tribe
executed a new tribal-state compact and revenue sharing agreement. The United States Department of the Interior must still approve the taking of the 29-acre planned casino site into



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| | trust. Also in February 2007, several New York farm and conservation groups filed suit against the Department of the Interior, challenging the approved
environmental assessment. On November 1, 2007, the St. Regis Mohawk Tribe filed suit against the U.S. Secretary of the Interior seeking to compel the Secretary to take action on the pending land-into-trust application.
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| |  |  | Seneca NationUnder the compact between the Seneca Nation and the State of New York and the 2001 authorizing legislation, the Seneca Nation is permitted to
operate three casinos in the western portion of the state, and, with the opening of a temporary casino in Buffalo in July 2007, the Seneca Nation now operates all three. The Seneca Nation opened its first casino in Niagara Falls in December 2002. In
December 2005, the Seneca Nation opened its new $200.0 million hotel and casino in Niagara Falls. The hotel has 604 rooms, two restaurants, a bar and an event center. The casino provides 35,000 square feet of gaming space, which includes
approximately 4,200 slot machines and approximately 100 table games. This casino offers full-scale gaming similar to that offered at Mohegan Sun; however, we do not draw a significant number of customers from the Niagara Falls market. A second,
temporary facility opened on the Seneca Nation reservation in Salamanca, New York in May 2004. The permanent Seneca Allegany Casino & Hotel now has approximately 2,200 slot machines and 40 table games in approximately 68,000 square feet of
gaming space, with approximately 220 hotel rooms. On July 3, 2007, the temporary casino in downtown Buffalo was opened, featuring 119 slot machines and a snack bar. The permanent Seneca Buffalo Creek Casino is scheduled to open in
2010 and is expected to contain 2,100 slot machines, 50 table games, dining and parking for approximately 2,500 vehicles. The Seneca Nation is also pursuing gaming development in Massachusetts in connection with the Aquinnah Wampanoag Tribe of
Massachusetts (see Massachusetts below).
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| |  |  | Cayuga Indian Nation of New York and Seneca-Cayuga Tribe of OklahomaThe Cayuga Indian Nation currently has a pending land-into-trust application for 125 acres
in Cayuga and Seneca counties in central New York. The Seneca-Cayuga Tribe also has a pending land-into-trust application for a 229 acre farm owned by the tribe in Aurelius, New York, in Cayuga County.
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| |  |  | Shinnecock TribeThe Shinnecock Tribe, which had previously announced intentions to construct an approximately 65,000 square-foot commercial casino gaming
facility adjacent to land it owns on Long Island, New York, recently submitted a proposal to take over the Aqueduct Raceway in Queens, New York in conjunction with Gateway Casino Resorts. The Shinnecock Tribe is recognized by the State of New York,
but its petition to receive federal recognition is still pending with the BIA. In November 2005, a federal district court in New York found that the Shinnecock Tribe met all the legal requirements to be considered a federally recognized tribe and
remanded the case for consideration of other issues, including the Shinnecocks land claims. In January 2006, the BIA declared that it is not bound by that federal district court ruling. Accordingly, the Shinnecock Tribe is continuing its
pursuit for federal recognition, which published reports indicate could take several years. On November 28, 2006, a New York federal district court rejected the Shinnecock Tribes claim to 3,600 acres in Long Island.
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Other tribes also may be attempting to develop various forms of gaming operations in the state of New York. In
addition, there are several pending federal recognition petitions from other New York groups, but we believe none are being actively considered by the BIA for federal recognition. It is not clear if or when federal recognition for these groups will
be achieved.

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



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In March 2006, the New York racing oversight board approved a construction contract for a $182.0 million
improvement to the Aqueduct race track facility, one of three tracks owned and operated by the New York Racing Authority, or NYRA, and the installation of 4,500 VLTs; however, that improvement has been delayed due to the NYRAs Chapter 11
bankruptcy filing in November 2006. The thoroughbred racing contract between the NYRA and the State of New York expires on December 31, 2007. A State of New York panel is currently reviewing recommendations for new operators of the NYRA
facilities, including Aqueduct, Belmont and Saratoga racetracks (refer to Overview-Other Diversification Projects-New York above). No additional VLTs at the Saratoga thoroughbred racetrack are being considered due to the existence
of VLTs at the Saratoga harness racetrack and VLTs at Belmont would require additional state legislation. In September 2007, Governor Spitzer recommended to the state legislature that NYRA retain its franchise racing rights at Aqueduct, Belmont and
Saratoga but that VLT contracts be awarded separately. The Authority, in conjunction with Capital Play, is one of seven groups that has submitted a bid to operate at least 4,500 VLTs at Aqueduct Racetrack. The other bidders include Foxwoods
Development Co., Delaware North and Gateway Casino Resorts, in conjunction with the Shinnecock Tribe.

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

which they operate. Due to the difference in the gaming experience, we do not believe that the cruises to nowhere are significant competition to Mohegan Sun.

Massachusetts

In October 2007, Governor Deval Patrick filed legislation calling for the award of licenses for three major gaming facilities to be built in the western, southeastern and metropolitan Boston areas of the state and conducted the first
hearing on the subject on December 18, 2007. Various groups have expressed interest in constructing and operating these facilities, including the Authority. A partnership with a federally recognized, eligible Massachusetts tribe is identified
as one of the criteria that will be used to assess proposals. The Speaker of the State House of Representatives has repeatedly stated that he is opposed to the plan and that it is not expected to pass the House, as currently crafted.

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

The Mashpee Wampanoag Tribe, which received federal recognition in February 2007, secured in April 2007 a group of financial backers to acquire a 125-acre tract of land in Middleboro, which is located in southeastern
Massachusetts, as a potential site for a resort casino and the tribes initial reservation. The tribes financial backers also purchased an option to buy an additional 200 acres adjacent to the site. Reports indicate the tribe expects to
work with the Governor to negotiate a tribal-state compact within the coming year. On July 28, 2007, voters in the town of Middleboro ratified a host community, intergovernmental agreement with the Mashpee Wampanoag Tribe to allow for the
tribes planned $1.0 billion casino and 1,500-room hotel, in exchange for funding of infrastructure improvements and annual payments to the town. The Mashpee Wampanoag Tribe has also expressed interest in opening a Class II and/or Class III
gaming facility under appropriate IGRA provisions.



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

New Jersey

In the state of New Jersey, Mohegan Sun primarily competes for overnight customers with casinos located in Atlantic City. The
Atlantic City gaming market currently consists of twelve casino properties, with a total of approximately 14,000 hotel rooms and 1.4 million square feet of gaming space, containing approximately 42,000 slot machines and 1,400 table games. These
properties include the Borgata, a casino resort complex completed in the summer of 2003, the first new casino in Atlantic City in 13 years.

Several proposed developments and expansions of casino, hotel, retail and entertainment space have also commenced or been completed in Atlantic City. Some of these recent projects include:



| |  |  | In 2004, Boyd Gaming and MGM Mirage announced multiple expansions of the Borgata Hotel and Casino which previously featured a 40 story hotel with approximately
2,000 rooms and suites, a 135,000 square foot casino and over 4,000 slot machines, restaurants, retail shops, a spa and pool, and entertainment venues. The expansions will add an additional 500,000 square feet to the facility, including more gaming,
retail and restaurant space, two additional nightclubs and a new hotel tower, containing approximately 200 luxury time-share condominiums and approximately 600 guest rooms, a new spa, two swimming pools and additional meeting room space. In June
2006, the first phase of the expansion project opened to the public, featuring three new signature restaurants, an upscale food court, 500 slot machines, 45 table games, an 85-table poker room and a new nightclub. The next phase of the expansion,
including the new hotel tower described above, is scheduled to open in the third quarter of 2008.
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| |  |  | MGM Mirage Inc. announced in October 2007 it will spend up to $5.0 billion to build a three tower 3,000 room casino resort, planned to open in 2012. The MGM Grand
Atlantic City will be built on a 72-acre site next to the Borgata, which is MGM Mirages joint venture with Boyd Gaming Corp. The new resort would offer the largest casino floor in Atlantic City, with 5,000 slot machines, 200 table games and a
poker room. Plans also call for a 1,500-seat theater, restaurants, nightclubs, a spa, 500,000 square feet of retail space and a convention center.
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| |  |  | Harrahs Entertainment Inc. has completed construction on The Pier at Caesars, a $145.0 million upscale retail, dining, and entertainment facility located on
the Atlantic City Boardwalk, attached to the Caesars Atlantic City by skywalk. In July 2006, Morgan Stanley Gaming Cos. Holdings, a subsidiary of Morgan Stanley, purchased a 20 acre parcel located on the Atlantic City Boardwalk for $74.0 million.
Morgan Stanley has hired Revel Entertainment Group to build a $2.0 billion casino resort on this parcel, which will be adjacent to the Showboat, owned by Harrahs Entertainment. In September 2006, Wallace Barr, former Chief Executive Officer of
Caesars Entertainment Inc., and Curtis Bashaw, former executive director of the New Jersey Casino Reinvestment Development Authority, entered into an agreement to purchase an 11-acre site on the southern edge of the Atlantic City Boardwalk for
$85.0 million. Reports indicate Mr. Barr and Mr. Bashaw plan to develop a new casino on this site.
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| |  |  | On November 11, 2006, Sands Atlantic City Hotel and Casino was closed in conjunction with the purchase by Pinnacle Entertainment Inc. of the company that owns
the Sands, and the facility was imploded in October 2007. It is anticipated that the Sands will be replaced by a new mega-resort casino-hotel reportedly costing in excess of $1.5 billion, with construction beginning in mid-2008, scheduled to open in
2012.
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In addition, the state legislature has considered adding slot machines or VLTs at the state racetracks.



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There are no federally recognized Indian tribes in the state; however, at least one state tribe, the
Unalachtigo Band of the Nanticoke Lenni Lenape Nation, is reportedly seeking federal recognition and possible casino gaming.

Maine

There are no full-scale casino gaming operations allowed in Maine other than one cruise boat that operates out of Maine and
provides casino gaming off-shore. There are four federally recognized tribes in Maine, one of which, the Penobscot Tribe, operates a high stakes bingo facility in Old Town, in east central Maine. The Penobscot Tribe and the Passamaquoddy Tribe are
attempting to gain approval for full-scale casino operations at various locations in Maine; however, to date these efforts have been unsuccessful. None of the other federally recognized tribes in Maine have negotiated a tribal-state compact or
otherwise taken significant steps of developing casino operations.

In November 2005, Penn National Gaming, Inc. opened a temporary slot
machine facility in Bangor, Maine, featuring 475 slot machines, with plans to construct a $71.0 million permanent facility that would have a total of approximately 1,500 slot machines.

In August 2006, the members of the Maine Gambling Control Board adopted a nonbinding resolution calling for a moratorium on any expansion of gambling in
the state.

In November 2007, Maine voters rejected a proposal by the Passamaquoddy Tribe to build a racetrack, high stakes bingo parlor,
hotel and casino with 1,500 slot machines on 700 acres in Calais, along the St. Croix River and border with New Brunswick, Canada.

New Hampshire

There are no casinos allowed in New Hampshire and no significant initiatives currently underway to
legalize commercial casino gaming. 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 commercial casino gaming. There are no federally recognized tribes in Vermont. On June 22, 2007, the
BIA issued a final determination rejecting a petition for federal recognition from the St. Francis/Sokoki Band of Abenakis in Swanton. On October 10, 2007, the IBIA dismissed as untimely the tribes request for reconsideration of that
final determination.

Mohegan Sun at Pocono Downs

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

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



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among other things, a prohibition against locating another harness or thoroughbred facility with slots or a stand-alone slot facility within 20 linear miles
of Pocono Downs, and a prohibition against locating a resort facility within 15 linear miles of Pocono Downs.

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

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



| |  |  | Mount Airy, LLC was approved for a conditional Category Two slot machine license to operate a slot machine parlor at the former Mount Airy Lodge in Mount Pocono,
which is approximately 40 miles from Pocono Downs. In October 2007, Mount Airy, LLC opened its $412.0 million Mount Airy Resort and Casino, which includes approximately 2,300 slot machines. In November 2007, the facility introduced a 188-room hotel
and is expected to open Gypsies Lounge Nightclub in late 2007. Reports indicate that by the end of 2008, the facility will be expanded to have 3,000 slot machines, 400 hotel rooms, four restaurants, a night club, conference rooms, a spa, indoor and
outdoor pools, retail shops and additional parking.
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| |  |  | Sands Bethworks Gaming, a partnership between BethWorks and Las Vegas Sands, Inc., owner of the Venetian Resort and Casino in Las Vegas, was approved for a
conditional Category Two slot machine license to operate a gaming facility in Bethlehem, which is approximately 70 miles from Pocono Downs. The group has indicated plans for a $630.0 million Phase I project that would offer 3,000 slot machines, a
new 300-room hotel, retail shops and restaurants to the public by the spring of 2009 and a future expansion that would increase the total number of slot machines to 5,000 by late 2009.
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In addition to the other slot facilities in Pennsylvania, Pocono Downs faces competition from a VLT gaming facility at Monticello Raceway in Monticello,
New York in the Catskills, which features a reported 1,500 VLTs, and any full scale casino gaming operation that is ultimately developed by an Indian tribe in the Catskills region. The Catskills are approximately 90 miles from Pocono Downs. Pocono
Downs also could face competition from Tioga Downs Racetrack in Nichols, New York, approximately 100 miles from Pocono Downs. On June 9, 2006, Tioga Downs opened its racetrack after renovations, and on July 4, 2006, the track opened its
new gaming floor, which includes 750 video lottery terminals.

Mohegan Tribe of Indians of Connecticut

General

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



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

Governance of the Tribe

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

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

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

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

Gaming Disputes Court

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



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

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

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

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

Paul M. Guernsey, Chief Judge. Age: 57. Judge Guernsey has served on the Gaming Disputes Court since 1996. He was appointed Acting Chief Judge in November 1999 and appointed as Chief Judge in January 2000. Judge Guernsey has also
served as Fact Finder for the New London Judicial District from 1990 to 1992 and as State of Connecticut Attorney Trial Referee, Judicial District of New London, since 1992.

F. Owen Eagan, Judge. Age: 77. Judge Eagan was appointed to the Gaming Disputes Court in 1996. He served as U.S. Magistrate Judge from 1975 to
1996 and was formerly Assistant U.S. Attorney for the District of Connecticut and U.S. Attorney for the District of Connecticut. He is currently an adjunct law faculty member at Western New England School, a position he has held since 1978.

Frank A. Manfredi, Judge. Age: 56. 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:67. Judge Wilson was appointed to the Gaming Disputes Court in 1996. Judge Wilson
served as a partner and director at Suisman, Shapiro, Wool, Brennan & Gray, P.C. from 1967-2003. Judge Wilson has also served as State Attorney Trial Referee since 1988 and as Town Attorney for the Town of Ledyard from 1971 to 1979, 1983 to
1991 and 1995 to the present.

Workers Compensation Department

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



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

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

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

Mohegan Tribal Gaming Authority

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

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

Government Regulation

General

Our operations at
Mohegan Sun are subject to certain federal, state and tribal laws applicable to both commercial relationships with Indians generally and to Indian gaming and the management and financing of Indian casinos specifically. In addition, our operations
there, as well as our slot machine operations in Pennsylvania at Mohegan Sun at Pocono Downs, are subject to federal and state laws applicable to the gaming industry generally and to the distribution of gaming equipment. Our operations at Mohegan
Sun at Pocono Downs also are subject to Pennsylvania laws and regulations applicable to harness racing and simulcasting as well as the slot machine gaming commenced there in 2006. The following description of the regulatory environment in which
gaming takes place and in which we operate is only a summary and not a complete recitation of all applicable law. Moreover, since this regulatory environment is susceptible to changes in public policy considerations, it is impossible to predict how
particular provisions will be interpreted from time to time or whether they will remain intact. Changes in such laws could have a material adverse impact on our operations. See Risk Factors.



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Tribal Law and Legal Systems

Applicability of State and Federal Law

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

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

Waiver of Sovereign Immunity; Jurisdiction; Exhaustion of Tribal Remedies

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

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

The Indian Gaming Regulatory Act of 1988

Regulatory Authority

The operation of casinos and of all gaming on Indian land is subject to IGRA, which is administered by the NIGC, an independent agency within the United States Department of the Interior, which exercises primary federal regulatory
responsibility over Indian gaming. The NIGC has exclusive authority to issue regulations governing tribal gaming activities, approve tribal ordinances for regulating Class II and Class III Gaming (as described below), approve management agreements
for gaming facilities, conduct investigations and generally

monitor tribal gaming. Certain responsibilities under IGRA (such as the approval of per capita
distribution plans



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to tribal members and the approval of transfer of lands into trust status for gaming) are retained by the BIA. The BIA also has responsibility to review and
approve land leases and other agreements relating to Indian lands. Criminal enforcement is the exclusive responsibility of the United States Department of Justice, except to the extent such enforcement responsibility is shared with the State of
Connecticut under the Mohegan Compact and under the federal law that recognizes the Tribe.

The NIGC is empowered to inspect and audit all
Indian gaming facilities, to conduct background checks on all persons associated with Class II Gaming, to hold hearings, issue subpoenas, take depositions, adopt regulations and assess fees and impose civil penalties for violations of IGRA. IGRA
also prohibits illegal gaming on Indian land and theft from Indian gaming facilities. The NIGC has adopted rules implementing specific provisions of IGRA, which govern, among other things, the submission and approval of tribal gaming ordinances or
resolutions and require an Indian tribe to have the sole proprietary interest in and responsibility for the conduct of any gaming. Tribes are required to issue gaming licenses only under articulated standards, to conduct or commission financial
audits of their gaming enterprises, to perform or commission background investigations for primary management officials and key employees and to maintain their facilities in a manner that adequately protects the environment and the public health and
safety. These rules also set out review and reporting procedures for tribal licensing of gaming operation employees.

Additionally, the
NIGC established the Minimum Internal Control Standards, or MICS, that require each tribe or its designated tribal government body or agency to establish and implement tribal MICS by February 4, 2000. We established and implemented tribal MICS
on February 4, 2000. As of September 30, 2007, we believe we were in material compliance with the tribal MICS.

Tribal
Ordinances

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

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

Classes of Gaming

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

Class I
Gaming on Indian lands is within the exclusive jurisdiction of the Indian tribes and is not subject to IGRA. Class II Gaming is permitted on Indian lands if (1) the state in which the Indian lands lie permits such gaming for any purpose by any
person, organization or entity; (2) the gaming is not otherwise specifically prohibited on Indian lands by federal law; (3) the gaming is conducted in accordance with a tribal ordinance or resolution which has been approved by the NIGC;
(4) an Indian tribe has sole proprietary interest and



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responsibility for the conduct of gaming; (5) the primary management officials and key employees are tribally licensed; and (6) several other
requirements are met. Class III Gaming is permitted on Indian lands if the conditions applicable to Class II Gaming are met and, in addition, the gaming is conducted in conformance with the terms of a tribal-state compact (a written agreement
between the tribal government and the government of the state within whose boundaries the tribes lands lie).

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

Tribal-State Compacts

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

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

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

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



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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 and believes that such an action would likely be barred by applicable statutes of limitation. The
Connecticut Attorney General has issued a formal opinion, which states that existing [state] statutes provide the Governor with the authority to negotiate and execute the . . . [Mohegan] Compact. Thus, the Attorney General declined to
follow the Kansas case. In addition, the United States Court of Appeals for the Second Circuit has held, in a case brought by the Mashantucket Pequot Tribe, that Connecticut law authorizes casino gaming. After execution of the Mohegan Compact, the
Connecticut General Assembly passed a law requiring that future gaming compacts be approved by the legislature, but that law does not apply to previously executed compacts such as the Mohegan Compact.

Possible Changes in Federal Law

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

Pennsylvania Racing Regulation

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



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



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



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



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



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

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

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

Pennsylvania Gaming Regulations

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



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



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



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



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

As in most states, the regulations and oversight applicable to our operations in Pennsylvania are intended primarily to safeguard the legitimacy of
gaming and its freedom from inappropriate or criminal influences. The PGCB has broad authority to regulate in the best interests of gaming and may, to that end, disapprove the involvement of certain personnel in our operations, deny approval of
certain acquisitions following their consummation or withhold permission on applicable gaming matters for a variety of reasons. In addition, many of the regulations currently issued by the PGCB are temporary in nature and there is no guarantee that
permanent regulations, when issued, will follow the form or content of the temporary regulations currently in effect.

Material Agreements

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

Gaming Compact with the State of Connecticut

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

(1) The Tribe is authorized to conduct on its reservation those Class III gaming activities specifically enumerated in the
Mohegan Compact or amendments thereto. The forms of Class III gaming authorized under the Mohegan Compact include (a) specific types of games of chance, (b) video facsimiles of such authorized games of chance (i.e., slot machines),
(c) off-track pari-mutuel betting on animal races, (d) pari-mutuel betting, through simulcasting, on animal races and (e) certain other types of pari-mutuel betting on games and races conducted at the gaming facility (some types 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.
The Tribe must supervise the implementation of these standards by regulation through a Tribal gaming agency.

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

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

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

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



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

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

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

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

In May 1994, the
Tribe and the State of Connecticut entered into a memorandum of understanding, or MOU, which sets forth certain matters regarding the implementation of the Mohegan Compact. The MOU stipulates that a portion of the revenues earned on slot machines
must be paid to the State of Connecticut. This payment is known as the slot win contribution. For each 12-month period commencing July 1, 1995, the slot win contribution shall be the lesser of (a) 30% of gross revenues from slot machines,
or (b) the greater of (i) 25% of gross revenues from slot machines or (ii) $80.0 million. The slot win contribution payments will not be required if the State of Connecticut legalizes any other gaming operations with slot machines or
other commercial casino games within the State of Connecticut except those operations consented to by the Tribe and the Mashantucket Pequot Tribe.

Agreement with the Town of Montville

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

Land Lease from the Tribe to the Authority

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

Term

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

Rent and Other Operating Expenses

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



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Use of Leased Property

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

Permitted Mortgages and Rights of Permitted Mortgages

We may not mortgage, pledge or otherwise
encumber our leasehold estate in the leased property except to a holder of a permitted mortgage. Under the lease, a permitted mortgage includes the leasehold mortgage securing our obligations under the new credit facility granted by us
that provides, among other things, that (1) the Tribe will have the right to notice of, and to cure, any default by us, (2) the Tribe will have the right to prior notice of an intention by the holder to foreclose on the permitted mortgage
and the right to purchase the mortgage in lieu of any foreclosure and (3) the permitted mortgage is subject and subordinated to any and all access and utility easements granted by the Tribe under the lease. As provided in the lease, each holder
of a permitted mortgage has the right to notice of any default by us under the lease and the opportunity to cure such default within any applicable cure period.

Default Remedies

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

Priority Distribution Agreement with the Tribe

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



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Relinquishment Agreement with Trading Cove Associates

General

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

Relinquishment Payments

The payments under the relinquishment agreement are divided into senior relinquishment payments and junior relinquishment payments, each of which are 2.5%
of revenues (as defined in the relinquishment agreement). Senior relinquishment payments are payable quarterly in arrears and commenced on April 25, 2000 and the junior relinquishment payments are payable semi-annually in arrears and commenced
on July 25, 2000. Under the relinquishment agreement, revenues are defined as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues (including hotel revenues, room service, food and beverage sales, parking
revenues, ticket revenues and other fees or receipts from the Mohegan Sun Arena and convention center and all rental or other receipts from the lessees, licensees and concessionaires, but not the gross receipts of such lessees, licensees and
concessionaires) and proceeds of business interruption insurance.

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 our senior
notes. The relinquishment agreement also provides that all relinquishment payments are subordinated in right of payment to the minimum priority distribution payment, as defined in the relinquishment agreement, from us to the Tribe to the extent then
due.

Trademarks

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

Pocono Downs Purchase Agreement

On October 14, 2004, we entered into a purchase
agreement with subsidiaries of Penn National Gaming, Inc., pursuant to which we acquired Pocono Downs, a standardbred harness racing facility located on approximately 400 acres in Plains Township, Pennsylvania as well as five Pennsylvania OTWs
located in Carbondale, East Stroudsburg, Erie, Hazleton and Lehigh Valley (Allentown) for a purchase price of approximately $280.0 million. On August 7, 2006, we entered into an amendment of the purchase agreement with the seller, pursuant to
which, in exchange for our agreement to modify certain provisions of the purchase agreement, including the elimination of our post-closing termination rights, we will receive an aggregate refund of $30.0 million of the original purchase price for
the Pocono Downs entities, payable in five annual installments of $7.0 million, $7.0 million, $6.5 million, $6.0 million and $3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. The first installment of $7.0 million was received
on November 14, 2007.



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Management and Development Agreements with Other Tribes

Cowlitz Project

In September 2004,
Salishan-Mohegan entered into development and management agreements with the Cowlitz Indian Tribe regarding the Cowlitz Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing,
development, construction, and furnishing, as well as providing assistance with the financing of the Cowlitz Project. The development agreement provides for certain development fees of 3% of total Project Costs, as defined in the development
agreement, which are to be distributed to Mohegan VenturesNW and the Mohegan Tribe pursuant to the Salishan-Mohegan operating agreement. As of April 2006, Salishan-Mohegan purchased the land to be used as the site for the planned casino, which
will be transferred to the Cowlitz Tribe or the United States under certain conditions in the development agreement. The management agreement is for a period of seven years commencing with the opening of the planned casino, during which
Salishan-Mohegan will manage, operate and maintain the planned casino. The management agreement provides for a management fee of 24% of Net Revenues, as defined in the management agreement, which approximates net income from the Cowlitz Project.
Pursuant to the operating agreement, management fees will be allocated to the members of Salishan-Mohegan based on their respective membership percentages. Development of the Cowlitz Project is subject to certain governmental and regulatory
approvals, including, but not limited to, negotiating a gaming compact with the State of Washington and the United States Department of the Interior accepting land into trust on behalf of the Cowlitz Tribe. The management agreement is subject to
approval by the National Indian Gaming Commission, or the NIGC.

Menominee Project

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

In March 2007, Wisconsin Tribal Gaming, LLC, or WTG, was formed to participate in the
development of the proposed casino to be owned by the Menominee Tribe. WTG consists of two members, one of which is Mohegan Ventures Wisconsin, LLC (a wholly owned subsidiary of the Authority formed in March 2007), or MVW, which holds an 85.4%
membership interest in WTG, and the other is Mohegan Ventures, LLC (a wholly owned subsidiary of the Mohegan Tribe), or MV, which holds a 14.6% membership interest in WTG. Following formation in March 2007, WTG purchased the development rights for
the Menominee Project, along with certain other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC for consideration of $6.4 million. As a result of the purchase, the Authority and the Mohegan Tribe, through MVW and MV,
respectively, will receive development fees payable to WTG of 13.4% of Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and the Menominee Kenosha Gaming Authority, which approximates net income from the
Menominee Project over a period of seven years following the opening of the casino. Development of the Menominee Project is subject to certain governmental and regulatory approvals, including but not limited to, the United States Department of the
Interior accepting new land into trust for gaming at the project site in Kenosha, Wisconsin.

Certain Indebtedness

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

Prior Bank Credit Facility

On March 9, 2007, we repaid the entire outstanding $55.0 million of indebtedness under our then existing $450.0 million bank credit facility and
extinguished the facility.



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New Bank Credit Facility

On March 9, 2007, we entered into a new bank credit facility providing for up to $1.0 billion in borrowing capacity from a syndicate of 23 financial
institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. The new bank credit facility replaces our prior bank credit facility. The total commitment on the new facility may be increased to $1.25 billion at our
option. The five-year senior secured revolving credit facility includes a $300.0 million term loan conversion provision which is triggered upon the initial accumulation of $300.0 million in total borrowings on the new bank credit facility. The term
loan requires principal payments in quarterly installments of $750,000 after the conversion date until the maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. As of
September 30, 2007, the amount under letters of credit totaled $6.8 million, of which no amount was drawn, as discussed below under Letters of Credit. Inclusive of letters of credit, which reduce borrowing availability under the new
bank credit facility, we had approximately $960.2 million of available borrowing under the new bank credit facility as of September 30, 2007, without taking into account covenants under the line of credit as described below.

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



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



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



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

As of September 30, 2007, we and the Tribe were in compliance with all of our and their respective covenant requirements in the new bank credit
facility.

At our option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month,
two-month, three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on our Total Leverage Ratio, as each term is defined in the new bank credit facility, at the time each loan is made. We also pay
commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable
Rate for base rate advances is between 0.000% and 1.125%, and the Applicable Rate for Eurodollar rate advances is between 1.250% and 2.375%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of
Americas announced prime rate or the federal funds rate plus 0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly
in arrears. As of September 30, 2007, we had $33.0 million in Eurodollar rate loans and no base rate



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loans outstanding. The Eurodollar rate loans outstanding at September 30, 2007 were comprised of: (1) a $24.0 million loan based on a one-month
Eurodollar rate of 5.75% plus an Applicable Rate of 1.25% and (2) a $9.0 million loan based on a one-month Eurodollar rate of 5.50% plus an Applicable Rate of 1.25%. The Applicable Rate for commitment fees was 0.20% as of September 30,
2007.

The initial advances under the new bank credit facility on March 9, 2007 totaled $62.0 million in base rate advances under the
revolving loan. The proceeds from these advances were used to refinance our prior bank credit facility, to pay costs related to entering into the new bank credit facility and fund certain operating costs.

2005 61/8% Senior Notes

On February 8, 2005, we issued $250.0 million Senior Notes with fixed interest payable at a rate of 6.125% per annum (the 2005 Senior
Notes). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Notes mature on February 15, 2013. The
first call date for the 2005 Senior Notes is February 15, 2009. Interest on the 2005 Senior Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Notes are uncollateralized general obligations, which are
effectively subordinated to all of the existing and future senior secured indebtedness, including the New Bank Credit Facility. The 2005 Senior Notes rank equally in right of payment with 50% of our payment obligations under the Relinquishment
Agreement that are then due and owing and rank senior to the remaining 50% of our payment obligations under the Relinquishment Agreement that are then due and owing, the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003
Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Notes.

2001 83/8% Senior Subordinated Notes

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

In August 2004, we completed a cash tender offer and consent solicitation to repurchase any or all of its outstanding
2001 Senior Subordinated Notes. As part of the tender offer we solicited and received requisite consents to certain proposed amendments to the indentures governing the 2001 Senior Subordinated Notes, which eliminated substantially all of the
restrictive covenants thereunder. The aggregate principal amount of 2001 Senior Subordinated Notes tendered was $133.7 million. An aggregate principal amount of $16.3 million of the 2001 Senior Subordinated Notes remain outstanding as of
September 30, 2007.

2002 8% Senior Subordinated Notes

In February 2002, we issued $250.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.0% per annum (the 2002 Senior
Subordinated Notes). The proceeds from this financing were used to pay transaction costs and pay down $243.0 million on the then existing bank credit facility. Interest on the 2002



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

2003 63/8% Senior Subordinated Notes

In July 2003, we issued $330.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.375% per annum (the 2003 Senior
Subordinated Notes). The proceeds from this financing were used to repurchase substantially all of the outstanding $300.0 million 8.75% Senior Subordinated Notes issued in March 1999 and to pay fees and expenses associated with the issuance.
Interest on the 2003 Senior Subordinated Notes is payable semi-annually on January 15 and July 15. The 2003 Senior Subordinated Notes mature on July 15, 2009. The 2003 Senior Subordinated Notes are uncollateralized general obligations
and are subordinated to the New Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% payment obligations under the Relinquishment Agreement that are then due and owing. The 2003 Senior Subordinated
Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of our payment obligations under the Relinquishment
Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2003 Senior Subordinated Notes.

2004 71/8% Senior Subordinated Notes

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

2005 67/8% Senior Subordinated Notes

On February 8, 2005, we issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the
2005 Senior Subordinated Notes). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated
Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15, 2010. Interest on the 2005 Senior Subordinated Notes is payable



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semi-annually on February 15 and August 15. The 2005 Senior Subordinated Notes are uncollateralized general obligations and are subordinated to the
New Bank Credit Facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of our payment obligations under the Relinquishment Agreement that are then due and owing. The 2005 Senior Subordinated Notes rank equally
with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the remaining 50% of our payment obligations under the Relinquishment Agreement that are then due
and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Subordinated Notes.

The senior and senior subordinated note indentures contain certain financial and non-financial covenants with which we and the Tribe must comply. The financial covenants include, among other things, limitations on
restricted payments and the incurrence of indebtedness, while the non-financial covenants include, among other things, reporting obligations, compliance with laws and regulations and our continued existence. As of September 30, 2007, both we
and the Tribe were in compliance with all of their respective covenant requirements in the senior and senior subordinated note indentures.

WNBA Promissory Note

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

In consideration for this acquisition, MBC paid $2.0 million (with funds advanced from
us) and issued a promissory note to the WNBA (the WNBA Note) for $8.0 million that accrues interest at an annual rate equal to a three-month Eurodollar rate plus 1.5%. The Authority guaranteed the obligations of MBC under the WNBA Note.
Pursuant to the WNBA Note, principal payments of $1.0 million, subject to adjustment for certain revenue thresholds, and interest payments are required to be paid to the WNBA on each anniversary of the WNBA Note. The WNBA Note is scheduled to mature
in January 2011, but will mature no later than January 2013. As of September 30, 2007, $4.0 million was outstanding on the WNBA Note.

Line of Credit

We have a $25.0 million revolving loan agreement with Bank of America, or the line of credit. Each
advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of our Leverage Ratio, as each term is defined in the line of credit. Borrowings under the line of credit are uncollateralized
obligations. The line of credit matures on March 31, 2008 and subjects us to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under the new bank credit facility. As of September 30, 2007,
we had $16.6 million in loans outstanding under the line of credit, which were based on a one-month Eurodollar rate of 5.14% plus an Applicable Margin of 0.90%. As of September 30, 2007 we were in compliance with all covenant requirements in
the line of credit and had $8.4 million available for borrowing under the line of credit.

Mortgage Payable

Upon formation of Salishan-Mohegan, Salishan Company contributed, among other things, land with a mortgage payable of $2.6 million. The mortgage payable
bears interest due on a monthly basis at an annual rate of 9.5%, with the principal balance payable in full by Salishan-Mohegan on the maturity date. In March 2006, Salishan-Mohegan received an extension on the maturity date from March 28, 2006
to March 28, 2007. Refer to Salishan-Mohegan Bank Credit Facility below for the payment of this mortgage. Any and all amounts paid by Salishan-Mohegan, including interest payments, pursuant to this agreement are reimbursable by the
Cowlitz Tribe provided certain events occur, as described in the development agreement between Salishan-Mohegan and the Cowlitz Tribe.



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Salishan-Mohegan Bank Credit Facility

In October 2006, Salishan-Mohegan entered into a $25.0 million revolving loan agreement with Bank of America, or the Salishan Credit Facility, which
matures on September 30, 2009. The revolving loan has no mandatory amortization provisions and is payable in full at maturity. At the option of Salishan-Mohegan, each advance of loan proceeds accrues interest on the basis of a base rate or on
the basis of a one-month, two-month, three-month or six-month Eurodollar rate, plus a spread of 1.25% for base rate loans and 2.25% for Eurodollar loans. The base rate is the higher of Bank of Americas announced prime rate or the federal funds
rate plus 0.50%. The Salishan Credit Facility is collateralized by a lien on substantially all of the existing and future assets of Salishan-Mohegan. The obligations of Salishan-Mohegan under the Salishan Credit Facility are also guaranteed by the
Mohegan Tribe. The Salishan Credit Facility subjects Salishan-Mohegan to a number of restrictive covenants, including financial and non-financial covenants customarily found in loan agreements for similar transactions.

Immediately following the execution of the loan agreement, $10.0 million in loan proceeds were used by Salishan-Mohegan to provide a partial repayment of
its outstanding loan balance with Mohegan Ventures-NW. Another $2.6 million in loan proceeds were used to pay off a mortgage payable discussed above under Mortgage Payable. As of September 30, 2007, Salishan-Mohegan had $7.7 million
of available borrowings under the Salishan Credit Facility. As of September 30, 2007, Salishan-Mohegan had $17.3 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at September 30,
2007 were comprised of: (1) a $15.5 million loan based on a one-month Eurodollar rate of 5.50% plus an Applicable Rate of 2.25% and (2) $1.8 million in loans based on a one-month Eurodollar rate of 5.80% plus an Applicable Rate of 2.25%.
The Applicable Rate for commitment fees was 0.50% as of September 30, 2007.

Letters of Credit

As of September 30, 2007, we maintained four uncollateralized letters of credit to satisfy potential workers compensation liabilities, overdue
pari-mutuel wagering tax liabilities of the Pocono Downs entities that may arise, overdue amounts for purses due to horsemen at Pocono Downs that may arise and potential contractor and subcontractor liabilities relating to the Project Horizon
expansion at Mohegan Sun. The letters of credit expire(d) on August 31, 2008, January 25, 2008, November 17, 2007 and September 5, 2008, respectively, subject to renewals. As of September 30, 2007, no amounts were
drawn on the letters of credit.

Environmental Matters

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

From 1991 through 1993, United
Nuclear Corporation commissioned environmental audits and soil sampling programs which detected, among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. The Connecticut Department of
Environmental Protection, or DEP, reviewed the environmental audits and reports and established cleanup requirements for the site. In December 1994, the DEP approved United Nuclear Corporations remedial plan, which determined that groundwater
remediation was unnecessary because although the groundwater beneath the site was contaminated, it met the applicable groundwater criteria given the classification of the groundwater under the site. In addition, extensive remediation of contaminated
soils and additional investigation were completed to achieve the DEPs cleanup criteria and demonstrate that the remaining soils complied with applicable cleanup criteria. Initial construction at the site also involved extensive soil
excavation. According to the data gathered in a 1995 environmental report



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commissioned by United Nuclear Corporation, remediation is complete and is consistent with the applicable Connecticut cleanup requirements. The DEP has
reviewed and approved the cleanup activities at the site, and, as part of the DEPs approval, United Nuclear Corporation was required to perform post-closure groundwater monitoring at the site to ensure the adequacy of the cleanup. In addition,
under the terms of United Nuclear Corporations environmental certification and indemnity agreement with the Department of the Interior (which took the former United Nuclear Corporation land into trust for the Tribe), United Nuclear Corporation
agreed to indemnify the Department of the Interior for environmental actions and expenses based on acts or conditions existing or occurring as a result of United Nuclear Corporations activities on the property.

We are not currently incurring, and did not incur in the fiscal years ended September 30, 2007, 2006 and 2005, any material costs related to
compliance with environmental requirements with respect to the Mohegan Sun sites former use by the United Nuclear Corporation. Notwithstanding the foregoing, no assurance can be given that any existing environmental studies reveal all
environmental liabilities, or that future laws, ordinances or regulations will not impose any material environmental liability, or that a material environmental condition does not otherwise currently exist.

Prior to acquiring the Pocono Downs entities, we conducted an extensive environmental investigation of the Pocono Downs facilities. In the course of that
work, we identified several environmental conditions at the Mohegan Sun at Pocono Downs facility for which corrective actions are necessary to bring the property into compliance with applicable laws and regulations. Downs Racing implemented a
comprehensive plan to mitigate and resolve these conditions. As of September 30, 2007, Downs Racing has an estimated remaining obligation of approximately $197,000 for completion of the remediation plan.

Employees and Labor Relations

As of
September 30, 2007, Mohegan Sun employed approximately 8,700 full-time employees, and 1,700 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 first to qualified members of the Tribe and then to enrolled members of other Indian tribes. See Certain Relationships and Related Transactions. None of Mohegan Suns employees
are covered by collective bargaining agreements.

As of September 30, 2007, Pocono Downs employed approximately 830 full time
employees. Certain of our Pocono Downs employees are represented under collective bargaining agreements between Downs Racing, the International Union of Operating Engineers Local Union 542C (Local Union 542C) and Teamsters Local
No. 401 (Local No. 401). The agreement with Local Union 542C expires on March 31, 2010 and relates to equipment and heavy equipment operators. The agreement with Local No. 401 expires on January 31, 2012 and
relates to truck drivers and maintenance employees.

Item 1A. Risk Factors

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



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Risks Related to Our Business

Our substantial indebtedness could affect adversely our financial condition.

We currently have and will continue to have a significant amount of indebtedness. As of September 30, 2007, we had outstanding debt totaling $1.29 billion. In addition, as of September 30, 2007, we had borrowing capacity under the
new bank credit facility and line of credit of up to $960.2 million in total, of which no amounts were drawn.

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



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



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



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



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



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

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

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

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



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

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

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

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

We, the Tribe and our wholly
owned subsidiaries may not be subject to the federal bankruptcy laws. No assurance can be given that, if an event of default occurs, a forum will be available to creditors other than the 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 or any other court on Tribal lands will require the cooperation of the Tribes officials in the exercise of their police powers.
Thus, to the extent that a judgment of the Gaming Disputes Court must be executed on Tribal lands, the practical realization of any benefit of such a judgment will be dependent upon the willingness and ability of Tribal officials to carry out such
judgment. In addition, the land on which Mohegan Sun is located is owned by the United States in trust for the Tribe, and our creditors and the creditors of the Tribe may not foreclose upon or obtain title to the land.

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

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



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



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



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



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



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



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



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



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

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

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



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In addition, the new bank credit facility requires a periodic test which ensures that we have sufficient
liquidity under the new bank credit facility and other allowed borrowings, projected cash flows over applicable construction periods and existing cash and cash equivalents to cover planned construction expenditures.

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

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

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

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

Our success depends in large part on the continued service of key
management personnel, particularly Mitchell Grossinger Etess, Chief Executive Officer of the Authority and Chief Executive Officer and President of Mohegan Sun, Jeffrey E. Hartmann, Chief Operating Officer of the Authority and Executive Vice
President and Chief Operating Officer of Mohegan Sun, Leo M. Chupaska, Chief Financial Officer of the Authority, and Robert J. Soper, President and Chief Executive Officer of the Pocono Downs entities. The loss of the services of one or more of
these individuals or other key personnel could have a material adverse effect on our business, operating results and financial condition. The key management personnel, excluding Mr. Soper, currently are retained pursuant to five-year employment
agreements for Mr. Etess and Mr. Hartmann, which expire on December 31, 2011, and a three-year employment agreement for Mr. Chupaska, which expires on December 31, 2008. Each of these agreements includes a provision for
automatic renewal for an additional term of five years. Mr. Soper and the Management Board are currently in the process of finalizing the terms of a new employment agreement.

We 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.

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

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



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Prior to acquiring the Pocono Downs entities, we conducted an extensive environmental investigation of
the Pocono Downs facilities. In the course of that work, we identified several environmental conditions at the Mohegan Sun at Pocono Downs facility for which corrective actions are necessary to bring the property into compliance with applicable laws
and regulations. Downs Racing implemented a comprehensive plan to mitigate and resolve these conditions. As of September 30, 2007, Downs Racing has an estimated remaining obligation of approximately $197,000 for completion of the remediation
plan.

Notwithstanding the foregoing, we cannot assure you that:



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



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



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



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

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

Risks Related to Mohegan Sun

Mohegan
Suns failure to generate sufficient cash flows could prevent us from fulfilling our debt service obligations.

We currently rely
primarily on cash flows generated by gaming operations at Mohegan Sun to meet our debt service obligations. Our financial condition and operations are subject to many financial, economic, political, competitive and regulatory factors beyond our
control. If Mohegan Sun is unable to generate sufficient cash flows, we may be unable to meet our debt service obligations with respect to our outstanding indebtedness. We could be required to, among other things, reduce or delay planned capital
expenditures, dispose of some of our assets and/or seek to restructure some or all of our debt. We cannot assure you that any of these alternatives could be effected on satisfactory terms, if at all, and if effected, would not have a material
adverse effect on our results of operations.

If we are not able to compete successfully, we may not be able to generate sufficient cash
flows to fund our operations or service our debt.

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

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

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

In February 2005, the Mashantucket Pequot Tribe announced its plans to undertake a three-year,
$700.0 million expansion at Foxwoods, which is expected to add over two million square feet to the facility, including



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an 825-room hotel tower, a spa, a theater, additional retail, entertainment and parking spaces and additional meeting, convention and reception facilities.
In addition, the expansion is expected to include 50,000 square feet of gaming space and will accommodate an additional 1,500 slot machines and 45 table games. Groundbreaking activities occurred in November 2005, and the facility is scheduled to
open in May of 2008. On December 8, 2006, the Mashantucket Pequot Tribe and MGM Mirage, Inc. announced that they had completed agreements that include the development of the new hotel and casino described above. The new hotel and casino will be
known as the MGM Grand at Foxwoods and will be owned and operated by the Mashantucket Pequot Tribe but with marketing and other services available under license from MGM Mirage. In May 2005, the Mashantucket Pequot Tribe completed the
construction of two golf courses and a clubhouse and subsequently opened eight golf villas and a golf academy. In November 2007, Foxwoods announced an additional investment of $55.0 million to add additional restaurants and shops to MGM Grand at
Foxwoods.

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

Since the completion of Project Sunburst in 2002, we have broadened Mohegan Suns target market beyond day-trip customers
to include guests making overnight stays at the resort. Consequently, Mohegan Sun also now competes directly for customers with resort casinos in Atlantic City, New Jersey. Many of these casinos may have greater resources, operating experience and
name recognition than Mohegan Sun. Moreover, public announcements, including those by Boyd Gaming, Pinnacle Entertainment and MGM, indicate that several Atlantic City properties are undergoing renovation and expansion, which could make them more
attractive destinations and divert potential customers from Mohegan Sun.

Mohegan Sun also currently faces competition from several casinos
and gaming facilities located on Indian tribal lands in New York, and from racetracks and other facilities in New York and Rhode Island that operate video gaming machines. New York has six federally recognized tribes located in the central, northern
and western parts of the state. Three of these tribes, the Oneida Nation of New York, the Seneca Nation and the St. Regis Mohawk Tribe of New York, currently engage in casino gaming. The St. Regis Mohawk Tribe has a pending land-into-trust
application with the Bureau of Indian Affairs, which, if approved, would allow for the conversion of approximately 29 acres at the Monticello Raceway in Monticello, New York into a tribal-owned casino. In addition to these three tribes, other Indian
tribes have announced potential casino projects, which, if completed, will add significant casino space and hotel rooms to the northeastern United States gaming market. In addition, eight thoroughbred and harness racetracks located in various parts
of the state of New York, including Yonkers Raceway in Yonkers, currently operate an aggregate of approximately 13,000 video gaming machines, with additional facilities under consideration for Aqueduct Raceway in Queens and Belmont Park in Nassau
County. Two facilities located in Rhode Island operate an aggregate of approximately 5,700 video gaming machines.

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

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



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seeking to gain federal recognition as Indian tribes are pursuing commercial casino gaming in the northeastern United States. These efforts are ongoing in
Connecticut, Maine, Massachusetts, New York and Rhode Island.

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

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

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

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

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



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



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



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



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



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



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



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



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

Adverse changes in these conditions could affect adversely our hotels financial performance and results of operations.



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

Pursuant to the terms of the relinquishment agreement, we are required, among
other things, to pay TCA five percent of the revenues (as defined in the relinquishment agreement) generated by Mohegan Sun during the 15-year period which commenced on January 1, 2000. During the fiscal year ended September 30, 2007, we
paid $77.4 million in relinquishment payments.

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

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

The anticipated construction costs and completion dates for Project Horizon
are based on budgets, design documents and schedule estimates prepared by the Authority with the assistance of architects, contractors and consultants. Construction projects such as Project Horizon are inherently subject to significant development
and construction risks, which could cause unanticipated cost increases. These include the following:



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



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



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



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



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



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



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



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

Furthermore, although construction activities related to Project Horizon have been planned to minimize disruption, construction noise and debris and the
temporary closing of some of the facility, 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 Horizon
will not have a material adverse effect on the Authoritys results of operations.

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

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



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Risks Related to the Indian Gaming Industry

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

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

Currently, the operation of all gaming on Indian lands is subject to IGRA. Over the past several years, legislation
has been introduced in the United States Congress with the intent of modifying a variety of perceived problems with IGRA. Virtually all of the proposals that have been considered seriously would be prospective in effect and contain clauses that
would grandfather existing Indian gaming operations such as Mohegan Sun. Legislation also has been proposed, however, which would have the effect of repealing many of the key provisions of IGRA and prohibiting the continued operation of particular
classes of gaming on Indian reservations in states where such gaming is not otherwise allowed on a commercial basis. While none of the substantive proposed amendments to IGRA have been enacted, we cannot predict the effects of future legislative
acts. In the event that Congress passes prohibitory legislation that does not include any grandfathering exemption for existing tribal gaming operations, and if such legislation is sustained in the courts against tribal challenge, our ability to
meet our debt service obligations would be materially and adversely affected.

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

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

Based on current interpretation of the Internal Revenue Code of 1986, as amended, or the Code, we, the Tribe, MBC, Mohegan Ventures-NW, the Pocono Downs
entities, WTG and MTGA Gaming are not subject to federal income taxes. However, we cannot assure you that the United States Congress will not reverse or modify the exemption for Indian tribes from federal income taxation.

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

Risks
Related to Our Pocono Downs Operations

If we are not able to develop Project Sunrise at Pocono Downs on time or on budget, we
may not be able to achieve necessary returns from the Pocono Downs acquisition.

We anticipate total costs to develop Project Sunrise at
Pocono Downs of approximately $208.0 million. Construction commenced in May 2007 with a grand opening planned in the summer of 2008. Failure to complete



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Project Sunrise within budget or on schedule could prevent us from achieving necessary returns from the Pocono Downs acquisition and, accordingly, may have a
material adverse effect on our financial condition, results of operations or liquidity.

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

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

Construction difficulties may delay our projected opening of Project Sunrise and could prevent us from achieving our operating projections.

Construction projects like this one are inherently subject to significant development and construction risks, all of which could cause
unanticipated delays or cost increases. These include the following:



| |  |  | regulatory approvals;
| | - |  | ---------------------



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



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



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



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



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



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



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



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

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

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

Slot machine licenses have been awarded to all owners of the six existing racetracks: Philadelphia Park located in
Bensalem (approximately 115 miles southeast of Pocono Downs), Penn National Race Course in Grantville (located approximately 85 miles southwest of Pocono Downs), Presque Isle Downs in Summit



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Township, near Erie (approximately 325 miles from Pocono Downs) and two harness racetracks, the Meadows, located in Meadow Lands, near Pittsburgh
(approximately 300 miles from Pocono Downs), and Harrahs Chester Casino and Racetrack, located in Chester (approximately 115 miles from Pocono Downs). In addition, it is expected that a slot machine license will be awarded to Centaur, Inc.,
which is currently building Valley View Downs in Lawrence County, near Pittsburgh.

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



| |  |  | Mount Airy, LLC was approved for a conditional Category Two slot machine license to operate a slot machine parlor at the former Mount Airy Lodge in Mount Pocono,
which is approximately 40 miles from Pocono Downs. In October 2007, Mount Airy, LLC opened its $412.0 million Mount Airy Resort and Casino, which includes approximately 2,300 slot machines. In November 2007, the facility introduced a 188-room hotel
and is expected to open Gypsies Lounge Nightclub in late 2007. Reports indicate that by the end of 2008, the facility will be expanded to have 3,000 slot machines, 400 hotel rooms, four restaurants, a night club, conference rooms, a spa, indoor and
outdoor pools, retail shops and additional parking.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Sands Bethworks Gaming, a partnership between BethWorks and Las Vegas Sands, Inc., owner of the Venetian Resort and Casino in Las Vegas, was approved for a
conditional Category Two slot machine license to operate a gaming facility in Bethlehem, which is approximately 70 miles from Pocono Downs. The group has indicated plans for a $630.0 million Phase I project that would offer 3,000 slot machines, a
new 300-room hotel, retail shops and restaurants to the public by the spring of 2009 and a future expansion that would increase the total number of slot machines to 5,000 by late 2009.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the other slot facilities in Pennsylvania, Pocono Downs faces competition from a VLT gaming facility at Monticello Raceway in Monticello,
New York in the Catskills, which features a reported 1,500 VLTs, and any full scale casino gaming operation that is ultimately developed by an Indian tribe in the Catskills region. The Catskills are approximately 90 miles from Pocono Downs. Pocono
Downs also could face competition from Tioga Downs Racetrack in Nichols, New York, approximately 100 miles from Pocono Downs. On June 9, 2006, Tioga Downs opened its racetrack after renovations, and on July 4, 2006, the track opened its
new gaming floor, which includes 750 video lottery terminals.

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

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

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



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

Under the Pennsylvania Gaming Act, the PGCB has broad authority to regulate gaming activities. Slot machine gaming is
a new industry in Pennsylvania and many of the regulations issued by the PGCB to date are temporary in nature. Additional regulations and permanent regulations are expected to be issued by the PGCB. Such additional or permanent regulations could
adversely affect our gaming operations at Pocono Downs.

Assessments for regulatory costs may negatively impact our operating results.

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

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

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

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

We have entered into various lease agreements 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.

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

Salishan-Mohegan owns land in
Clark County, Washington for the purposes of developing a casino to be owned by the Cowlitz Indian Tribe. Mohegan Ventures-NW, one of three members in Salishan-Mohegan, is our wholly-owned subsidiary. The Mohegan Tribe is also a member of
Salishan-Mohegan. The land shall be



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transferred to the Cowlitz Tribe or the United States upon: (1) receipt of necessary financing for the development of the proposed casino; and
(2) the underlying property being accepted to be taken into trust by the United States Department of the Interior.

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

Item 3. Legal Proceedings

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

As the successor owner of Downs Racing, we were involved in a dispute with the Wilkes-Barre Area School District, which had filed an appeal in November
2001 against Downs Racings predecessor company, Pocono Downs, Inc., and the Luzerne County Board of Assessment Appeals relating to certain property tax assessments. The school district challenged the certified assessment for the tax year 2002,
and sought an increase to the assessed value of that property for 2002 and subsequent tax years, including additional assessments for tax year 2007. A final settlement of the dispute was reached in June 2007 between the various parties in the
litigation and the settlement was subsequently approved by the Luzerne County Court. Based on the settlement, our liability for this litigation covering tax periods through June 30, 2007 was approximately $3.5 million, which is recorded in our
income from operations for the fiscal year ended September 30, 2007. We will continue to make agreed upon payments with the Wilkes-Barre Area School District for each tax year through 2015. The total amount of these payments is $18.2 million.

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

None.



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PART II

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

We have not issued or sold any equity securities.

Item 6. Selected Financial Data

The selected financial data shown below for the fiscal years ended
September 30, 2007, 2006 and 2005 and as of September 30, 2007 and 2006, have been derived from our audited consolidated financial statements included in this Form 10-K. The selected financial data set forth below for the fiscal years
ended September 30, 2004 and 2003 and as of September 30, 2005, 2004 and 2003 have been derived from our audited financial statements for those years, which are not included in this Form 10-K. The financial information shown below should
be read in conjunction with our consolidated financial statements and related notes beginning on page F-1 of this Form 10-K, 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. Amounts shown in the following table are in thousands.



|                                                            |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|----------------------------------------------------------- |  | ------------------------------------------------- | --------- | ---- | - | --------- | ---- |  | ---- | --------- |  | ---- | --------- | --- |  | - | --------- | ---
|                                                            |  | As of or for the Fiscal Years Ended September 30, |          
|                                                            |  | 2007                                              |           | 2006 |   |           | 2005 |  | 2004 |           |  | 2003 |          
|Operating Results:                                          |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Gross revenues                                              |  | $                                                 | 1,751,912 |      | $ | 1,547,971 |      |  | $    | 1,454,066 |  | $    | 1,367,933 |     |  | $ | 1,280,440 |    
|Promotional allowances                                      |  |                                                   | (131,846) |      |   | (124,917) |      |  |      | (125,148) |  |      | (111,007) |     |  |   | (102,952) |    
|                                                            |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Net revenues                                                |  | $                                                 | 1,620,066 |      | $ | 1,423,054 |      |  | $    | 1,328,918 |  | $    | 1,256,926 |     |  | $ | 1,177,488 |    
|                                                            |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Income from operations (1)                                  |  | $                                                 | 292,568   |      | $ | 249,232   |      |  | $    | 139,136   |  | $    | 246,617   |     |  | $ | 241,333   |    
|Total other expense (2)                                     |  |                                                   | (120,670) |      |   | (94,882)  | (3)  |  |      | (116,211) |  |      | (143,748) | (4) |  |   | (145,648) | (5)
|                                                            |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Income from continuing operations before minority interests |  |                                                   | 171,898   |      |   | 154,350   |      |  |      | 22,925    |  |      | 102,869   |     |  |   | 95,685    |    
|Minority interests                                          |  |                                                   | 648       |      |   | 420       |      |  |      | 514       |  |      | 18        |     |  |   |          |    
|                                                            |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Income from continuing operations                           |  |                                                   | 172,546   |      |   | 154,770   |      |  |      | 23,439    |  |      | 102,887   |     |  |   | 95,685    |    
|Total income from discontinued operations (6)               |  |                                                   | 21        |      |   | 147       |      |  |      | 228       |  |      |          |     |  |   |          |    
|                                                            |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Net income                                                  |  | $                                                 | 172,567   |      | $ | 154,917   |      |  | $    | 23,667    |  | $    | 102,887   |     |  | $ | 95,685    |    
|                                                            |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Other Data:                                                 |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Interest expense, net of capitalized interest               |  | $                                                 | 94,363    |      | $ | 90,928    |      |  | $    | 88,011    |  | $    | 78,970    |     |  | $ | 83,492    |    
|Capital expenditures                                        |  | $                                                 | 162,195   |      | $ | 101,920   |      |  | $    | 50,991    |  | $    | 30,680    |     |  | $ | 30,277    |    
|Net cash flows provided by operating activities             |  | $                                                 | 286,089   |      | $ | 250,877   |      |  | $    | 247,075   |  | $    | 214,805   |     |  | $ | 195,484   |    
|                                                            |  |                                                   |           |      |  
|Balance Sheet Data:                                         |  |                                                   |           |      |   |           |      |  |      |           |  |      |           |     |  |   |           |    
|Total assets                                                |  | $                                                 | 2,079,977 |      | $ | 1,914,357 |      |  | $    | 1,856,868 |  | $    | 1,579,705 |     |  | $ | 1,658,511 |    
|Long-term debt and capital lease obligations                |  | $                                                 | 1,276,109 |      | $ | 1,225,804 |      |  | $    | 1,226,348 |  | $    | 1,003,051 |     |  | $ | 1,101,649 |    

---

|(1) | Total operating costs and expenses included in income from operations includes non-cash relinquishment liability reassessment charges of $3.0 million, $39.4 million, $123.6 million
and $3.9 million for the 2007, 2006, 2005 and 2004 fiscal years, and a non-cash relinquishment liability reassessment credit of $22.7 million for the 2003 fiscal year. A discussion of this charge and our accounting for the relinquishment liability
may be found under Notes 2 and 14 to our audited consolidated financial statements beginning on page F-1 of this Form 10-K.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | For the fiscal years ended September 30, 2007, 2006, 2005, 2004, and 2003, total other expense includes $29.8 million, $30.7 million, $27.5 million, $29.9 million and $33.6
million, respectively, for the accretion of discount to the relinquishment liability to reflect the impact of the time value of money. A discussion of our accounting for the relinquishment liability may be found under Notes 2 and 14 to our audited
consolidated financial statements beginning on page F-1 of this Form 10-K.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes a non-cash gain of $24.5 million from a settlement on the Pocono Downs purchase agreement in August 2006. A discussion of this transaction may be found under Note 13 to our
audited consolidated financial statements beginning on page F-1 of this Form 10-K.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(5) | Includes a loss on extinguishment of debt of $27.4 million. The loss is comprised of a tender premium of $22.8 million, a write-off of unamortized debt issuance costs of $4.4
million and other transaction costs of approximately $200,000.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | A discussion of our accounting for discontinued operations may be found under Note 17 to our audited consolidated financial statements beginning on page F-1 of this Form 10-K.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

Overview

The Tribe and the Authority

The Mohegan Tribe of Indians of Connecticut, or the Mohegan Tribe or the Tribe, is a
federally recognized Indian tribe with an approximately 507-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, or IGRA, federally recognized Indian tribes are
permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a gaming compact with the state in which they operate. The Tribe and the State of Connecticut have entered into such a
compact, the Mohegan Compact, which has been approved by the United States Secretary of the Interior. We were established as an instrumentality of the Tribe, with the exclusive power to conduct and regulate gaming activities on tribal lands and the
non-exclusive authority to conduct such activities elsewhere. Our gaming operation at Mohegan Sun is one of only two legally authorized gaming operations in New England offering traditional slot machines and table games. Through our subsidiary,
Downs Racing, L.P., we also own Mohegan Sun at Pocono Downs, or Pocono Downs, a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania, and several off-track wagering, or OTW, facilities located
elsewhere in Pennsylvania, of which one referred to in Note 17 to our consolidated financial statements has been sold to a third party. We are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the
governing body of the Tribe). Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

Mohegan Sun

In October 1996, we opened a gaming and entertainment complex known as Mohegan Sun. Mohegan Sun is
located on a 185-acre site on the Tribes reservation overlooking the Thames River with direct access from Interstate 395 and Connecticut Route 2A via a four-lane access road. Mohegan Sun is approximately 125 miles from New York City and
approximately 100 miles from Boston, Massachusetts. In fiscal year 2002, we



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completed a major expansion of Mohegan Sun known as Project Sunburst. The first phase of Project Sunburst, the Casino of the Sky, which included increased
gaming, restaurant and retail space and an entertainment arena, opened in September 2001. The remaining components, including the approximately 1,200-room luxury Sky hotel and approximately 100,000 square feet of convention space, were fully opened
in June 2002.

Mohegan Sun operates in an approximately 3.0 million square-foot facility, which includes the following:

Casino of the Earth

As of
September 30, 2007, the Casino of the Earth had approximately 188,000 square feet of gaming space and offered:



| |  |  | approximately 3,775 slot machines and 210 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including the Birches Bar & Grill, a 285-seat full-service restaurant and bar, three full-service themed fine dining
restaurants, with a fourth area featuring cuisine from all three adjacent restaurant themes, a 610-seat buffet, a ten-station food court featuring international and domestic cuisine, Hong Kong Street food outlet offering authentic
Southeast Asian cuisine and multiple service bars, all operated by us, for a current total of approximately 1,700 restaurant seats;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | five retail shops providing shopping opportunities ranging from Mohegan Sun logo souvenirs to cigars.
| | - |  | -----------------------------------------------------------------------------------------------------

Casino of the Sky

As of
September 30, 2007, the Casino of the Sky had approximately 119,000 square feet of gaming space and offered:



| |  |  | approximately 2,410 slot machines and 120 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including two full-service restaurants, two quick-service restaurants, a 24-hour coffee shop, a 320-seat buffet and five lounges and
bars operated by us, as well as four full-service restaurants, three quick-service restaurants and a multi-station food court operated by third parties, for a total of approximately 2,600 restaurant seats;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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



| |  |  | the Shops at Mohegan Sun containing 32 different retail shops, eight of which we own;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | an approximately 1,200-room luxury hotel with a private high limit table games suite on the 36thfloor;
| | - |  | ------------------------------------------------------------------------------------------------------



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



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



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

Mohegan Sun has parking spaces for approximately 13,000 guests and 3,100 employees. In addition, we operate a gasoline and convenience center, an
approximately 4,000 square foot, 20-pump facility located adjacent to Mohegan Sun.



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Project Horizon

We have undertaken a major expansion of Mohegan Sun, known as Project Horizon. Project Horizon consists of four major components (Sunrise Square, Property
Infrastructure, Casino of the Wind and the Earth Expansion). The plans for Project Horizon currently include adding substantially more hotel rooms, gaming space and other new non-gaming amenities to Mohegan Sun. The total number of slot machines at
Mohegan Sun is projected to increase to approximately 7,000 units, complemented by approximately 380 table games (including poker tables) when the project is completed.

Groundbreaking occurred in November 2006 with the construction of Sunrise Square, a new Asian themed gaming area, which includes a new 5,000-square-foot bus lobby, a 4,000-square-foot Hong Kong Street food
outlet and 8,500 square feet of gaming space offering 46 table games such as Mini-Baccarat, Sic Bo and Pai Gow Poker. The gaming component of Sunrise Square partially opened in July 2007, and the remainder of the new facility opened in August 2007.
The estimated cost of this component totaled $17.0 million.

The Property Infrastructure component of the project is underway and includes
a 1,700-space parking garage and additional surface parking lots, site development and road improvements on or adjacent to the property. The estimated cost of this component is $101.0 million.

We are also developing the Casino of the Wind, a new gaming area adjacent to the Casino of the Sky, which is expected to include approximately 45,000
square feet of gaming space with approximately 825 slot machines, 28 table games and a themed poker room with 42 tables, as well as approximately 20,000 square feet of new dining and retail amenities, including a two-level 16,000-square-foot Jimmy
Buffetts Margaritaville Restaurant. Groundbreaking for the Casino of the Wind occurred in June 2007, and the new casino is scheduled to open in the fall of 2008. The estimated cost of this component is $125.0 million.

Project Horizon also is planned to include the Earth Expansion, featuring the Earth hotel which is expected to include approximately 922 rooms, including
approximately 261 House of Blues-themed hotel rooms and a House of Blues Foundation Room. The Earth Expansion is also planned to include new House of Blues-themed dining and entertainment amenities, including an approximately 19,400 square foot
music hall. In addition, the Earth Expansion will include a special events facility, approximately 35,000 square feet of retail space, additional food and beverage facilities, including two fine-dining options, a burger restaurant, four bars, a
pizzeria and a three-station food court. The Earth hotel and related facilities are expected to open in October 2010. The estimated cost of this component is $682.0 million.

Total costs for Project Horizon, inclusive of costs incurred to date for Sunrise Square and the Casino of the Wind, currently are estimated to be
approximately $925.0 million. Remaining project costs are estimated to be incurred as follows: fiscal year 2008 $252.0 million, fiscal year 2009 $303.0 million, fiscal year 2010 $294.0 million and fiscal year 2011 $30.0 million.

Connecticut Sun

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

Mohegan Golf

In November 2006, we formed a wholly owned subsidiary, Mohegan Golf, LLC, or Mohegan Golf, to purchase
and operate a golf course in southeastern Connecticut. In May 2007, Mohegan Golf acquired substantially all of the assets of Pautipaug Country Club Inc., or PCC, which included a golf course located in



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Sprague and Franklin, Connecticut. Mohegan Golf incurred total acquisition costs of $4.7 million for the golf course and other items acquired from PCC. The
club was renamed Mohegan Sun Country Club at Pautipaug and opened for the season in June 2007.

Mohegan Sun at Pocono Downs

Through Downs Racing, we own and operate the slot machine and harness racing facility known as Mohegan Sun at Pocono Downs located on
approximately 400 acres in Plains Township, Pennsylvania, as well as several Pennsylvania OTWs located in Carbondale, East Stroudsburg, Hazleton and Lehigh Valley (Allentown). Harness racing has been conducted at Pocono Downs since 1965. The Lehigh
Valley (Allentown) OTW is a 28,000 square-foot facility and is the largest OTW in the Commonwealth of Pennsylvania. Another OTW in Erie, Pennsylvania was sold to a third party in July 2007 for consideration of $7.0 million in cash, pursuant to an
agreement we assumed in connection with our purchase of the Pocono Downs entities.

Downs Racing completed the 2007 harness racing season
at Pocono Downs in November 2007 and will continue the harness racing activities when the 2008 racing season begins in the spring of 2008. Year round simulcast pari-mutuel wagering activities also are conducted at Mohegan Sun at Pocono Downs and the
OTW facilities. A new state of the art, pari-mutuel simulcast facility at Mohegan Sun at Pocono Downs opened in March 2006.

On
August 7, 2006, we entered into an amendment of the Pocono Downs purchase agreement with the seller, a subsidiary of Penn National Gaming, Inc. Pursuant to the amendment, in exchange for our agreement to modify certain provisions of the
purchase agreement, including the elimination of our post-closing termination rights, we will receive an aggregate refund of $30.0 million of the original purchase price for the Pocono Downs entities, payable in five annual installments of $7.0
million, $7.0 million, $6.5 million, $6.0 million and $3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. The first installment of $7.0 million was received in November 2007.

Downs Racing has secured a permanent Category One slot machine license, which permits the installation and operation of up to 3,000 slot machines at
Mohegan Sun at Pocono Downs. Under certain circumstances, Downs Racing may be permitted to install up to a total of 5,000 slot machines at Pocono Downs. A minimum of 1,500 slot machines were required to be in operation by November 2007; however, in
November 2007, the PGCB, granted Downs Racing a one-year extension to reach the 1,500 slot machine threshold.

After the satisfaction of
certain regulatory conditions and the payment of a one-time slot machine license fee of $50.0 million to the PGCB in October 2006, Downs Racing was the first to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of its gaming
and entertainment facility opened to the public on November 14, 2006. The total cost incurred for development of the Phase I facility was approximately $70.0 million, excluding the $50.0 million one-time slot machine license fee. The
two-level casino includes 90,000 square feet of gaming space, operates 24 hours a day, seven days a week and houses approximately 1,100 new slot machines with denominations ranging from one cent to $25. The facility also offers two casino bars, a
food court and a retail shop. In June 2007, renovations were completed in the current food court to accommodate the installation of approximately 80 additional slot machine gaming positions. Approximately 40 of these new positions are comprised of
video blackjack units approved by the PGCB.

A Phase II gaming and entertainment facility, Project Sunrise, at Mohegan Sun at
Pocono Downs is being developed on land adjacent to the existing gaming facility. When completed, the combined facility is anticipated to include approximately 2,500 slot machines, three fine dining restaurants, a 300-seat buffet, an expanded food
court, retail shopping, nightlife venues, additional parking and bus amenities. Construction commenced in May 2007 with a grand opening planned in the summer of 2008. Development of Project Sunrise is anticipated to cost approximately $208.0
million.



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Other Diversification Projects

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

Cowlitz Project

In July 2004, we formed Mohegan Ventures-Northwest, LLC, or Mohegan Ventures-NW, one of three members in Salishan-Mohegan LLC, or Salishan-Mohegan.
Salishan-Mohegan was formed to participate in the development and management of a casino to be located in Clark County, Washington and owned by the Cowlitz Tribe, or the Cowlitz Project. Mohegan Ventures-NW holds a 49.15% membership interest, the
Mohegan Tribe holds a 7.85% membership interest and Salishan Company, LLC, or Salishan Company, holds a 43.0% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Mohegan Tribe each hold one of four seats on the Board of Managers of
Salishan-Mohegan.

In September 2004, Salishan-Mohegan entered into development and management agreements with the Cowlitz Tribe regarding
the Cowlitz Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing, development, construction, and furnishing, as well as providing assistance with the financing of the Cowlitz
Project. The development agreement provides for certain development fees of 3% of total Project Costs, as defined in the development agreement, which are to be distributed to Mohegan VenturesNW and the Mohegan Tribe pursuant to the
Salishan-Mohegan operating agreement. As of April 2006, Salishan-Mohegan purchased the land to be used as the site for the planned casino, which will be transferred to the Cowlitz Tribe or the United States under certain conditions in the
development agreement. The management agreement is for a period of seven years commencing with the opening of the planned casino, during which Salishan-Mohegan will manage, operate and maintain the planned casino. The management agreement provides
for a management fee of 24% of Net Revenues, as defined in the management agreement, which approximates net income from the Cowlitz Project. Pursuant to the operating agreement, management fees will be allocated to the members of Salishan-Mohegan
based on their respective membership percentages. Development of the Cowlitz Project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of Washington and the United
States Department of the Interior accepting land into trust on behalf of the Cowlitz Tribe. The management agreement is subject to approval by the National Indian Gaming Commission, or the NIGC.

Menominee Project

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

In March 2007, Wisconsin Tribal Gaming, LLC, or WTG, was formed to participate in the development of the proposed casino to be owned by the Menominee
Tribe. WTG consists of two members, one of which is Mohegan Ventures Wisconsin, LLC (a wholly owned subsidiary of the Authority formed in March 2007), or MVW, which holds an 85.4% membership interest in WTG, and the other is Mohegan Ventures, LLC (a
wholly



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owned subsidiary of the Mohegan Tribe), or MV, which holds a 14.6% membership interest in WTG. Following formation in March 2007, WTG purchased the
development rights for the Menominee Project, along with certain other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC for consideration of $6.4 million. As a result of the purchase, the Authority and the Mohegan Tribe,
through MVW and MV, respectively, will receive development fees payable to WTG of 13.4% of Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and the Menominee Kenosha Gaming Authority, which approximates net
income from the Menominee Project over a period of seven years following the opening of the casino. Development of the Menominee Project is subject to certain governmental and regulatory approvals, including but not limited to, the United States
Department of the Interior accepting new land into trust for gaming at the project site in Kenosha, Wisconsin.

Other
Projects

New York

In October 2007, through our wholly owned subsidiary, MTGA Gaming, LLC, or MTGA Gaming, we submitted a proposal to the State of New York, along with Capital Play, Inc., to manage the proposed Video Lottery Terminal,
or VLT, facility at Aqueduct Racetrack in Jamaica, New York. If MTGA Gamings bid is selected, we would manage the proposed 4,500 VLT facility at Aqueduct Racetrack, expected to open in June 2009.

Kansas

In September 2007, MTGA
Gaming, along with Olympia Gaming-KC, LLC, and RED Leg Sun, LLC, or RED, formed Leg Sun, LLC, a joint venture which was created to submit an application to the Kansas Lottery Commission for the proposed development of a gaming facility and
destination resort to be named Legends Sun and located in Wyandotte County, Kansas. In accordance with the Kansas Expanded Lottery Act, which is subject to a pending constitutional challenge in Kansas state court, the project would be subject to
various reviews, requirements and approvals by the Kansas Lottery Commission, which is considering several other bids for the right to develop a single resort casino in Wyandotte County.

The proposed $770.0 million Legends Sun complex would feature a wide array of attractions and amenities that include a casino with approximately 2,000
slot machines, 60 table games and 25 poker tables, a Robert Trent Jones II designed championship golf course, a luxury hotel with approximately 350 rooms, a convention and conference facility, approximately 200,000 square feet of high-end retail and
approximately 200,000 square feet of residential development. If selected, we would manage the casino and related operations and RED would manage the retail and residential components of the project.

Explanation of Key Financial Statement Captions

Gross revenues

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



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



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



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



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



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

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

Commonly used terms in the discussion of revenues from table games include table games revenues, table games drop and table games hold
percentage. Table games revenues represents the closing table games inventory plus table games drop and credit slips for coins, chips or tokens returned to the casino cage, less opening table games inventory, discounts provided on patron losses,
free bet coupons and chip fills to the tables. Table games drop is the total amount of cash, free bet coupons, cash advance drafts, customer deposit withdrawals, safekeeping withdrawals and credit issued at the table contained in the locked
container at each gaming table. Table games hold percentage is the table games revenues as a percentage of table games drop.

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

Promotional allowances

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



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We also operate a program for our guests at Mohegan Sun at Pocono Downs, without membership fees, called
the Players Club. This program provides complimentary food, beverage and retail services to guests based on points that are awarded for guests slot machine gaming activities. These points may be used to purchase items at the retail store
and dining outlets located within Mohegan Sun at Pocono Downs. The retail value of points are included in gross revenues when redeemed at Pocono Downs and then deducted as promotional allowances to arrive at net revenues.

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

Gaming expenses

The largest component of gaming expenses is the portion of gross slot revenues which must be paid to the State of Connecticut and the PGCB, which are
referred to as slot win contribution and slot machine tax assessments, respectively. For each 12-month period commencing July 1, 1995, the slot win contribution from Mohegan Sun is the lesser of (a) 30% of gross slot revenues, or
(b) the greater of (i) 25% of gross slot revenues or (ii) $80.0 million. The current assessment of the amount payable to the PGCB on a daily basis is 55% of gross slot revenues at Mohegan Sun at Pocono Downs. In addition to this daily
assessment, Downs Racing, L.P. must pay, on an annual basis, to the PGCB amounts necessary to ensure that the city and municipality hosting Mohegan Sun at Pocono Downs will receive an annual minimum of $10.0 million from the local share assessment.
The local share assessment is equal to the greater of 2.0% of annual gross slot revenues or $10.0 million.

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

Income from
operations

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

Accretion of
discount to the relinquishment liability and reassessment of relinquishment liability

In February 1998, we entered into a
relinquishment agreement with Trading Cove Associates, or TCA. The relinquishment agreement provides that we will make certain payments to TCA out of, and determined as a percentage of, revenues (as defined in the relinquishment agreement) generated
by Mohegan Sun over a 15-year period. In accordance with Statement of Financial Accounting Standards, or SFAS, No. 5, Accounting for Contingencies, or SFAS 5, we have recorded a relinquishment liability of the estimated present
value of our obligations under the relinquishment agreement. We reassess projected revenues (and consequently the relinquishment liability) (i) annually in conjunction with our budgeting process and (ii) when necessary to account for
material increases or decreases in projected revenues over the relinquishment period. Further, we record a quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimates
and judgments used with respect to calculating the relinquishment liability,



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future events that affect such estimates and judgments may cause the actual relinquishment liability to differ significantly from the estimate. In addition,
we have capitalized $130.0 million of this relinquishment liability in connection with the trademark value of the Mohegan Sun brand name. Under SFAS No. 142, Goodwill and Other Intangible Assets, or SFAS 142, the Mohegan Sun
trademark is no longer subject to amortization because it has been deemed to have an indefinite useful life. SFAS 142, however, requires the trademark to be evaluated at least annually for impairment by applying a fair-value test and, if impairment
occurs, the amount of impaired trademark must be written off immediately. Refer to Note 14 to our consolidated financial statements for a further discussion of how we account for the relinquishment liability.

Results of Operation

Summary Operating Results

As of September 30, 2007, we own and operate the Mohegan Sun and Mohegan Sun Country Club properties in Connecticut and,
through the Pocono Downs entities, operate a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania, and several OTW facilities located elsewhere in Pennsylvania (one of which has been sold to a
third party as described in Note 17 to our consolidated financial statements and is not reported in the below segment information related to Pocono Downs). All of our revenues are derived from these operations. Our executive officers review and
assess the performance of the operating results and determine the proper allocation of resources to the Mohegan Sun entities in Connecticut, which include the Connecticut Sun WNBA franchise, and the Pocono Downs entities in Pennsylvania on a
separate basis. We therefore believe that we have two operating segments, one comprised solely of Mohegan Sun, which includes the operations of the Connecticut entities, and another, referred to as Pocono Downs, comprised of the
operations of the Pocono Downs entities. The two operating segments are also separate reportable segments due to the differing nature of their operations. See Note 18 to the consolidated financial statements for financial information about the
segments.

The following tables summarize our results from operations on a property basis (in thousands):



|                               |  |                                          |           |   |      |   |           |      |  |   |                 |   |           |                    |         |           |   |         |           |  |        |   |  |       |  
|------------------------------ |  | ---------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------------- | - | --------- | ------------------ | ------- | --------- | - | ------- | --------- |  | ------ | - |  | ----- | -
|                               |  | For the Fiscal Years Ended September 30, |          
|                               |  |                                          |           |   |      |   |           |      |  |   | Dollar Variance |   |           | PercentageVariance |        
|                               |  | 2007 (1)                                 |           |   | 2006 |   |           | 2005 |  |   | 07 vs. 06       |   | 06 vs. 05 |                    |         | 07 vs. 06 |   |         | 06 vs. 05 | 
|Net revenues:                  |  |                                          |           |   |      |   |           |      |  |   |                 |   |           |                    |         |           |   |         |           |  |        |   |  |       |  
|Mohegan Sun                    |  | $                                        | 1,430,560 |   |      | $ | 1,392,958 |      |  | $ | 1,305,686       |   |           | $                  | 37,602  |           | $ | 87,272  |           |  | 2.7    | % |  | 6.7   | %
|Pocono Downs                   |  |                                          | 189,506   |   |      |   | 30,096    |      |  |   | 23,232          |   |           |                    | 159,410 |           |   | 6,864   |           |  | 529.7  | % |  | 29.5  | %
|                               |  |                                          |           |   |      |   |           |      |  |   |                 |   |           |                    |         |           |   |         |           |  |        |   |  |       |  
|Total                          |  | $                                        | 1,620,066 |   |      | $ | 1,423,054 |      |  | $ | 1,328,918       |   |           | $                  | 197,012 |           | $ | 94,136  |           |  | 13.8   | % |  | 7.1   | %
|Income (loss) from operations: |  |                                          |           |   |      |   |           |      |  |   |                 |   |           |                    |         |           |   |         |           |  |        |   |  |       |  
|Mohegan Sun                    |  | $                                        | 287,017   |   |      | $ | 267,415   |      |  | $ | 150,914         |   |           | $                  | 19,602  |           | $ | 116,501 |           |  | 7.3    | % |  | 77.2  | %
|Pocono Downs                   |  |                                          | 16,137    |   |      |   | (7,547    | )    |  |   | (295            | ) |           |                    | 23,684  |           |   | (7,252  | )         |  | -313.8 | % |  | 2458  | %
|Corporate expenses             |  |                                          | (10,586   | ) |      |   | (10,636   | )    |  |   | (11,483         | ) |           |                    | 50      |           |   | 847     |           |  | -0.5   | % |  | -7.4  | %
|                               |  |                                          |           |   |      |   |           |      |  |   |                 |   |           |                    |         |           |   |         |           |  |        |   |  |       |  
|Total                          |  | $                                        | 292,568   |   |      | $ | 249,232   |      |  | $ | 139,136         |   |           | $                  | 43,336  |           | $ | 110,096 |           |  | 17.4   | % |  | 79.1  | %
|Net income                     |  | $                                        | 172,567   |   |      | $ | 154,917   |      |  | $ | 23,667          |   |           | $                  | 17,650  |           | $ | 131,250 |           |  | 11.4   | % |  | 554.6 | %

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

The important factors and trends that most contributed to our financial performance for the fiscal years ended September 30, 2007, 2006 and 2005
are as follows:



| |  |  | the opening of the Phase I slot facility at Mohegan Sun at Pocono Downs in November 2006, which generated gross slot revenues of $157.2 million for the fiscal year
ended September 30, 2007;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | the strengthening of the Mohegan Sun brand awareness in the Northeast gaming market, which is reflected above in the Mohegan Sun net revenue growth rates for the
fiscal years ended September 30, 2007, 2006 and 2005;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a successful table games marketing program targeting high limit players at Mohegan Sun, which is partially attributable to the strong results of the private table
games suite that was opened in the Sky hotel in June 2006 and the semi-private gaming area that was opened in the Cabaret lounge in February 2007;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | successful marketing programs and promotional events at Mohegan Sun designed to increase targeted repeat patron visitation;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | increased competition in the Northeast gaming market from newly opened VLT facility at Yonkers Raceway in Yonkers, New York and the recently expanded Twin River
facility in Lincoln, Rhode Island, which contributed to the decrease in the growth rate of gross slot revenues at Mohegan Sun for the fiscal year ended September 30, 2007;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a slow down in the regional economy which contributed to the decrease in the growth rate of gross slot revenues at Mohegan Sun for the fiscal year ended
September 30, 2007;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the continued utilization of technologies to improve the productivity and efficiencies of our Mohegan Sun labor force; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | the optimization of hotel occupancy through offers of promotional room rates to Players Club members, which we believe led to higher gaming and non-gaming
revenues that more than offset the decline in hotel revenues.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The other non-recurring factors that affected our
financial performance for the fiscal years ended September 30, 2007, 2006 and 2005 are as follows:



| |  |  | a $3.5 million charge recorded in the fiscal year ended September 30, 2007 in connection with a settlement of litigation related to the assessment of property
taxes at the Pocono Downs facility;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the non-cash relinquishment liability reassessment charges of $3.0 million, $39.4 million and $123.6 million for the fiscal years 2007, 2006 and 2005, respectively;
and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the non-cash non-operating gain of $24.5 million from a settlement on the Pocono Downs purchase agreement discussed above under Overview-Mohegan Sun at Pocono
Downs, which resulted in a significant non-recurring increase in net income for the 2006 fiscal year.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net revenues
for the fiscal year ended September 30, 2007 increased compared to the prior fiscal year primarily as a result of the addition of slot revenues at Mohegan Sun at Pocono Downs from the opening of the Phase I slot facility on November 14,
2006, as well as a the increase in gaming revenues at Mohegan Sun discussed below.

Net revenues for the fiscal year ended
September 30, 2006 increased primarily as a result of a 6.2% growth in gaming and a 5.3% growth in non-gaming revenues at Mohegan Sun, and an increase in net revenues associated with a full year of operations at Pocono Downs and the OTWs
acquired in January 2005. The increase in net revenues for the fiscal year ended September 30, 2006 was also due to a decrease in promotional allowances discussed below under Promotional Allowances compared to the prior fiscal year.

Income from operations for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased as a result of the
growth in net revenues, offset by an increase in operating costs and expenses of 13.1%. Our operating margin, or income from operations as a percentage of net revenues, for the fiscal year ended September 30, 2007 increased to 18.1% from 17.5%
for the prior fiscal year, primarily due to the decrease in the non-cash relinquishment liability reassessment charge, which was $3.0 million for the fiscal year ended September 30, 2007 compared to $39.4 million for the fiscal year ended
September 30, 2006. The decrease in



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reassessment charge was partially offset by the opening of the Phase I slot facility at Mohegan Sun at Pocono Downs, which has a significantly lower
operating margin than Mohegan Sun due to higher gaming tax rates assessed by the Commonwealth of Pennsylvania. Margins were also reduced by the $3.5 million charge recorded in connection with the litigation settlement discussed above and an increase
in promotional programs at Mohegan Sun to offset the impact of the new slot product being added to the Northeast market also as discussed above.

Income from operations for the fiscal year ended September 30, 2006 compared to the prior fiscal year increased as a result of the growth in net revenues and a significant decrease in the non-cash relinquishment liability reassessment
charge, as more fully described below under Mohegan Sun-Operating Costs and Expenses. Our operating margin for the fiscal year ended September 30, 2006 increased to 17.5% from 10.5% for the fiscal year ended September 30, 2005.
This increase was primarily due to the decrease in the non-cash relinquishment liability reassessment charge, greater employee productivity and successful cost reduction programs at Mohegan Sun, which enabled Mohegan Sun to have a 19.2% operating
margin for the fiscal year ended September 30, 2006 compared to 11.6% for the fiscal year ended September 30, 2005.

Net income
for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily due to the decrease in the non-cash relinquishment liability reassessment charge and the improved operating results at Mohegan Sun at Pocono
Downs due to the opening of the slot facility in November 2006, partially offset by a substantial decrease in other non-operating income from fiscal year 2006, which included the $24.5 million non-recurring gain recorded in connection with the price
adjustment related to the acquisition of Pocono Downs as discussed above.

Net income for the fiscal year ended September 30, 2006
compared to the prior fiscal year increased primarily due to the increase in income from operations at Mohegan Sun and the $24.5 million gain recorded in connection with the price adjustment related to the acquisition of Pocono Downs.

Mohegan Sun

Gross
Revenues

Gross revenues consisted of the following (in thousands):



|                                |  |                                          |           |      |   |           |  |                 |           |                     |           |        |           |  |   |           |  |      |   |  |     |  
|------------------------------- |  | ---------------------------------------- | --------- | ---- | - | --------- |  | --------------- | --------- | ------------------- | --------- | ------ | --------- |  | - | --------- |  | ---- | - |  | --- | -
|                                |  | For the Fiscal Years Ended September 30, |          
|                                |  |                                          |           |      |   |           |  | Dollar Variance |           | Percentage Variance |          
|                                |  | 2007                                     |           | 2006 |   | 2005      |  | 07 vs. 06       |           |                     | 06 vs. 05 |        | 07 vs. 06 |  |   | 06 vs. 05 | 
|Gaming                          |  | $                                        | 1,286,915 |      | $ | 1,253,028 |  | $               | 1,179,337 |                     | $         | 33,887 |           |  | $ | 73,691    |  | 2.7  | % |  | 6.2 | %
|Food and beverage               |  |                                          | 94,905    |      |   | 93,713    |  |                 | 90,264    |                     |           | 1,192  |           |  |   | 3,449     |  | 1.3  | % |  | 3.8 | %
|Hotel                           |  |                                          | 47,333    |      |   | 50,818    |  |                 | 50,058    |                     |           | (3,485 | )         |  |   | 760       |  | -6.9 | % |  | 1.5 | %
|Retail, entertainment and other |  |                                          | 129,658   |      |   | 120,316   |  |                 | 111,175   |                     |           | 9,342  |           |  |   | 9,141     |  | 7.8  | % |  | 8.2 | %
|                                |  |                                          |           |      |   |           |  |                 |           |                     |           |        |           |  |   |           |  |      |   |  |     |  
|Total                           |  | $                                        | 1,558,811 |      | $ | 1,517,875 |  | $               | 1,430,834 |                     | $         | 40,936 |           |  | $ | 87,041    |  | 2.7  | % |  | 6.1 | %
|                                |  |                                          |           |      |   |           |  |                 |           |                     |           |        |           |  |   |           |  |      |   |  |     |  

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



|                                |  |                                          |   |  |       |   |  |       |  
|------------------------------- |  | ---------------------------------------- | - |  | ----- | - |  | ----- | -
|                                |  | For the Fiscal Years Ended September 30, |  
|                                |  | 2007                                     |   |  | 2006  |   |  | 2005  |  
|Gaming                          |  | 82.6                                     | % |  | 82.6  | % |  | 82.4  | %
|Food and beverage               |  | 6.1                                      | % |  | 6.2   | % |  | 6.3   | %
|Hotel                           |  | 3.0                                      | % |  | 3.3   | % |  | 3.5   | %
|Retail, entertainment and other |  | 8.3                                      | % |  | 7.9   | % |  | 7.8   | %
|                                |  |                                          |   |  |       |   |  |       |  
|Total                           |  | 100.0                                    | % |  | 100.0 | % |  | 100.0 | %
|                                |  |                                          |   |  |       |   |  |       |  



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



|                                                    |  |                                          |        |   |      |   |        |      |  |   |           |   |  |                     |      |   |           |   |      |           |  |      |   |  |      |  
|--------------------------------------------------- |  | ---------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | --------- | - |  | ------------------- | ---- | - | --------- | - | ---- | --------- |  | ---- | - |  | ---- | -
|                                                    |  | For the Fiscal Years Ended September 30, |       
|                                                    |  |                                          |        |   |      |   |        |      |  |   | Variance  |   |  | Percentage Variance |     
|                                                    |  | 2007                                     |        |   | 2006 |   |        | 2005 |  |   | 07 vs. 06 |   |  | 06 vs. 05           |      |   | 07 vs. 06 |   |      | 06 vs. 05 | 
|Slot handle                                         |  | $                                        | 10,601 |   |      | $ | 10,540 |      |  | $ | 10,182    |   |  | $                   | 61   |   |           | $ | 358  |           |  | 0.6  | % |  | 3.5  | %
|Gross slot revenues                                 |  | $                                        | 922    |   |      | $ | 905    |      |  | $ | 861       |   |  | $                   | 17   |   |           | $ | 44   |           |  | 1.9  | % |  | 5.1  | %
|Net slot revenues                                   |  | $                                        | 889    |   |      | $ | 876    |      |  | $ | 834       |   |  | $                   | 13   |   |           | $ | 42   |           |  | 1.5  | % |  | 5.0  | %
|Weighted average number of slot machines (in units) |  |                                          | 6,060  |   |      |   | 6,201  |      |  |   | 6,233     |   |  |                     | (141 | ) |           |   | (32  | )         |  | -2.3 | % |  | -0.5 | %
|Gross slot hold percentage                          |  |                                          | 8.7    | % |      |   | 8.6    | %    |  |   | 8.5       | % |  |                     | 0.1  | % |           |   | 0.1  | %         |  | 1.2  | % |  | 1.2  | %
|Gross slot win per unit per day (in dollars)        |  | $                                        | 417    |   |      | $ | 400    |      |  | $ | 379       |   |  | $                   | 17   |   |           | $ | 21   |           |  | 4.3  | % |  | 5.5  | %
|Table games drop                                    |  | $                                        | 2,482  |   |      | $ | 2,305  |      |  | $ | 2,086     |   |  | $                   | 177  |   |           | $ | 219  |           |  | 7.7  | % |  | 10.5 | %
|Table games revenues                                |  | $                                        | 386    |   |      | $ | 366    |      |  | $ | 334       |   |  | $                   | 20   |   |           | $ | 32   |           |  | 5.5  | % |  | 9.6  | %
|Weighted average number of table games (in units)   |  |                                          | 302    |   |      |   | 300    |      |  |   | 294       |   |  |                     | 2    |   |           |   | 6    |           |  | 0.7  | % |  | 2.0  | %
|Table games hold percentage (1)                     |  |                                          | 15.6   | % |      |   | 15.9   | %    |  |   | 16.0      | % |  |                     | -0.3 | % |           |   | -0.1 | %         |  | -1.9 | % |  | -0.6 | %
|Table games revenue per unit per day (in dollars)   |  | $                                        | 3,511  |   |      | $ | 3,341  |      |  | $ | 3,114     |   |  | $                   | 170  |   |           | $ | 227  |           |  | 5.1  | % |  | 7.3  | %

---

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

Gaming revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased primarily due to continued growth in table
games and slot revenues. The increase in table games revenues for the fiscal year ended September 30, 2007 was principally attributable to the strengthened awareness of the Mohegan Sun brand in the northeastern United States gaming market due
to enhancements in our targeted direct marketing programs, including our continued focus on high end table play with the introduction of new private and semi-private gaming space as discussed above under Summary Operating Results. The
increase in table games revenues was also due to the continued success of our Asian marketing program, including our opening of Sunrise Square in August 2007. Gross slot revenues growth rate decreased to 1.9% for fiscal year 2007 compared to the
prior fiscal year growth rate of 5.1%. The decrease in gross slot revenues growth rate was attributable to increased competition and the slow down in the regional economy, both discussed above under Summary Operating Results. The State
of Connecticut reported total slot revenues of $1.73 billion and $1.72 billion for the fiscal years ended September 30, 2007 and 2006, respectively, representing an increase of 0.5% in the Connecticut market. However, Mohegan Sun increased its
slot market share to 53.4% of the Connecticut market for the fiscal year ended September 30, 2007 as compared to 52.7% for the prior fiscal year, despite a reduction in slot machines at the Casino of the Earth due to the construction of Sunrise
Square.

Gaming revenues for the fiscal year ended September 30, 2006 compared to the prior fiscal year increased due to continued
growth in net slot revenues and table games revenues at Mohegan Sun. The increase in net slot revenues and table games revenues, and higher win or revenue per unit for both slot machines and table games, resulted primarily from the strengthened
awareness of the Mohegan Sun brand in the northeastern United States gaming market due to enhancements in our targeted direct marketing programs. The increase in gaming revenues was also due to the contribution of $11.7 million in table games
revenues from the new private high limit table games suite discussed above under Summary Operating Results. We exceeded the Connecticut slot revenue market growth rate for the fiscal year ended September 30, 2006 of 2.3%, with
Mohegan Sun increasing its market share to 52.7% for the fiscal year ended September 30, 2006 from 51.3% for the prior fiscal year. The State of Connecticut reported slot revenues of $1.72 billion and $1.68 billion for the fiscal years ended
September 30, 2006 and 2005, respectively.



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Food and beverage revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal
year increased as a result of a $925,000 increase in food revenues due to a $1.4 million increase in banquet revenues from the Mohegan Sun convention center and the addition of new revenues from the Hong Kong Street food outlet in
Sunrise Square, which opened in August 2007. These increases were partially offset by a shift in patron visitation from Authority-owned quick serve food outlets to third party outlets.

Food and beverage revenues for the fiscal year ended September 30, 2006 compared to the prior fiscal year increased as a result of a $2.8 million
increase in gross beverage revenues and a $682,000 increase in gross food revenues. The increase in beverage revenues was due primarily to an increase in the number of events and ticket sales at the Mohegan Sun Arena in fiscal 2006, as discussed
below. The increase in food revenues was due to a slight increase in the number of meals served, or food covers, and the average price per meal at Mohegan Sun. The average price per meal was $13.13 and $13.09 for the fiscal years ended
September 30, 2006 and 2005, respectively.

The following table presents data related to hotel revenues at Mohegan Sun:



|                                    |  |                                          |         |   |      |   |         |      |  |   |           |   |  |                     |      |   |           |   |       |           |  |      |   |  |     |  
|----------------------------------- |  | ---------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | --------- | - |  | ------------------- | ---- | - | --------- | - | ----- | --------- |  | ---- | - |  | --- | -
|                                    |  | For the Fiscal Years Ended September 30, |        
|                                    |  |                                          |         |   |      |   |         |      |  |   | Variance  |   |  | Percentage Variance |     
|                                    |  | 2007                                     |         |   | 2006 |   |         | 2005 |  |   | 07 vs. 06 |   |  | 06 vs. 05           |      |   | 07 vs. 06 |   |       | 06 vs. 05 | 
|Rooms occupied                      |  |                                          | 399,500 |   |      |   | 400,200 |      |  |   | 398,600   |   |  |                     | -700 |   |           |   | 1,600 |           |  | -0.2 | % |  | 0.4 | %
|Average daily room rate (ADR)       |  | $                                        | 112     |   |      | $ | 120     |      |  | $ | 118       |   |  | $                   | (8   | ) |           | $ | 2     |           |  | -6.7 | % |  | 1.7 | %
|Occupancy rate                      |  |                                          | 93.2    | % |      |   | 93.3    | %    |  |   | 92.9      | % |  |                     | -0.1 | % |           |   | 0.4   | %         |  | -0.1 | % |  | 0.4 | %
|Revenue per available room (REVPAR) |  | $                                        | 104     |   |      | $ | 112     |      |  | $ | 110       |   |  | $                   | (8   | ) |           | $ | 2     |           |  | -7.1 | % |  | 1.8 | %

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

Hotel revenues for the fiscal year
ended September 30, 2006 compared to the prior fiscal year increased slightly due to our yield management strategy evidenced by the increase in hotel occupancy, which we believe contributes to growth in gaming, food and beverage and retail,
entertainment and other revenues at Mohegan Sun.

Retail, entertainment and other revenues for the fiscal year ended September 30,
2007 compared to the prior fiscal year increased primarily as a result of a $3.9 million, or 8.4%, increase in entertainment revenues. The increase in entertainment revenues was primarily due to a 5.5% increase in average ticket price for Mohegan
Sun Arena events and a 2.0% increase in overall ticket sales at the Arena due to an increased number of headliner shows. The increase in retail, entertainment and other revenues was also the result of a $1.5 million, or 16.0%, increase in rental
revenue from the Shops at Mohegan Sun due to higher rent paid by new tenants, particularly the Coach outlet; a $1.4 million, or 6.2%, increase in gasoline revenues at the Mohegan Sun gasoline and convenience center related to free coupon promotional
programs during the fiscal year, which do not have an effect on net revenues; and a $1.7 million, or 4.2%, increase in retail and other revenues from miscellaneous amenities available to our patrons at Mohegan Sun.

Retail, entertainment and other revenues increased for the fiscal year ended September 30, 2006 compared to the prior fiscal year as a result of an
increase in entertainment revenues of $16.1 million, or 52.8%, offset by a



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decrease in retail revenues of $6.4 million, or 10.7%, due to changes in promotions offered to Mohegan Sun Players Club members. The increase in
entertainment revenues was primarily due to a 30.6% increase in Mohegan Sun Arena ticket sales and a 21.6% increase in average price for Arena tickets due to an increased number of headliner shows.

Promotional Allowances

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



|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|------------------------------- |  | ---------------------------------------- | ------- | ---- | - | ------- |  | --------------- | ------- |  | ------------------- | ------ | - | --------- | - | ------ | --------- |  | ---- | - |  | ---- | -
|                                |  | For the Fiscal Years Ended September 30, |        
|                                |  |                                          |         |      |   |         |  | Dollar Variance |         |  | Percentage Variance |       
|                                |  | 2007                                     |         | 2006 |   | 2005    |  | 07 vs. 06       |         |  | 06 vs. 05           |        |   | 07 vs. 06 |   |        | 06 vs. 05 | 
|Food and beverage               |  | $                                        | 45,591  |      | $ | 46,894  |  | $               | 44,757  |  | $                   | (1,303 | ) |           | $ | 2,137  |           |  | -2.8 | % |  | 4.8  | %
|Hotel                           |  |                                          | 16,385  |      |   | 17,356  |  |                 | 16,292  |  |                     | (971   | ) |           |   | 1,064  |           |  | -5.6 | % |  | 6.5  | %
|Retail, entertainment and other |  |                                          | 66,275  |      |   | 60,667  |  |                 | 64,099  |  |                     | 5,608  |   |           |   | (3,432 | )         |  | 9.2  | % |  | -5.4 | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|Total                           |  | $                                        | 128,251 |      | $ | 124,917 |  | $               | 125,148 |  | $                   | 3,334  |   |           | $ | (231   | )         |  | 2.7  | % |  | -0.2 | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  

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



|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|------------------------------- |  | ---------------------------------------- | ------- | ---- | - | ------- |  | --------------- | ------- |  | ------------------- | ------ | - | --------- | - | ------ | --------- |  | ---- | - |  | ---- | -
|                                |  | For the Fiscal Years Ended September 30, |        
|                                |  |                                          |         |      |   |         |  | Dollar Variance |         |  | Percentage Variance |       
|                                |  | 2007                                     |         | 2006 |   | 2005    |  | 07 vs. 06       |         |  | 06 vs. 05           |        |   | 07 vs. 06 |   |        | 06 vs. 05 | 
|Food and beverage               |  | $                                        | 46,427  |      | $ | 48,352  |  | $               | 44,877  |  | $                   | (1,925 | ) |           | $ | 3,475  |           |  | -4.0 | % |  | 7.7  | %
|Hotel                           |  |                                          | 8,866   |      |   | 8,734   |  |                 | 7,731   |  |                     | 132    |   |           |   | 1,003  |           |  | 1.5  | % |  | 13.0 | %
|Retail, entertainment and other |  |                                          | 53,790  |      |   | 46,874  |  |                 | 49,372  |  |                     | 6,916  |   |           |   | (2,498 | )         |  | 14.8 | % |  | -5.1 | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  
|Total                           |  | $                                        | 109,083 |      | $ | 103,960 |  | $               | 101,980 |  | $                   | 5,123  |   |           | $ | 1,980  |           |  | 4.9  | % |  | 1.9  | %
|                                |  |                                          |         |      |   |         |  |                 |         |  |                     |        |   |           |   |        |           |  |      |   |  |      |  

Promotional allowances increased for the fiscal year ended September 30, 2007 compared to the
prior fiscal year due primarily to an increase in marketing programs targeting customers in New York and Rhode Island, where expanded VLT facilities opened during the fiscal year, partially offset by a net shift in the utilization of patron
complimentaries from Authority-owned outlets to third party outlets.

Promotional allowances decreased for the fiscal year ended
September 30, 2006 compared to the prior fiscal year as a result of a significant decrease in retail complimentaries due to a reduction in gas and other retail coupons offered to casino patrons, offset by: 1) increased redemption of
entertainment complimentaries resulting from higher attendance and retail prices of tickets due to the increased number of headliner shows at the Mohegan Sun Arena as discussed above; 2) an increase in food and beverage complimentaries due to the
increase in attendance at the Arena and a change in promotional programs to offer more food and beverage complimentaries and offer less retail complimentaries as discussed above; and 3) an increase in hotel complimentaries due to our yield
management strategy.



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Operating Costs and Expenses

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



|                                        |  |                                          |           |      |   |           |  |                 |           |  |                     |         |   |           |   |         |           |  |       |   |  |       |  
|--------------------------------------- |  | ---------------------------------------- | --------- | ---- | - | --------- |  | --------------- | --------- |  | ------------------- | ------- | - | --------- | - | ------- | --------- |  | ----- | - |  | ----- | -
|                                        |  | For the Fiscal Years Ended September 30, |          
|                                        |  |                                          |           |      |   |           |  | Dollar Variance |           |  | Percentage Variance |        
|                                        |  | 2007                                     |           | 2006 |   | 2005      |  | 07 vs. 06       |           |  | 06 vs. 05           |         |   | 07 vs. 06 |   |         | 06 vs. 05 | 
|Gaming                                  |  | $                                        | 736,492   |      | $ | 700,674   |  | $               | 668,865   |  | $                   | 35,818  |   |           | $ | 31,809  |           |  | 5.1   | % |  | 4.8   | %
|Food and beverage                       |  |                                          | 45,384    |      |   | 47,182    |  |                 | 43,328    |  |                     | (1,798  | ) |           |   | 3,854   |           |  | -3.8  | % |  | 8.9   | %
|Hotel                                   |  |                                          | 16,959    |      |   | 16,883    |  |                 | 16,114    |  |                     | 76      |   |           |   | 769     |           |  | 0.5   | % |  | 4.8   | %
|Retail, entertainment and other         |  |                                          | 47,010    |      |   | 42,471    |  |                 | 34,824    |  |                     | 4,539   |   |           |   | 7,647   |           |  | 10.7  | % |  | 22.0  | %
|Advertising, general and administrative |  |                                          | 211,643   |      |   | 193,533   |  |                 | 182,110   |  |                     | 18,110  |   |           |   | 11,423  |           |  | 9.4   | % |  | 6.3   | %
|Pre-opening costs and expenses          |  |                                          | 445       |      |   |          |  |                 |          |  |                     | 445     |   |           |   |        |           |  | 100.0 | % |  |      |  
|Depreciation and amortization           |  |                                          | 82,613    |      |   | 85,394    |  |                 | 85,907    |  |                     | (2,781  | ) |           |   | (513    | )         |  | -3.3  | % |  | -0.6  | %
|Relinquishment liability reassessment   |  |                                          | 2,997     |      |   | 39,407    |  |                 | 123,624   |  |                     | (36,410 | ) |           |   | (84,217 | )         |  | -92.4 | % |  | -68.1 | %
|                                        |  |                                          |           |      |   |           |  |                 |           |  |                     |         |   |           |   |         |           |  |       |   |  |       |  
|Total                                   |  | $                                        | 1,143,543 |      | $ | 1,125,544 |  | $               | 1,154,772 |  | $                   | 17,999  |   |           | $ | (29,228 | )         |  | 1.6   | % |  | -2.5  | %
|                                        |  |                                          |           |      |   |           |  |                 |           |  |                     |         |   |           |   |         |           |  |       |   |  |       |  

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

Gaming costs and expenses
increased for the fiscal year ended September 30, 2006 compared to the prior fiscal year primarily as a result of higher labor costs, slot win contribution to the State of Connecticut and other operating costs commensurate with higher gaming
revenues, increased costs related to a higher amount of certain complimentaries and special promotions offered to casino patrons and enhancements in our targeted direct marketing programs, partially offset by a decrease in outside retail redemption
costs due to changes in promotional programs offered to casino patrons. The increase in labor costs included an increase in bonus expenses as a result of our successful fiscal 2006 operating results and in commemoration of the casinos ten-year
anniversary. Slot win contribution payments totaled $226.3 million and $215.2 million for the fiscal years ended September 30, 2006 and 2005, respectively. Despite the increases mentioned above, efficiencies achieved in Mohegan Sun gaming
operations caused gaming costs and expenses as a percentage of gaming revenues to decrease from 56.7% for the fiscal year ended September 30, 2005 to 55.9% for the fiscal year ended September 30, 2006.

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



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Food and beverage costs and expenses increased for fiscal year ended September 30, 2006 compared to
the prior fiscal year due to higher direct labor and other operating costs to support the increase in food and beverage revenues and the continuous improvements of our food and beverage services at Mohegan Sun. The increase in food and beverage
costs and expenses was partially offset by a higher amount of food and beverage costs being allocated to gaming costs and expenses for food and beverage complimentaries provided to casino patrons.

Hotel costs and expenses increased for the fiscal year ended September 30, 2007 compared to the prior fiscal year primarily as a result of higher
direct labor, due to market driven compensation adjustments and medical insurance costs. The increase was partially offset by a $1.0 million charge in the prior fiscal year for inventory obsolescence which did not recur in fiscal year 2007.

Hotel costs and expenses increased for the fiscal year ended September 30, 2006 compared to the prior fiscal year as a result of
increased labor and other operating costs, including significant costs for the replacement of hotel room supplies, partially offset by increased hotel complimentaries, resulting in a higher amount of hotel costs and expenses being allocated to
gaming costs and expenses.

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

Retail, entertainment and other costs and expenses increased for the fiscal year ended September 30, 2006 compared to the prior fiscal year
primarily due to a substantial increase in entertainment expenses due to the increased number of headliner shows at the Arena, partially offset by a decrease in retail expenses due to the change in promotional programs offered to casino patrons and
an increase in entertainment complimentaries, resulting in a higher amount of entertainment costs and expenses being allocated to gaming costs and expenses.

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

Advertising, general and administrative costs and expenses increased for the fiscal year ended September 30, 2006 compared
to the prior fiscal year primarily as a result of increased labor, utility costs, property maintenance and other costs necessary to support Mohegan Sun operations.

Pre-opening costs and expenses for the fiscal year ended September 30, 2007 were comprised of personnel, consulting and other costs associated with the development plans for Project Horizon, as described above
under Overview-Mohegan Sun. There were no pre-opening costs and expenses for the fiscal year ended September 30, 2006.

Relinquishment liability reassessment for the fiscal year ended September 30, 2007 decreased significantly compared to the reassessment in the prior fiscal year. The relinquishment liability reassessment charge in fiscal year 2007 was
the result of our review of current revenue forecasts, including the estimated timing and extent of future competition and other factors, which led to increased revenue projections for the period in which the relinquishment agreement applies, as
more fully described below.



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Our accounting policy is to reassess the relinquishment liability at least annually in conjunction with
our budgeting process or upon an event which, in our estimation, would materially increase or decrease projected revenues over the relinquishment period. Based on our updated projections for Project Horizon and delayed competition in the Northeast
gaming market, both having the effect of increasing estimated future Mohegan Sun revenues, we concluded that projected revenues from Mohegan Sun subject to the relinquishment agreement over the remaining relinquishment period, which expires on
December 31, 2014, would increase by approximately $139.8 million, thereby increasing the related relinquishment liability and causing the Authority to record a non-cash relinquishment liability charge of $3.0 million for the fiscal year ended
September 30, 2007.

Relinquishment liability reassessment for the fiscal year ended September 30, 2006 decreased significantly
compared to the reassessment in the prior fiscal year, which had the effect of substantially decreasing operating expenses. The relinquishment liability reassessment charge in fiscal year 2006 was the result of our review of current revenue
forecasts, including the estimated timing and extent of future competition, which led to increased revenue projections for the period in which the relinquishment agreement applies. In October 2006, our Management Board approved an expansion of
Mohegan Sun referred to as Project Horizon. As a result of this decision and a review of potential competition in the Northeast gaming market impacting future Mohegan Sun revenues, we concluded that projected revenues from Mohegan Sun
subject to the relinquishment agreement over the remaining period of the agreement, would increase by approximately $878.2 million, thereby increasing the related relinquishment liability, resulting in a non-cash relinquishment liability charge of
$39.4 million for the fiscal year ended September 30, 2006.

Mohegan Sun at Pocono Downs

Gross Revenues

Gross revenues
consisted of the following (in thousands):



|                  |  |                                          |         |      |   |          |  |                 |        |                    |   |           |  |   |           |  |       |   |  |      |  
|----------------- |  | ---------------------------------------- | ------- | ---- | - | -------- |  | --------------- | ------ | ------------------ | - | --------- |  | - | --------- |  | ----- | - |  | ---- | -
|                  |  | For the Fiscal Years Ended September 30, |        
|                  |  |                                          |         |      |   |          |  | Dollar Variance |        | PercentageVariance |  
|                  |  | 2007 (1)                                 |         | 2006 |   | 2005 (2) |  | 07 vs. 06       |        | 06 vs. 05          |   | 07 vs. 06 |  |   | 06 vs. 05 | 
|Gaming            |  | $                                        | 182,428 |      | $ | 26,807   |  | $               | 20,486 |                    | $ | 155,621   |  | $ | 6,321     |  | 580.5 | % |  | 30.9 | %
|Food and beverage |  |                                          | 7,192   |      |   | 2,073    |  |                 | 1,730  |                    |   | 5,119     |  |   | 343       |  | 246.9 | % |  | 19.8 | %
|Retail and other  |  |                                          | 3,481   |      |   | 1,216    |  |                 | 1,016  |                    |   | 2,265     |  |   | 200       |  | 186.3 | % |  | 19.7 | %
|                  |  |                                          |         |      |   |          |  |                 |        |                    |   |           |  |   |           |  |       |   |  |      |  
|Total             |  | $                                        | 193,101 |      | $ | 30,096   |  | $               | 23,232 |                    | $ | 163,005   |  | $ | 6,864     |  | 541.6 | % |  | 29.5 | %
|                  |  |                                          |         |      |   |          |  |                 |        |                    |   |           |  |   |           |  |       |   |  |      |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Period from date of inception (January 25, 2005) to September 30, 2005.
|--- | -----------------------------------------------------------------------

The table below summarizes the percentage of gross revenues from each of the three revenue sources at Mohegan Sun at Pocono Downs:



|                  |  |                                          |   |  |       |   |  |          |  
|----------------- |  | ---------------------------------------- | - |  | ----- | - |  | -------- | -
|                  |  | For the Fiscal Years Ended September 30, |  
|                  |  | 2007 (1)                                 |   |  | 2006  |   |  | 2005 (2) |  
|Gaming            |  | 94.5                                     | % |  | 89.1  | % |  | 88.2     | %
|Food and beverage |  | 3.7                                      | % |  | 6.9   | % |  | 7.4      | %
|Retail and other  |  | 1.8                                      | % |  | 4.0   | % |  | 4.4      | %
|                  |  |                                          |   |  |       |   |  |          |  
|Total             |  | 100.0                                    | % |  | 100.0 | % |  | 100.0    | %
|                  |  |                                          |   |  |       |   |  |          |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Period from date of inception (January 25, 2005) to September 30, 2005.
|--- | -----------------------------------------------------------------------



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The following table presents data related to gaming revenues at Mohegan Sun at Pocono Downs (in
thousands, except where noted):



|                                                    |  |                                          |           |   |      |   |      |  |           |   |                     |           |           |           |  |   |           |  |       |   |  |  
|--------------------------------------------------- |  | ---------------------------------------- | --------- | - | ---- | - | ---- |  | --------- | - | ------------------- | --------- | --------- | --------- |  | - | --------- |  | ----- | - |  | -
|                                                    |  | For the Fiscal Years Ended September 30,
|                                                    |  |                                          |           |   |      |   |      |  | Variance  |   | Percentage Variance
|                                                    |  | 2007 (1)                                 |           |   | 2006 |   | 2005 |  | 07 vs. 06 |   |                     | 06 vs. 05 |           | 07 vs. 06 |  |   | 06 vs. 05
|Slot handle                                         |  | $                                        | 1,690,417 |   |      | $ |     |  | $         |  |                     | $         | 1,690,417 |           |  | $ |          |  | 100.0 | % |  | 
|Gross slot revenues                                 |  | $                                        | 157,185   |   |      | $ |     |  | $         |  |                     | $         | 157,185   |           |  | $ |          |  | 100.0 | % |  | 
|Net slot revenues                                   |  | $                                        | 156,031   |   |      | $ |     |  | $         |  |                     | $         | 156,031   |           |  | $ |          |  | 100.0 | % |  | 
|Weighted average number of slot machines (in units) |  |                                          | 1,142     |   |      |   |     |  |           |  |                     |           | 1,142     |           |  |   |          |  | 100.0 | % |  | 
|Gross slot hold percentage                          |  |                                          | 9.3       | % |      |   |     |  |           |  |                     |           | 9.3       | %         |  |   |          |  | 100.0 | % |  | 
|Gross slot win per unit per day (in dollars)        |  | $                                        | 429       |   |      | $ |     |  | $         |  |                     | $         | 429       |           |  | $ |          |  | 100.0 | % |  | 

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

Gaming revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal year increased as a result of the addition of $156.0
million in net slot revenues due to the opening of the Phase I slot facility. The increase in food and beverage revenues and retail and other revenues for the fiscal year ended September 30, 2007 compared to the prior fiscal year was also
attributable to the opening of the Phase I slot operation, which resulted in increased patron visitation to food and beverage and retail outlets at the facility.

Gaming revenues for the fiscal year ended September 30, 2006 compared to the prior fiscal year increased due to an increase in harness racing and off-track wagering revenues as a result of a full year of
operations at Pocono Downs and the OTW facilities acquired in January 2005. The increase in food and beverage revenues and retail and other revenues for the fiscal year ended September 30, 2006 compared to the prior fiscal year was also a
result of a full year of operations of the food and beverage outlets at the Pocono Downs properties.

Promotional Allowances

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



|                  |  |                                          |       |      |   |      |  |                 |   |                     |   |           |  |   |           |  |       |   |  |  
|----------------- |  | ---------------------------------------- | ----- | ---- | - | ---- |  | --------------- | - | ------------------- | - | --------- |  | - | --------- |  | ----- | - |  | -
|                  |  | For the Fiscal Years Ended September 30,
|                  |  |                                          |       |      |   |      |  | Dollar Variance |   | Percentage Variance
|                  |  | 2007 (1)                                 |       | 2006 |   | 2005 |  | 07 vs. 06       |   | 06 vs. 05           |   | 07 vs. 06 |  |   | 06 vs. 05
|Food and beverage |  | $                                        | 2,547 |      | $ |     |  | $               |  |                     | $ | 2,547     |  | $ |          |  | 100.0 | % |  | 
|Retail            |  |                                          | 1,048 |      |   |     |  |                 |  |                     |   | 1,048     |  |   |          |  | 100.0 | % |  | 
|                  |  |                                          |       |      |   |      |  |                 |   |                     |   |           |  |   |           |  |       |   |  |  
|Total             |  | $                                        | 3,595 |      | $ |     |  | $               |  |                     |   | 3,595     |  | $ |          |  | 100.0 | % |  | 
|                  |  |                                          |       |      |   |      |  |                 |   |                     |   |           |  |   |           |  |       |   |  |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

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



|                  |  |                                          |       |      |   |      |  |                 |   |                     |   |           |  |   |           |  |       |   |  |  
|----------------- |  | ---------------------------------------- | ----- | ---- | - | ---- |  | --------------- | - | ------------------- | - | --------- |  | - | --------- |  | ----- | - |  | -
|                  |  | For the Fiscal Years Ended September 30,
|                  |  |                                          |       |      |   |      |  | Dollar Variance |   | Percentage Variance
|                  |  | 2007 (1)                                 |       | 2006 |   | 2005 |  | 07 vs. 06       |   | 06 vs. 05           |   | 07 vs. 06 |  |   | 06 vs. 05
|Food and beverage |  | $                                        | 2,816 |      | $ |     |  | $               |  |                     | $ | 2,816     |  | $ |          |  | 100.0 | % |  | 
|Retail            |  |                                          | 991   |      |   |     |  |                 |  |                     |   | 991       |  |   |          |  | 100.0 | % |  | 
|                  |  |                                          |       |      |   |      |  |                 |   |                     |   |           |  |   |           |  |       |   |  |  
|Total             |  | $                                        | 3,807 |      | $ |     |  | $               |  |                     | $ | 3,807     |  | $ |          |  | 100.0 | % |  | 
|                  |  |                                          |       |      |   |      |  |                 |   |                     |   |           |  |   |           |  |       |   |  |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------



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

Operating Costs and Expenses

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



|                                        |  |                                          |         |      |   |          |  |                 |        |                     |           |         |           |  |   |           |  |       |   |  |       |  
|--------------------------------------- |  | ---------------------------------------- | ------- | ---- | - | -------- |  | --------------- | ------ | ------------------- | --------- | ------- | --------- |  | - | --------- |  | ----- | - |  | ----- | -
|                                        |  | For the Fiscal Years Ended September 30, |        
|                                        |  |                                          |         |      |   |          |  | Dollar Variance |        | Percentage Variance |          
|                                        |  | 2007 (1)                                 |         | 2006 |   | 2005 (2) |  | 07 vs. 06       |        |                     | 06 vs. 05 |         | 07 vs. 06 |  |   | 06 vs. 05 | 
|Gaming                                  |  | $                                        | 133,062 |      | $ | 19,389   |  | $               | 14,113 |                     | $         | 113,673 |           |  | $ | 5,276     |  | 586.3 | % |  | 37.4  | %
|Food and beverage                       |  |                                          | 5,115   |      |   | 2,238    |  |                 | 1,691  |                     |           | 2,877   |           |  |   | 547       |  | 128.6 | % |  | 32.3  | %
|Retail and other                        |  |                                          | 1,204   |      |   | 752      |  |                 | 503    |                     |           | 452     |           |  |   | 249       |  | 60.1  | % |  | 49.5  | %
|Advertising, general and administrative |  |                                          | 19,942  |      |   | 7,589    |  |                 | 4,336  |                     |           | 12,353  |           |  |   | 3,253     |  | 162.8 | % |  | 75.0  | %
|Pre-opening costs and expenses          |  |                                          | 3,391   |      |   | 5,130    |  |                 | 1,257  |                     |           | (1,739  | )         |  |   | 3,873     |  | -33.9 | % |  | 308.1 | %
|Depreciation and amortization           |  |                                          | 10,655  |      |   | 2,545    |  |                 | 1,627  |                     |           | 8,110   |           |  |   | 918       |  | 318.7 | % |  | 56.4  | %
|                                        |  |                                          |         |      |   |          |  |                 |        |                     |           |         |           |  |   |           |  |       |   |  |       |  
|Total                                   |  | $                                        | 173,369 |      | $ | 37,643   |  | $               | 23,527 |                     | $         | 135,726 |           |  | $ | 14,116    |  | 360.6 | % |  | 60.0  | %
|                                        |  |                                          |         |      |   |          |  |                 |        |                     |           |         |           |  |   |           |  |       |   |  |       |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Period from date of inception (January 25, 2005) to September 30, 2005.
|--- | -----------------------------------------------------------------------

Operating costs and expenses increased for the fiscal year ended September 30, 2007 compared to the prior fiscal year primarily as a result of higher operating costs and expenses necessary to support the slot
operations, including slot machine tax assessment payments to the PGCB. The increase in operating costs and expenses was also due to the $3.5 million charge recorded in advertising, general and administrative expenses in connection with the
litigation settlement, as described above under Summary Operating Results, partially offset by decreased pre-opening costs and expenses related to the opening of the Phase I facility. Slot machine tax assessment payments to the PGCB
totaled $92.2 million for the fiscal year ended September 30, 2007. The increase in depreciation and amortization expenses for the fiscal year ended September 30, 2007 compared to the prior fiscal year was principally due to the
commencement of depreciation on the new Phase I facility and related slot machines and equipment placed in service in November 2006.

Operating costs and expenses increased for the fiscal year ended September 30, 2006 compared to the prior fiscal year primarily as a result of a full year of operations at the Pocono Downs properties acquired in January 2005. The
increase in operating costs and expenses was also due to increased personnel, consulting and other pre-opening costs and expenses associated with the opening of the Phase I slot facility.



65



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Corporate Expenses and Other Income (Expense)

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



|                                                          |  |                                          |          |      |      |   |         |      |  |   |                 |      |  |                     |         |   |           |   |        |           |  |        |   |  |         |  
|--------------------------------------------------------- |  | ---------------------------------------- | -------- | ---- | ---- | - | ------- | ---- |  | - | --------------- | ---- |  | ------------------- | ------- | - | --------- | - | ------ | --------- |  | ------ | - |  | ------- | -
|                                                          |  | For the Fiscal Years Ended September 30, |         
|                                                          |  |                                          |          |      |      |   |         |      |  |   | Dollar Variance |      |  | Percentage Variance |        
|                                                          |  | 2007                                     |          |      | 2006 |   |         | 2005 |  |   | 07 vs. 06       |      |  | 06 vs. 05           |         |   | 07 vs. 06 |   |        | 06 vs. 05 | 
|Corporate expenses:                                       |  |                                          |          |      |      |   |         |      |  |   |                 |      |  |                     |         |   |           |   |        |           |  |        |   |  |         |  
|Depreciation                                              |  | $                                        | 79       |      |      | $ | 77      |      |  | $ | 18              |      |  | $                   | 2       |   |           | $ | 59     |           |  | 2.6    | % |  | 327.8   | %
|Corporate expenses                                        |  |                                          | 10,507   |      |      |   | 10,558  |      |  |   | 11,465          |      |  |                     | (51     | ) |           |   | (907   | )         |  | -0.5   | % |  | -7.9    | %
|                                                          |  |                                          |          |      |      |   |         |      |  |   |                 |      |  |                     |         |   |           |   |        |           |  |        |   |  |         |  
|Total corporate expenses                                  |  | $                                        | 10,586   |      |      | $ | 10,635  |      |  | $ | 11,483          |      |  | $                   | (49     | ) |           | $ | (848   | )         |  | -0.5   | % |  | -7.4    | %
|                                                          |  |                                          |          |      |      |   |         |      |  |   |                 |      |  |                     |         |   |           |   |        |           |  |        |   |  |         |  
|Other income (expense):                                   |  |                                          |          |      |      |   |         |      |  |   |                 |      |  |                     |         |   |           |   |        |           |  |        |   |  |         |  
|Accretion of discount to the relinquishment liability (1) |  | $                                        | (29,794  | )    |      | $ | (30,707 | )    |  | $ | (27,466         | )    |  | $                   | 913     |   |           | $ | (3,241 | )         |  | -3.0   | % |  | 11.8    | %
|Interest income (2)                                       |  |                                          | 3,695    |      |      |   | 2,245   |      |  |   | 673             |      |  |                     | 1,450   |   |           |   | 1,572  |           |  | 64.6   | % |  | 233.6   | %
|Interest expense, net of capitalized interest             |  |                                          | (94,363  | )    |      |   | (90,928 | )    |  |   | (88,011         | )    |  |                     | (3,435  | ) |           |   | (2,917 | )         |  | 3.8    | % |  | 3.3     | %
|Loss on early extinguishment of debt (3)                  |  |                                          |         |      |      |   |        |      |  |   | (280            | )    |  |                     |        |   |           |   | 280    |           |  |       |   |  | -100.0  | %
|Write off of debt issuance costs (4)                      |  |                                          | (71      | )    |      |   |        |      |  |   |                |      |  |                     | (71     | ) |           |   |       |           |  | 100    | % |  |        |  
|Other income (expense), net                               |  |                                          | (137     | )(5) |      |   | 24,508  |      |  |   | (1,127          | )(5) |  |                     | (24,645 | ) |           |   | 25,635 |           |  | -100.6 | % |  | -2274.6 | %
|                                                          |  |                                          |          |      |      |   |         |      |  |   |                 |      |  |                     |         |   |           |   |        |           |  |        |   |  |         |  
|Total other expense, net                                  |  | $                                        | (120,670 | )    |      | $ | (94,882 | )    |  | $ | (116,211        | )    |  | $                   | (25,788 | ) |           | $ | 21,329 |           |  | 27.2   | % |  | -18.4   | %
|                                                          |  |                                          |          |      |      |   |         |      |  |   |                 |      |  |                     |         |   |           |   |        |           |  |        |   |  |         |  

---

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

|(2) | Comprised primarily of interest earned on long-term receivables from the Menominee Tribe related to the Menominee Project and the Cowlitz Tribe related to the Cowlitz Project, both
more fully described in Notes 4 and 16, respectively, to our consolidated financial statements included in this form 10-K.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents the loss associated with the repayment of our term loan under the then existing bank credit facility.
|--- | ----------------------------------------------------------------------------------------------------------------

|(4) | Represents the unamortized debt issuance costs written off upon the termination of our $450.0 million bank credit facility in March 2007.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents primarily a loss on disposal of property and equipment.
|--- | ------------------------------------------------------------------

Corporate costs and expenses for the fiscal years ended September 30, 2007 and 2006 were comparable. Corporate costs and expenses decreased for the fiscal year ended September 30, 2006 compared to the prior
fiscal year primarily as a result of reduced headcount, professional costs related to compliance with the Sarbanes-Oxley Act of 2002 and other corporate expenditures.

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



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and Pocono Downs, all described below under Liquidity, Capital Resources and Capital SpendingCapital Expenditures. The weighted average
interest rate was 7.4% for the fiscal years ended September 30, 2007 and 2006.

Interest expense, net of capitalized interest,
increased for the fiscal year ended September 30, 2006 compared to the prior fiscal year primarily due to increases in weighted average outstanding debt and weighted average interest rate, partially offset by the capitalization of $1.2 million
in interest costs during the construction phase at Pocono Downs. The weighted average outstanding debt was $1.25 billion for the fiscal year ended September 30, 2006 versus $1.21 billion for the fiscal year ended September 30, 2005. The
increase in weighted average outstanding debt was due to a full year of outstanding debt in fiscal 2006 related to the acquisition of Pocono Downs properties in January 2005. The weighted average interest rate was 7.4% for the fiscal year ended
September 30, 2006 compared to 7.3% for the fiscal year ended September 30, 2005.

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

Seasonality

The
gaming industry in Connecticut is seasonal in nature, with the heaviest gaming activity often occurring at Mohegan Sun between May and August. Additionally, live harness racing activity at Pocono Downs is seasonal, with the racing season commencing
on March 31st and ending in November. The overall gaming industry in Pennsylvania is also expected to be seasonal in nature. Accordingly, the results of operations for the fiscal year ended September 30, 2007 are not necessarily indicative
of the operating results for interim periods.

Liquidity, Capital Resources and Capital Spending

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



|                                                    |  |                                  |          |   |      |   |          |      |  |   |                 |   |  |                     |         |   |           |   |          |           |  |       |   |  |        |  
|--------------------------------------------------- |  | -------------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | --------------- | - |  | ------------------- | ------- | - | --------- | - | -------- | --------- |  | ----- | - |  | ------ | -
|                                                    |  | Fiscal Years Ended September 30, |         
|                                                    |  |                                  |          |   |      |   |          |      |  |   | Dollar Variance |   |  | Percentage Variance |        
|                                                    |  | 2007                             |          |   | 2006 |   |          | 2005 |  |   | 07 vs. 06       |   |  | 06 vs. 05           |         |   | 07 vs. 06 |   |          | 06 vs. 05 | 
|Net cash provided by operating activities           |  | $                                | 286,089  |   |      | $ | 250,877  |      |  | $ | 247,075         |   |  | $                   | 35,212  |   |           | $ | 3,802    |           |  | 14.0  | % |  | 1.5    | %
|Net cash used in investing activities               |  |                                  | (189,516 | ) |      |   | (100,781 | )    |  |   | (335,178        | ) |  |                     | (88,735 | ) |           |   | 234,397  |           |  | 88.0  | % |  | -69.9  | %
|Net cash provided by (used in) financing activities |  |                                  | (66,223  | ) |      |   | (147,275 | )    |  |   | 99,734          |   |  |                     | 81,052  |   |           |   | (247,009 | )         |  | -55.0 | % |  | -247.7 | %
|                                                    |  |                                  |          |   |      |   |          |      |  |   |                 |   |  |                     |         |   |           |   |          |           |  |       |   |  |        |  
|Net increase in cash and cash equivalents           |  | $                                | 30,350   |   |      | $ | 2,821    |      |  | $ | 11,631          |   |  | $                   | 27,529  |   |           | $ | (8,810   | )         |  | 975.9 | % |  | -75.7  | %
|                                                    |  |                                  |          |   |      |   |          |      |  |   |                 |   |  |                     |         |   |           |   |          |           |  |       |   |  |        |  

As of September 30, 2007 and September 30, 2006 we held cash and cash equivalents of
$105.6 million and $75.2 million, respectively. As a result of the cash-based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and
amortization and relinquishment liability reassessments. The increase in cash provided by operating activities for the fiscal year ended September 30, 2007 is attributable primarily to the increase in operating income after adjustments for
non-cash items and lower working capital requirements as compared to the prior fiscal year.



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Operating activities are a significant source of our cash flows. We use our cash flows provided by
operating activities primarily to meet our working capital requirements, provide funding for our maintenance capital expenditures, reduce our debt, provide distributions to the Tribe, provide payments under the relinquishment agreement and, from
time to time, make investments. While we do not believe that there is any trend or a likely event that would adversely impact the level of our cash flows provided by operating activities, there are numerous potential factors which may cause a
substantial reduction in the amount of such cash flows, including, but not limited to, the following:



| |  |  | increased competition in the gaming industry, including the legalization or expansion of gaming in New England, New York, New Jersey and Pennsylvania (including the
December 2006 approval of two Category Two slot machine facilities, one of which opened in October 2007, in the immediate market of Mohegan Sun at Pocono Downs), which may result in a substantial decrease in revenue;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | downturn in the economy and lack of consumer confidence, which would result in reduced spending on discretionary items such as gaming activities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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

In addition to cash generated by operating activities, we have relied on external sources of liquidity to meet our investing requirements. The increase in cash used in investing activities for the fiscal year ended
September 30, 2007 is attributable primarily to the payment of the one-time slot machine license fee of $50.0 million to the PGCB, as discussed above under Overview-Mohegan Sun at Pocono Downs; a $35.4 million increase in capital
expenditures due to the construction projects described below under Capital Expenditures-Capital Expenditures Incurred; the acquisition of the Menominee Project development rights and other related assets for $6.4 million, as discussed
above under Overview-Other Diversification Projects-Menominee Project; and the acquisition of substantially all of the assets of Pautipaug Country Club Inc. for $4.7 million in total costs, as discussed above under Overview-Other
Diversification Projects-Mohegan Golf LLC. The decrease in cash used in financing activities for the fiscal year ended September 30, 2007 is attributable primarily to a $78.2 million increase in total net borrowings to facilitate the
payment of the $50.0 million slot license fee at Pocono Downs and capital expenditures at Mohegan Sun and Pocono Downs, partially offset by $6.8 million in debt issuance costs paid for the $1.0 billion bank credit facility, discussed below under
External Sources of Liquidity-New Bank Credit Facility.

External Sources of Liquidity

Notes. We financed the purchase of the Pocono Downs entities and much of the costs of
construction of Mohegan Sun and Pocono Downs with the net proceeds raised from the issuance of notes and borrowings under our bank credit facilities. As of September 30, 2007, we had $16.3 million outstanding in 83/8% senior subordinated notes due July 1, 2011 and first callable July 1, 2006, or the 2001 senior
subordinated notes; $250.0 million outstanding in 8% senior subordinated notes due April 1, 2012 and first callable April 1, 2007, or the 2002 senior subordinated notes; $330.0 million outstanding in 63/8% senior subordinated notes due July 15, 2009, or the 2003 senior subordinated notes; $225.0 million
outstanding in 71/8% senior subordinated notes due August 15, 2014 and first callable on August 15,
2009, or the 2004 senior subordinated notes; $250.0 million outstanding in 61/8% senior notes due
February 15, 2013 and first callable February 15, 2009, or the 2005 senior notes; and $150.0 million outstanding in 67/8% senior subordinated notes due February 15, 2015 and first callable February 15, 2010, or the 2005 senior subordinated notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and
MTGA Gaming are guarantors of each of these notes, except for the 2001 senior subordinated notes, which are guaranteed solely by MBC. Refer to Note 9 to our consolidated financial statements in this Form 10-K for a further discussion of these notes.



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In November 2006, Standard and Poors Ratings Services downgraded the credit rating on our 2005
senior notes from BB- to B+ and the credit rating on our senior subordinated notes from B+ to B, primarily to reflect an increase in our projected ratio of debt to earnings related to the additional financings needed to fund Project Horizon at
Mohegan Sun and Project Sunrise at Pocono Downs. In March 2007, Moodys Investors Services downgraded the credit rating on our 2005 senior notes from Baa2 to Baa3 based on similar factors and maintained its rating of Ba2 on our senior
subordinated notes.

Prior Bank Credit Facility.On March 9, 2007, we repaid the entire outstanding $55.0 million of
indebtedness under our then existing $450.0 million bank credit facility and extinguished the facility.

New Bank Credit
Facility.On March 9, 2007, we entered into a new bank credit facility providing for up to $1.0 billion in borrowing capacity from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as
Administrative Agent. The new bank credit facility replaces our prior bank credit facility. The total commitment on the new facility may be increased to $1.25 billion at our option. The five-year senior secured revolving credit facility includes a
$300.0 million term loan conversion provision which is triggered upon the initial accumulation of $300.0 million in total borrowings on the new bank credit facility. The term loan requires principal payments in quarterly installments of $750,000
after the conversion date until the maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. As of September 30, 2007, the amount under letters of credit totaled
$6.8 million, of which no amount was drawn, as discussed below under Letters of Credit. Inclusive of letters of credit, which reduce borrowing availability under the new bank credit facility, we had approximately $960.2 million of
available borrowing under the new bank credit facility as of September 30, 2007, without taking into account covenants under the line of credit as described below.

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



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



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



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

As of September 30, 2007, we and the Tribe were in compliance with all of our and their respective covenant requirements in the new bank credit
facility.

At our option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month,
two-month, three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on our Total Leverage Ratio, as each term is defined in the new bank credit facility, at the



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time each loan is made. We also pay commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the product obtained by
multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is between 0.000% and 1.125%, and the Applicable Rate for Eurodollar rate advances is
between 1.250% and 2.375%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of Americas announced prime rate or the federal funds rate plus 0.50%. Interest on Eurodollar loans is payable
at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears. As of September 30, 2007, we had $33.0 million in Eurodollar rate loans and no base rate loans
outstanding. The Eurodollar rate loans outstanding at September 30, 2007 were comprised of: (1) a $24.0 million loan based on a one-month Eurodollar rate of 5.75% plus an Applicable Rate of 1.25% and (2) a $9.0 million loan based on a
one-month Eurodollar rate of 5.50% plus an Applicable Rate of 1.25%. The Applicable Rate for commitment fees was 0.20% as of September 30, 2007.

The initial advances under the new bank credit facility totaled $62.0 million in base rate advances under the revolving loan. The proceeds from these advances were used to refinance our prior bank credit facility, to
pay costs related to entering into the new bank credit facility and fund certain operating costs.

Line of Credit. We have a $25.0
million revolving loan agreement with Bank of America, or the line of credit. Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of our Leverage Ratio, as each term is
defined in the line of credit. Borrowings under the line of credit are uncollateralized obligations. The line of credit matures on March 31, 2008 and subjects us to certain covenants, including a covenant to maintain at least $25.0 million
available for borrowing under the new bank credit facility. As of September 30, 2007, we had $16.6 million in loans outstanding under the line of credit, which were based on a one-month Eurodollar rate of 5.14% plus an Applicable Margin of
0.90%. As of September 30, 2007 we were in compliance with all covenant requirements in the line of credit and had $8.4 million available for borrowing under the line of credit.

Letters of Credit. As of September 30, 2007, we maintained four uncollateralized letters of credit to satisfy potential workers
compensation liabilities, overdue pari-mutuel wagering tax liabilities of the Pocono Downs entities that may arise, overdue amounts for purses due to horsemen at Pocono Downs that may arise and potential contractor and subcontractor liabilities
relating to the Project Horizon expansion at Mohegan Sun. The letters of credit expire(d) on August 31, 2008, January 25, 2008, November 17, 2007 and September 5, 2008, respectively, subject to renewals. As of
September 30, 2007, no amounts were drawn on the letters of credit.

Salishan Credit Facility.In October 2006,
Salishan-Mohegan entered into a $25.0 million revolving loan agreement with Bank of America, or the Salishan Credit Facility, which matures on September 30, 2009. The revolving loan has no mandatory amortization provisions and is payable in
full at maturity. At the option of Salishan-Mohegan, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month or six-month Eurodollar rate, plus a spread of 1.25% for base rate
loans and 2.25% for Eurodollar loans. The base rate is the higher of Bank of Americas announced prime rate or the federal funds rate plus 0.50%. The Salishan Credit Facility is collateralized by a lien on substantially all of the existing and
future assets of Salishan-Mohegan. The obligations of Salishan-Mohegan under the Salishan Credit Facility are also guaranteed by the Mohegan Tribe. The Salishan Credit Facility subjects Salishan-Mohegan to a number of restrictive covenants,
including financial and non-financial covenants customarily found in loan agreements for similar transactions.

Immediately following the
execution of the loan agreement, $10.0 million in loan proceeds were used by Salishan-Mohegan to provide a partial repayment of its outstanding loan balance with Mohegan Ventures-NW. Another $2.6 million in loan proceeds were used to pay off a
mortgage payable. As of September 30, 2007, Salishan-Mohegan had $7.7 million of available borrowings under the Salishan Credit Facility. As of September 30, 2007, Salishan-Mohegan had $17.3 million in Eurodollar rate loans and no base
rate loans outstanding. The Eurodollar rate loans outstanding at September 30, 2007 were comprised of: (1) a $15.5 million



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loan based on a one-month Eurodollar rate of 5.50% plus an Applicable Rate of 2.25% and (2) $1.8 million in loans based on a one-month Eurodollar rate
of 5.80% plus an Applicable Rate of 2.25%. The Applicable Rate for commitment fees was 0.50% as of September 30, 2007.

Capital Expenditures

Capital Expenditures Incurred

Capital expenditures totaled $162.2 million for the fiscal year ended September 30, 2007, compared to $101.9 million for the fiscal year ended September 30, 2006. These capital expenditures were comprised of
the following:



| |  |  | Capital expenditures at Mohegan Sun totaled $103.7 million and $44.4 million for the fiscal year ended September 30, 2007 and 2006, respectively. For the
fiscal year ended September 30, 2007, these expenditures included $34.0 million in maintenance capital expenditures, $46.5 million in costs related to the Project Horizon expansion and $23.2 million in property renovation expenditures at
Mohegan Sun. For the fiscal year ended September 30, 2006, these expenditures were principally related to the purchase of new carpeting in the Casino of the Earth and Sky, customer relationship management software and related hardware, slot
machine replacements, information systems enhancements and upgrades and for other general maintenance of the Mohegan Sun facility.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital expenditures at Mohegan Sun at Pocono Downs totaled $58.4 million and $44.4 million for the fiscal years ended September 30, 2007 and 2006,
respectively. For the fiscal year ended September 30, 2007, these expenditures were comprised primarily of Pocono Downs construction expenditures of $56.4 million, including $638,000 in capitalized interest. For the fiscal year ended
September 30, 2006, these expenditures were comprised primarily of construction costs for the renovation and expansion of the existing grandstand and infrastructure related improvements for the Phase I facility, including $1.2 million in
capitalized interest.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital expenditures for the Corporate division were minimal for the fiscal year ended September 30, 2007. Capital expenditures for the Corporate division were
$13.1 million for the fiscal year ended September 30, 2006 which represents the purchase of land, excluding prior deposits, intended to be used as the site for a casino to be owned by the Cowlitz Tribe.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Expected Future Capital Expenditures

Capital expenditures for fiscal year 2008 at Mohegan Sun, exclusive of the Project Horizon expansion described above under Overview-Mohegan Sun-Project Horizon, are budgeted to be $62.3 million, which are expected to be
comprised of the following:



| |  |  | Maintenance capital expenditures at Mohegan Sun are anticipated to be approximately $40.1 million for replacement and improvements of information technology
equipment and systems and the addition of slot machines and data warehouse storage.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Property renovation expenditures are expected to be approximately $22.2 million including the replacement of obsolete coin redemption booths in the Casino of the
Sky with slot machines, renovation of the Sky bar on the casino floor and preparation for the connection to the Casino of the Wind.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Total costs for the development of Project Horizon, inclusive of costs incurred to date for Sunrise Square and the Casino of the Wind, currently are estimated to be approximately $925.0 million. Remaining project
costs are estimated to be incurred as follows: fiscal year 2008 $252.0 million, fiscal year 2009 $303.0 million, fiscal year 2010 $294.0 million and fiscal year 2011 $30.0 million, as discussed above under Overview-Mohegan Sun-Project
Horizon.



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Capital expenditures for Mohegan Sun at Pocono Downs are anticipated to be $178.0 million for the 2008
fiscal year, comprised primarily of $175.5 million in construction and furniture, fixtures, and equipment expenditures to complete Project Sunrise. We plan to spend $208.0 million in total on the development of Project Sunrise as discussed above
under Overview-Mohegan Sun at Pocono Downs.

Sources of Funding for Capital Expenditures

We will rely primarily on cash generated from operations to finance maintenance capital expenditures at Mohegan Sun and Pocono Downs. We plan to finance
capital expenditures for Project Horizon at Mohegan Sun and for Project Sunrise at Pocono Downs through the new $1.0 billion revolving bank credit facility from a syndicate of financial institutions and commercial banks. The Authority has commenced
discussions with its lenders regarding modifications to its bank credit facility to address the revisions to Project Horizon and the revised cost projection for Project Sunrise.

Interest Expense

For the fiscal years ended September 30, 2007, 2006 and 2005, we
incurred the following in interest expense, net of capitalized interest (in thousands):



|                                                                          |  |                                         |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------- |  | --------------------------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                          |  | For the Fiscal Years EndedSeptember 30, |       
|                                                                          |  | 2007                                    |        |   | 2006 |   |        | 2005 | 
|Prior bank credit facility                                                |  | $                                       | 2,755  |   |      | $ | 3,463  |      |  | $ | 7,337  |  
|New bank credit facility                                                  |  |                                         | 2,799  |   |      |   |       |      |  |   |       |  
|1999 81/8% senior notes                                                   |  |                                         |       |   |      |   | 284    |      |  |   | 1,219  |  
|2005 61/8% senior notes                                                   |  |                                         | 15,313 |   |      |   | 15,355 |      |  |   | 9,826  |  
|2001 83/8% senior subordinated notes                                      |  |                                         | 1,369  |   |      |   | 1,369  |      |  |   | 1,431  |  
|2002 8% senior subordinated notes                                         |  |                                         | 20,000 |   |      |   | 20,000 |      |  |   | 20,000 |  
|2003 63/8% senior subordinated notes                                      |  |                                         | 21,038 |   |      |   | 21,038 |      |  |   | 20,979 |  
|2004 71/8% senior subordinated notes                                      |  |                                         | 16,031 |   |      |   | 15,987 |      |  |   | 16,031 |  
|2005 67/8% senior subordinated notes                                      |  |                                         | 10,313 |   |      |   | 10,341 |      |  |   | 6,617  |  
|WNBA note                                                                 |  |                                         | 301    |   |      |   | 336    |      |  |   | 271    |  
|Line of credit                                                            |  |                                         | 641    |   |      |   | 515    |      |  |   | 504    |  
|Salishan Credit Facility                                                  |  |                                         | 1,185  |   |      |   |       |      |  |   |       |  
|Amortization of net deferred gain on settlement of derivative instruments |  |                                         | 456    |   |      |   | 444    |      |  |   | 711    |  
|Amortization of debt issuance costs                                       |  |                                         | 3,835  |   |      |   | 2,976  |      |  |   | 3,106  |  
|Capitalized interest                                                      |  |                                         | (1,673 | ) |      |   | (1,180 | )    |  |   | (21    | )
|                                                                          |  |                                         |        |   |      |   |        |      |  |   |        |  
|Total interest expense, net of capitalized interest                       |  | $                                       | 94,363 |   |      | $ | 90,928 |      |  | $ | 88,011 |  
|                                                                          |  |                                         |        |   |      |   |        |      |  |   |        |  

Sufficiency of Resources

We believe that existing cash balances, financing arrangements and operating cash flows will provide us with sufficient resources to meet our existing
debt obligations, relinquishment payments, foreseeable capital expenditure requirements with respect to current operations and distributions to the Tribe for at least the next twelve months. Distributions to the Tribe are anticipated to total
approximately $80.0 million for fiscal year 2008. Any future investments in Mohegan Sun related to Project Horizon and in Pocono Downs related to Project Sunrise are anticipated to be funded through the new bank credit facility, as discussed above
under Sources of Funding for Capital Expenditures. As of September 30, 2007, we had $960.2 million available for borrowing under the new bank credit facility, without taking into account covenants under the line of credit. We have
commenced discussions with our lenders regarding modifications to the new bank credit facility to address the revisions to Project Horizon and the revised cost projection for Project Sunrise.



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Contractual Obligations and Commitments

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



|                                        |  |       |           |                        |   |           |  |           |         |                   |   |         |  |   |        
|--------------------------------------- |  | ----- | --------- | ---------------------- | - | --------- |  | --------- | ------- | ----------------- | - | ------- |  | - | -------
|                                        |  |       |           | Payments due by period
|Contractual Obligations (in thousands)  |  | Total |           | Less than 1 year (1)   |   | 1-3 years |  | 3-5 years |         | More than 5 years
|                                        |  |       |           |                       
|Long-term debt (2)                      |  | $     | 1,292,786 |                        | $ | 17,591    |  | $         | 349,250 |                   | $ | 300,345 |  | $ | 625,600
|Interest payments on long-term debt (3) |  |       | 432,856   |                        |   | 87,513    |  |           | 152,191 |                   |   | 127,652 |  |   | 65,500 
|Construction obligations (4)            |  |       | 95,568    |                        |   | 95,568    |  |           |        |                   |   |        |  |   |       
|Procurement obligations (5)             |  |       | 25,950    |                        |   | 6,760     |  |           | 11,545  |                   |   | 5,945   |  |   | 1,700  
|                                        |  |       |           |                        |   |           |  |           |         |                   |   |         |  |   |        
|Total                                   |  | $     | 1,847,160 |                        | $ | 207,432   |  | $         | 512,986 |                   | $ | 433,942 |  | $ | 692,800
|                                        |  |       |           |                        |   |           |  |           |         |                   |   |         |  |   |        

|(1) | Amounts represent payment obligations from October 1, 2007 to September 30, 2008.
|--- | ---------------------------------------------------------------------------------

|(2) | Long-term debt includes maturities scheduled as of September 30, 2007 for our senior notes and senior subordinated notes, amounts required to be paid pursuant to the new bank
credit facility, and our other debt agreements, including the Salishan Credit Facility, but excludes interest payments. Refer to Note 9 to our consolidated financial statements in this Annual Report on Form 10-K.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes interest payments expected to be paid on long-term debt as of September 30, 2007, pursuant to respective debt agreements. Refer to Note 9 to our consolidated
financial statements in this Annual Report on Form 10-K.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(5) | Procurement obligations represent agreements entered into with vendors for inventory and sundry items.
|--- | ------------------------------------------------------------------------------------------------------

In addition to the contractual obligations described above, we have certain other contractual commitments as of September 30, 2007 that require
payments during the periods described below. The calculation of the estimated payments in the table below are based, in large part, on projections of future revenues over an extended period of time, as well as other factors that are indicated more
fully in the footnotes to the following table. Since there are estimates and judgments used with respect to calculating these liabilities, future events that affect such estimates and judgments may cause the actual payments to differ from the
estimates set forth below. The amounts included in the table are estimates and, while some agreements are perpetual in term, for the purposes of calculating these amounts, we have assumed that the table contains information for only ten years.



|                                                |  |                        |         |           |   |           |  |            |         |  |   |          
|----------------------------------------------- |  | ---------------------- | ------- | --------- | - | --------- |  | ---------- | ------- |  | - | ---------
|                                                |  | Payments due by period
|Contractual Commitments (in thousands)          |  | Less than 1 year (1)   |         | 1-3 years |   | 3-5 years |  | 5-10 years
|                                                |  |                        |        
|Minimum Slot Win Contributions (2)              |  | $                      | 226,648 |           | $ | 468,816   |  | $          | 550,472 |  | $ | 1,533,050
|Relinquishment commitments (3)                  |  |                        | 78,034  |           |   | 149,044   |  |            | 168,725 |  |   | 203,197  
|Priority distributions (4)                      |  |                        | 17,488  |           |   | 36,686    |  |            | 39,091  |  |   | 109,311  
|Town of Montville commitment (5)                |  |                        | 500     |           |   | 1,000     |  |            | 1,000   |  |   | 2,500    
|Host municipalities local share assessment (6) |  |                        | 10,000  |           |   | 20,000    |  |            | 20,000  |  |   | 50,000   
|Property tax litigation payments (7)            |  |                        | 1,556   |           |   | 3,926     |  |            | 4,646   |  |   | 8,066    
|                                                |  |                        |         |           |   |           |  |            |         |  |   |          
|Total                                           |  | $                      | 334,226 |           | $ | 679,472   |  | $          | 783,934 |  | $ | 1,906,124
|                                                |  |                        |         |           |   |           |  |            |         |  |   |          

---

|(1) | Amounts represent payment commitments from October 1, 2007 to September 30, 2008.
|--- | ---------------------------------------------------------------------------------

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

|(3) | Relinquishment payments are made by us to TCA under a relinquishment agreement. Relinquishment payments are five percent of revenues, as defined in the relinquishment agreement.
Refer to Note 14 to our consolidated financial statements in this Annual Report on Form 10-K.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(4) | Priority distributions are monthly payments required to be made by us to the Tribe pursuant to the priority distribution agreement. Refer to Note 13 to our consolidated financial
statements in this Annual Report on Form 10-K. The payments are calculated based on net cash flows and are limited to a maximum amount of $14.0 million pursuant to the priority distribution agreement, as adjusted annually based on the Consumer Price
Index, or CPI. For the purposes of calculating these amounts, we have assumed that we will pay the maximum amount in each of the years covered by the table, as adjusted by an annual CPI adjustment of 3.23%.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(6) | Pursuant to the Race Horse Development and Gaming Act of 2004, Downs Racing, L.P. must pay, on an annual basis, to the PGCB amounts necessary to ensure the hosting municipalities of
Mohegan Sun at Pocono Downs will receive an annual minimum of $10.0 million from the local share assessment included in the daily slot machine tax assessment payments to the PGCB. Refer to Note 13 to our consolidated financial statements in this
Annual Report on Form 10-K.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Pursuant to the Pennsylvania Property Tax Litigation settlement, Downs Racing, L.P. will continue to make agreed upon annual payments with the Wilkes-Barre Area School District for
each tax year through 2015. Refer to Note 13 to our consolidated financial statements in this Annual Report on Form 10-K.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical
Accounting Policies and Estimates

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

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

Revenue Recognition

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

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our patrons to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by
continually evaluating individual patron receivables, considering the patrons financial condition, credit history and current economic conditions. If the financial condition of patrons were to deteriorate, resulting in an impairment of their
ability to make payments, additional allowances may be required.

We also maintain allowances for doubtful accounts for reimbursable costs
and expenses incurred by Salishan-Mohegan and WTG for the development of casinos in Clark County, Washington and Kenosha, Wisconsin, respectively, to be owned by the Cowlitz Tribe and Menominee Tribe, respectively. Due to the



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inherent uncertainty in the development of these casino projects, the reserve for these receivables is based on our estimate of the probability that the
receivables will be collected. Future complications in the receipt of financing, the relevant land being taken into trust or other matters affecting the development of the casinos could affect the collectibility of the receivables.

Unredeemed Players Club Points

We maintain an accrual for unredeemed Players Club points, as more fully described above under Explanation of Key Financial Statement CaptionsPromotional Allowances. The accrual is based on the estimated cost of the
points expected to be redeemed as of the respective balance sheet date. Management determines the adequacy of this accrual by periodically evaluating the historical redemption experience and projected trends related to this accrual.

Self-insurance Accruals

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

Relinquishment Liability

In accordance with SFAS 5, we have recorded a relinquishment liability of the estimated present value of our obligations under the relinquishment
agreement. We reassess the relinquishment liability (i) annually in conjunction with our budgeting process or (ii) when necessary to account for material increases or decreases in projected revenues over the relinquishment period. If the
reassessment causes an overall increase to the projected revenues over the relinquishment period, the relinquishment liability will be increased by five percent of such increase in revenues, discounted at our risk-free rate of investment (an
incremental layer). If the reassessment causes an overall decrease to the projected revenues over the relinquishment period, the relinquishment liability will be decreased by five percent of such decrease in revenues, discounted based upon a
weighted-average discount rate (a decremental layer). The weighted-average discount rate is defined as the average discount rate used to discount all the previous incremental layers weighted by the amount of each such incremental layer. Further, we
record a quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimates and judgments used with respect to calculating this liability, future events that affect such
estimates and judgments may cause the actual liability to differ significantly from the estimate.

Property and Equipment

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



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



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

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

Goodwill

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the goodwill associated with the acquisition of the Pocono Downs entities is not subject to amortization but is tested at least
annually for impairment by comparing the fair value of the recorded assets to their carrying amount. If the carrying amount of the goodwill exceeds its fair value, an impairment loss will be recognized immediately.

Intangible Assets

Our
trademark for Mohegan Sun is no longer subject to amortization as it has been deemed to have an indefinite useful life. The trademark is evaluated periodically for impairment by applying a fair-value based test and, if impairment occurs, the amount
of impaired trademark will be written off immediately. The intangible assets associated with the acquisitions of the Pocono Downs entities, the WNBA franchise, the Menominee Project development rights and the assets of Pautipaug Country Club Inc.
are also assessed periodically for impairment pursuant to appropriate accounting standards.

Litigation

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

As the successor owner of Downs Racing, we were involved in a dispute with the Wilkes-Barre Area School District, which had filed an appeal in November
2001 against Downs Racings predecessor company, Pocono Downs, Inc., and the Luzerne County Board of Assessment Appeals relating to certain property tax assessments. The school district challenged the certified assessment for the tax year 2002,
and sought an increase to the assessed value of that property for 2002 and subsequent tax years, including additional assessments for tax year 2007. A final settlement of the dispute was reached in June 2007 between the various parties in the
litigation and the settlement was subsequently approved by the Luzerne County Court. Based on the settlement, our liability for this litigation covering tax periods through June 30, 2007 was approximately $3.5 million, which is recorded in our
income from operations for the fiscal year ended September 30, 2007. We will continue to make agreed upon payments with the Wilkes-Barre Area School District for each tax year through 2015. The total amount of these payments is $18.2 million.

Impact of Inflation

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



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New Accounting Pronouncements

In September 2006, the FASB issued SFAS 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurements. This standard does not require any new fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. However, the FASB did provide a one year deferral for the implementation of FAS 157 for other nonfinancial assets and liabilities. We do not believe the adoption of this standard will have a material impact
on our financial position, results of operations or cash flows.

In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108 (SAB 108), which provides guidance on the consideration of the effects of prior year financial statement misstatements in quantifying current year financial statement misstatements for the purpose of a
materiality assessment. SAB 108 is effective for annual financial statements issued for fiscal years ending after November 15, 2006. We do not believe the application of this guidance will have a material impact on our financial position,
results of operations or cash flows.

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

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

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss
arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our new bank credit facility in which
interest will accrue on the basis of a base rate formula or a Eurodollar-based formula, plus Applicable Rates, as defined in the new bank credit facility. As of September 30, 2007, we had $33.0 million drawn on the new bank credit facility. See
Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsExternal Sources of Liquidity for further information relating to the terms and conditions of the new bank credit facility.

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



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The following table provides information as of September 30, 2007 about our current financial
instruments (debt obligations) that are sensitive to changes in interest rates. The table presents principal payments and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied
forward rates in respective yield curves, which should not be considered to be precise indicators of actual future interest rates. Fair values for variable-rate debt instruments are considered to approximate their carrying amounts and fair values
for fixed-rate debt instruments, which are publicly traded, are based on quoted market prices as of September 30, 2007.



|                                            |  |                        |        |   |      |   |         |      |  |   |       |   |  |      |        |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------- | ---- |  | - | ----- | - |  | ---- | ------ | - | ---------- | - | ------- | ----- |  | - | ---------- | - |  | - | --------- | - |  | - | ---------
|                                            |  | Expected Maturity Date |        |   |      |   |         |     
|                                            |  | 2008                   |        |   | 2009 |   |         | 2010 |  |   | 2011  |   |  | 2012 |        |   | Thereafter |   |         | Total |  |   | Fair Value
|Liabilities                                 |  |                        |        |   |      |   |         |      |  |   |       |   |  |      |        |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|Long-Term Debt (including current portion): |  |                        |        |   |      |   |         |      |  |   |       |   |  |      |        |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|Fixed Rate                                  |  | $                      |       |   |      | $ | 330,000 |      |  | $ |      |   |  | $    | 16,345 |   |            | $ | 250,000 |       |  | $ | 625,000    |   |  | $ | 1,221,345 |   |  | $ | 1,208,891
|Average interest rate                       |  |                        |       |   |      |   | 6.4     | %    |  |   |      |   |  |      | 8.4    | % |            |   | 8.0     | %     |  |   | 6.7        | % |  |   | 6.9       | % |  |   |          
|Variable Rate                               |  | $                      | 17,591 |   |      | $ | 18,250  |      |  | $ | 1,000 |   |  | $    | 1,000  |   |            | $ | 33,000  |       |  | $ | 600        |   |  | $ | 71,441    |   |  | $ | 71,441   
|Average interest rate                       |  |                        | 6.1    | % |      |   | 6.6     | %    |  |   | 5.8   | % |  |      | 6.1    | % |            |   | 5.8     | %     |  |   |           |   |  |   | 6.0       | % |  |   |          

Item 8. Financial Statements and Supplementary Data

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

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

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with, or
furnished to the SEC, pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is
accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of disclosure controls and
procedures in Rule 13a-15(e) and 15d-15(e) of the Exchange Act.

As of September 30, 2007, we carried out an evaluation, under
the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of disclosure controls and procedures. Based on the foregoing
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in
Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during our fourth fiscal
quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.



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PART III

Item 10. Directors, Executive Officers and Corporate Governance

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

Management Board and Executive Officers

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



|                          |  |     |  |                                                                   
|------------------------- |  | --- |  | ------------------------------------------------------------------
|Name                      |  | Age |  | Position                                                          
|Bruce S. Bozsum           |  | 47  |  | Chairman and Member, Management Board                             
|Marilynn R. Malerba       |  | 54  |  | Vice Chairwoman and Member, Management Board                      
|Allison D. Johnson        |  | 37  |  | Recording Secretary and Member, Management Board (1)              
|Ralph James Gessner, Jr.  |  | 38  |  | Corresponding Secretary and Member, Management Board (1)          
|William Quidgeon, Jr.     |  | 45  |  | Treasurer and Member, Management Board (1)                        
|Mark F. Brown             |  | 50  |  | Member, Management Board (1)                                      
|Mark W. Hamilton          |  | 54  |  | Member, Management Board (1)                                      
|Cheryl A. Todd.           |  | 47  |  | Member, Management Board                                          
|Thayne D. Hutchins, Jr.   |  | 36  |  | Member, Management Board                                          
|Mitchell Grossinger Etess |  | 49  |  | Chief Executive Officer, Mohegan Tribal Gaming Authority          
|Jeffrey E. Hartmann       |  | 45  |  | Chief Operating Officer, Mohegan Tribal Gaming Authority          
|Leo M. Chupaska           |  | 59  |  | Chief Financial Officer, Mohegan Tribal Gaming Authority          
|Robert J. Soper           |  | 35  |  | President and Chief Executive Officer of the Pocono Downs entities

---

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

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

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



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

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

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

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

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

Mark W. HamiltonMr. Hamilton served
as Mohegan Suns General Counsel/Vice President for nine years prior to being seated on the Tribal Council and the Management Board in October 2005. As General Counsel, he was responsible for reviewing and approving contractual agreements,
establishing guidelines and procedures for legal issues related to operations, patrons, vendors and regulating agencies, overseeing the legal staff and budget preparation. Prior to his employment with Mohegan Sun, Mr. Hamilton worked as an
attorney in a private practice.

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

Thayne D. Hutchins, Jr.Mr. Hutchins was first seated on the Tribal Council and the Management Board in October 2007, after serving as a
staff accountant in the finance department of the Tribe for six years. His position enabled him to employ his business skills in a variety of responsibilities, including the analysis and monitoring of the Tribes wide-ranging financial
concerns. Mr. Hutchins graduated Magna Cum Laude from Eastern Connecticut State University holding a B.A. in Economics with a concentration in accounting.



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Mitchell Grossinger EtessMr. Etess assumed the role of Chief Executive Officer of the
Authority in May 2006, while continuing in his current role as President and Chief Executive Officer of Mohegan Sun. Mr. Etess has served as the President and Chief Executive Officer of Mohegan Sun since August 2004. Prior to that,
Mr. Etess served as Executive Vice President of Marketing of the Authority. Mr. Etess served as the Authoritys Executive Vice President of Marketing from October 1999 to August 2004 and served as its Senior Vice President of
Marketing from November 1995 to October 1999. Prior to his employment with Mohegan Sun, Mr. Etess was Vice President of Marketing at Players Island and, from 1989 to 1994, was Senior Vice President of Marketing and Hotel Operations at Trump
Plaza Hotel and Casino. Prior thereto, Mr. Etess held various management positions in the hospitality and advertising industries.

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

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

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

Audit Committee

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

Code of Ethics

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



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

Item 11. Executive Compensation

Compensation Discussion and Analysis

Executive Compensation Objectives

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

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

Role of the Compensation Committee and Senior Management

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

Elements of
Compensation

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

During fiscal year 2006, a thorough review of the Authoritys executive compensation program was undertaken with the assistance of Mercer Human
Resources Consulting, a nationally recognized compensation consulting firm. Based on the Mercer study, Mr. Etess, along with the Senior VP/Administration and VP/Human Resources of Mohegan Sun, designed a new cash-based annual incentive
compensation program, titled the Mohegan Sun Executive Compensation Performance Reward Program, or PRP. Additional information about the PRP, and each other element of compensation offered to our NEOs in 2007, is set forth below.



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Annual Compensation

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

Base Salaries

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

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

With these factors in mind, during 2006, we entered into employment agreements that, among other things, established minimum base salary levels for
Messrs. Etess, Hartmann, Chupaska and Patrone. These base salaries were the result of negotiations with each executive and reflected our need to compete for management talent in a competitive environment. Our fifth NEO, Mr. Soper, received a
substantial raise established in negotiations with our then-CEO in 2005 in connection with Mr. Sopers assumption of his duties at Pocono Downs; the Management Board and Mr. Soper are in the process of finalizing the terms of a new
employment agreement that is expected to include a minimum base salary provision. The agreements with our top three executives, Messrs. Etess, Hartmann and Chupaska, provide for annual increases, effective on January 1 of each year, of not less
than 5% of the executives prior base salary.

Employee Benefits

The NEOs receive certain employee benefits. For fiscal 2007, these benefits included health insurance, dental and vision coverage, prescription drug
plans, flexible spending accounts, long-term disability and the opportunity to participate in the Tribes deferred compensation, retirement and 401(k) plans. In addition, we offer our NEOs perquisites that consist of our payment of premiums on
life insurance policies for which the NEO is the owner, employer contributions and our other contributions on the NEOs behalf to the Tribes retirement and 401(k) plan, our payment of premiums for supplemental long-term disability
policies and complementary tickets to events and performances held at Mohegan Sun Arena as selected by each NEO.

Incentive Compensation

In fiscal 2007, the Authority offered its NEOs the opportunity to earn incentive compensation in the form of cash bonuses and, except
for Mr. Soper, payouts under the PRP, as described below. The bonus awarded to Mr. Soper for fiscal 2007 was determined by Mr. Etess based on his assessment of the role played by Mr. Soper in the financial performance of Mohegan
Sun at Pocono Downs, described in greater detail under Item 7 of this Form 10-K, and approved by the Management Board.

Mohegan Sun Executive Compensation Performance Reward Program

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



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

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

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



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



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



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

The Performance Reward Program established three levels of awards, two of which impact NEO
compensation:



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



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

Both the Chief Executive Officer and Senior Executive levels were established with an at risk bonus amount of 60% of base salary so as to
afford the executives at these levels total compensation potential at a



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level equal to 90% of the 50th percentile of total direct compensation paid by comparator companies to executives in similar positions, according to the
Mercer market data.

The PRP is intended to compensate executives based on their performance over four primary measurement areas during
each fiscal year. The measurement areas are derived from the guiding principles of the organization since Mohegan Suns establishment in 1996. The financial area, which for the 2007 fiscal year measured the Adjusted EBITDA of Mohegan Sun in
relation to a target established prior to the beginning of the fiscal year as part of the Authoritys budgeting process, will account for 50% of the at risk pool. For this purpose, Adjusted EBITDA or earnings before
interest, income taxes, depreciation and amortization, pre-opening costs and expenses, reassessment and accretion of discount to the relinquishment liability to Trading Cove Associates pursuant to a relinquishment agreement, write-off of debt
issuance costs, income (loss) from discontinued operations and other non-operating income and expense. Adjusted EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States of
America, or GAAP. The Authority historically has evaluated its operating performance with the non-GAAP measure, Adjusted EBITDA. Although EBITDA it is not a measure of performance calculated in accordance with generally accepted accounting
principals, it is the most important metric we use in evaluating our financial performance.

Going forward, the actual targets used, and
the extent of the at risk pool each of the areas comprises, will be determined following the annual strategic planning process in the discretion of Mr. Etess in conjunction with the Senior VP/Administration, Senior VP/Finance and
CFO and VP/Human Resources of Mohegan Sun. This process is being devised for the PRP in the 2008 fiscal year.

Compensation Committee
Report

The MTGA Management Board, made up of the nine member Mohegan Tribal Council, serves as the Compensation Committee of the
Mohegan Tribal Gaming Authority. The Management Board met with management to review and discuss the preceding Compensation Discussion and Analysis. Based on such review and discussion, the Management Board approved that this Compensation Discussion
and Analysis be included in the Authoritys Form 10-K for its 2007 fiscal year.

Management Board

Bruce S. Bozsum

Marilynn R. Malerba

Allison D. Johnson

Ralph
James Gessner, Jr.

William Quidgeon, Jr.

Mark F. Brown

Mark W. Hamilton

Cheryl A. Todd

Thayne D. Hutchins, Jr.



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Summary Compensation Table



|                                                                   |  |            |  |          |  |                                          |  |                          |     |  |          
|------------------------------------------------------------------ |  | ---------- |  | -------- |  | ---------------------------------------- |  | ------------------------ | --- |  | ---------
|Name and Principal Position                                        |  | Salary ($) |  | Bonus($) |  | Non-EquityIncentive PlanCompensation ($) |  | All OtherCompensation($) |     |  | Total ($)
|Mitchell Grossinger Etess                                          |  | 1,119,000  |  | 373,000  |  | 165,000                                  |  | 58,000                   | (1) |  | 1,715,000
|Chief Executive Officer, Mohegan Tribal Gaming Authority           |  |            |  |          |  |                                          |  |                          |     |  |          
|Jeffrey E. Hartmann                                                |  | 1,029,000  |  | 343,000  |  | 165,000                                  |  | 48,000                   | (2) |  | 1,585,000
|Chief Operating Officer, Mohegan Tribal Gaming Authority           |  |            |  |          |  |                                          |  |                          |     |  |          
|Leo M. Chupaska                                                    |  | 613,000    |  | 204,000  |  | 86,000                                   |  | 30,000                   | (3) |  | 933,000  
|Chief Financial Officer, Mohegan Tribal Gaming Authority           |  |            |  |          |  |                                          |  |                          |     |  |          
|Anthony Patrone                                                    |  | 333,000    |  |         |  | 144,000                                  |  | 11,000                   | (4) |  | 488,000  
|Senior Vice President of Marketing, Mohegan Sun                    |  |            |  |          |  |                                          |  |                          |     |  |          
|Robert J. Soper                                                    |  | 347,000    |  |         |  | 161,000                                  |  | 7,000                    | (5) |  | 515,000  
|President and Chief Executive Officer, Mohegan Sun at Pocono Downs |  |            |  |          |  |                                          |  |                          |     |  |          

---

|(1) | Consists of: (a) $30,035 in premium payments on a life insurance policy for which Mr. Etess is the owner; (b) $13,780 in reimbursements for the payment of income
taxes pertaining to certain life insurance benefits; (c) $6,890 in premium payments on a long-term disability policy; (d) $6,750 in employer 401(k) matching contributions; and (e) $624 in employer retirement contributions.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Consists of: (a) $24,299 in premium payments on a life insurance policy for which Mr. Hartmann is the owner; (b) $11,178 in reimbursements for the payment of income
taxes pertaining to certain life insurance benefits; (c) $6,750 in employer 401(k) matching contributions; (d) $5,352 in premium payments on a long-term disability policy; and (e) $624 in employer retirement contributions.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Consists of: (a) $20,063 in premium payments on a long-term disability policy; (b) $2,086 in premium payments on a life insurance policy for which Mr. Chupaska is the
owner; (c) $6,750 in employer 401(k) matching contributions; (d) $957 in reimbursements for the payment of income taxes pertaining to certain life insurance benefits; and (e) $624 in employer retirement contributions.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Consists of: $8,861 in employer 401(k) matching contributions; (d) $1,823 in premium payments on a long-term disability policy; and (c) $624 in employer retirement
contributions.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Consist of: $6,750 in employer 401(k) matching contributions.
|--- | -------------------------------------------------------------

Grants of Plan-Based Awards



|                          |  |            |  |                                                                   
|------------------------- |  | ---------- |  | ------------------------------------------------------------------
|Name                      |  | Grant Date |  | Estimated Future PayoutsUnder-Non Equity
PlanAwards (1) Target ($)
|                          | 
|Mitchell Grossinger Etess |  | 4/21/2007  |  | 299,000                                                           
|Jeffrey E. Hartmann       |  | 4/21/2007  |  | 275,000                                                           
|Leo M. Chupaska           |  | 4/21/2007  |  | 164,000                                                           
|Anthony Patrone           |  | 4/21/2007  |  | 198,000                                                           
|Robert J. Soper           |  |           |  |                                                                  

---

|(1) | The amounts shown in the table above are attributable to the participation of the NEOs, other than Mr. Soper, in the PRP. Target level payouts assume the
Authority had achieved 100% of each performance target for fiscal 2007. The target amounts for Messrs. Etess, Hartmann and Chupaska were reduced from 60% of base salary to 26.7% of base salary by virtue of contractual provisions entitling them to
receive
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 33.3% of base salary annually. See the Narrative disclosure below for a more thorough explanation of the 2007 PRP targets and payouts awarded to
each NEO. Threshold and Maximum columns have not been presented in this table because Mr. Etess possesses discretion under the PRP to make awards even if none of the targets are achieved. Similarly, maximum level payouts
cannot be determined. Under the PRP for fiscal 2007, in the event the Authority were to have exceeded its Adjusted EBITDA target, 20% of the dollar amount by which such target was exceeded would have been added to the overall pool established for
the PRP, and each NEO would have been eligible to receive a portion of the added amount as determined by Mr. Etess in his discretion.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

The following table
shows the criteria and weightings set for the NEOs under the PRP for fiscal 2007:



|                                                              |  |                                                                                                                                                                                  |  |                                                                                                                                                                                                                    |  |                            
|------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------
|Measurement Area                                              |  | Why We Used This Area                                                                                                                                                            |  | 2007 Goal(s)                                                                                                                                                                                                       |  | Percentage ofAt Risk Pool
|Bottom-line Financial Performance PerspectiveAdjusted EBITDA |  | Mohegan Suns Adjusted EBITDA is the single most important measure of our financial performance.                                                                                 |  | $391.3 million of Adjusted EBITDA, with no awards payable under this area if recorded Adjusted EBITDA did not meet or exceed 95% of this amount.                                                                   |  | 50                         
|Customer Relations Perspective                                |  | Our ability to deliver superior customer service and ensure future patronage directly affects results.                                                                           |  | Maintain or exceed our historical trend of receiving greater than 40-45% excellent ratings for customer service in surveys returned to Sterling, a third party marketing firm, by
former patrons of Mohegan Sun. |  | 10                         
|Internal Business Perspectives                                |  | It required management to undertake organizational and operational development initiatives, with a focus on internal processes that relate directly to strategic business
plans. |  | 1.      Completion of comprehensive FY2008 business plan for Mohegan Sun                                                                                                                                           |  | 15                         
|                                                              |  | 2.      Achieve a 50% reduction in internal audit repetitive findings                                                                                                            |  | 10                                                                                                                                                                                                                
|Learning and Growth Perspective                               |  | It encouraged management to enhance their leadership abilities and attain personal and career development goals through further executive education programs.                    |  | 1.      Completion of individually designed leadership programs                                                                                                                                                    |  | 10                         
|                                                              |  | 2.      Attendance at leadership development programs selected by each executive                                                                                                 |  | 5                                                                                                                                                                                                                 



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The actual payouts for the 2007 fiscal year, shown in the Summary Compensation Table, reflected that the
Authority achieved approximately 95.3% of the Adjusted EBITDA target and that all other components measured by the PRP were fully satisfied by each participating executive officer. Mr. Etess, in conjunction with the Authoritys Senior
VP/Administration and VP/Human Resources, reviewed these financial and other results and exercised his discretion to reduce the payouts under the PRP to approximately 65% of the initial targeted amounts, in the case of Messrs. Etess, Hartmann and
Chupaska, and 70%, in the case of Mr. Patrone. The Management Board approved these payments.

Nonqualified Deferred Compensation

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



|                          |  |                                              |  |                                               |  |                                          |  |                                       |  |                                            
|------------------------- |  | -------------------------------------------- |  | --------------------------------------------- |  | ---------------------------------------- |  | ------------------------------------- |  | -------------------------------------------
|Name                      |  | ExecutiveContributions inLast Fiscal Year($) |  | RegistrantContributions inLast Fiscal Year($) |  | Aggregate Earningsin Last Fiscal Year($) |  | AggregateWithdrawals/Distributions($) |  | Aggregate Balance atLast Fiscal Year End($)
|Mitchell Grossinger Etess |  | 513,349                                      |  |                                              |  | 330,462                                  |  |                                      |  | 2,479,786                                  
|Jeffrey E. Hartmann       |  | 670,353                                      |  |                                              |  | 589,115                                  |  |                                      |  | 3,573,478                                  
|Leo M. Chupaska           |  | 65,154                                       |  |                                              |  | 166,679                                  |  |                                      |  | 1,621,744                                  
|Robert J. Soper           |  | 1,608                                        |  |                                              |  | 4,341                                    |  |                                      |  | 35,646                                     
|Anthony Patrone           |  |                                             |  |                                              |  |                                         |  |                                      |  |                                           

The named executive officers may elect to defer all or a portion of their compensation under the
DCP. The amounts deferred by each named executive officer will be deemed invested in the fund or funds designated by such named executive officer from among a number of funds offered under the DCP. Officers may change their deemed investments from
time to time. For fiscal 2007, the following twenty-three funds were available for investment under the DCP:

Fund Name

Merrill Lynch Institutional

Davis New York Venture Y

Oppenheimer Small & Mid Cap Value Y

American Funds  Growth
Fund of America R5

Oakmark International I

Eaton Vance
Dividend Builder A

Janus Advisor Forty A

PIMCO Total Return
Instl

BlackRock Healthcare I

BlackRock Global Allocation I

Lazard Emerging Markets Open

BlackRock Eurofund I

Hotchkis & Wiley Large Cap Value I

Seligman
Communications & Information I

DWS RREEF Real Estate Sec A

BlackRock S&P 500 Index I

Neuberger Berman Partners Trust

Franklin Small-Mid Cap Growth Advisor

John Hancock High Yield Bond A

Allianz OCC Renaissance Admin



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PIMCO Real Return Instl

Fidelity Advisor Small Cap A

MainStay Small Cap Opportunity I

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

Potential Payments and Benefits upon Termination or Change in Control

The table below reflects potential payments to
our named executive officers in the event of a termination of employment based on the terms of employment agreements in as described above. The amounts shown represent our reasonable estimates of the amounts which would be paid to the named
executive officers upon their termination, assuming in each case that the termination occurred on September 30, 2007, the last business day of our last fiscal year. The actual amounts to be paid can only be determined at the time of the
named executive officers separation from the Authority. Due to the sovereignty of the Authority, potential payments upon change in control is not included within the table below as it is not applicable.



|                                          |  |            |  |                 |  |                                    |  |                       |  |                       |  |          
|----------------------------------------- |  | ---------- |  | --------------- |  | ---------------------------------- |  | --------------------- |  | --------------------- |  | ---------
|                                          |  | Salary ($) |  | Target Bonus($) |  | Continuation ofMedical Benefits($) |  | PenaltyPayment (2)($) |  | RelocationExpenses($) |  | Total ($)
|Mitchell Grossinger Etess                 |  |            |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 5,343,931  |  | 1,781,309       |  | 13,522                             |  | 459,220               |  |                      |  | 7,597,982
|Termination due to medical disability (1) |  | 573,488    |  |                |  | 1,219,378                          |  |                      |  |                      |  | 1,792,865
|Jeffrey E. Hartmann                       |  |            |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 4,914,125  |  | 1,638,040       |  | 13,522                             |  | 500,000               |  |                      |  | 7,065,687
|Termination due to medical disability (1) |  | 527,363    |  |                |  | 1,121,305                          |  |                      |  |                      |  | 1,648,667
|                                          |  |           |  |                 |  |                                    |  |                       |  |                       |  |          
|LeoM. Chupaska                            |  |            |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 796,900    |  | 265,633         |  | 9,416                              |  |                      |  |                      |  | 1,071,949
|Termination due to medical disability (1) |  | 314,163    |  |                |  | 241,369                            |  |                       |  |                       |  | 555,532  
|Anthony Patrone                           |  |            |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 332,747    |  |                |  |                                   |  |                      |  | 25,000                |  | 357,747  
|Robert J. Soper                           |  |            |  |                 |  |                                    |  |                       |  |                       |  |          
|Termination without cause                 |  | 330,000    |  |                |  |                                   |  |                      |  | 25,000                |  | 355,000  

---

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

|(2) | For termination without cause, pursuant to the agreement, and if the Executive agrees to the early withdraw of his deferred compensation balance, at which time the Authority shall
pay the penalty for early withdrawal, including the necessary gross up for income taxes. The above payment is assuming the Executive withdraws his deferred compensation on or before December 31, 2007, in which case the Authority will pay the
lesser of the actual penalty or $500,000.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

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

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

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



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Compensation of the Management Board

The following table provides compensation information for fiscal year 2007 for each member of our Management Board. For additional information about the
compensation paid to Roland Harris, who served as a member of the Management Board from October 1, 2006 until resigning that position to accept a position as Senior Vice President of Project Management at the Authority, please see
Compensation Committee Interlocks and Insider Participation below.



|                             |  |                |  |                              |  |          
|---------------------------- |  | -------------- |  | ---------------------------- |  | ---------
|Name                         |  | Fees Earned($) |  | All OtherCompensation (1)($) |  | Total ($)
|Bruce S. Bozsum*             |  | 180,107        |  | 280                          |  | 180,387  
|Marilynn R. Malerba*         |  | 163,734        |  | 254                          |  | 163,988  
|Allison D. Johnson*          |  | 130,987        |  | 203                          |  | 131,190  
|Ralph James Gessner, Jr.*    |  | 130,987        |  | 203                          |  | 131,190  
|William Quidgeon, Jr.*       |  | 130,987        |  | 203                          |  | 131,190  
|Roberta J. Harris-Payne (2)  |  | 130,987        |  | 203                          |  | 131,190  
|Mark F. Brown*               |  | 177,176        |  | 509                          |  | 177,685  
|Mark W. Hamilton*            |  | 130,987        |  | 203                          |  | 131,190  
|Cheryl A. Todd (3)*          |  | 73,050         |  | 117                          |  | 73,167   
|Thayne D. Hutchins, Jr. (4)* |  |               |  |                             |  |         
|Roland J. Harris (5)         |  | 37,345         |  | 2,403                        |  | 39,748   

---

|* | Represents current Management Board members.
|- | --------------------------------------------

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

|(2) | Term expired effective October 1, 2007.
|--- | ---------------------------------------

|(3) | Succeeded Mr. Harris effective March 5, 2007.
|--- | ---------------------------------------------

|(4) | Succeeded Mrs. Harris-Payne effective October 1, 2007.
|--- | ------------------------------------------------------

|(5) | Resigned from his position on the Board effective March 5, 2007.
|--- | ----------------------------------------------------------------

Members of the Management Board are paid annual salaries by the Tribe for their services as members of the Tribal Council. Because of the dual role played by these individuals in the governance of the Authority as
well as the Tribe itself, under the terms of an arrangement established at the time Mohegan Sun opened, the Authority is allocated the responsibility to fund a portion of the compensation paid to them. For fiscal 2007, the Authority was allocated
60% of these payment obligations, based on consideration of the amount of time that the Tribal Council functions in its capacity as the Management Board as opposed to its capacity as the Tribal Council, including participation in weekly Board
meetings (and related preparation), weekly breakfast meetings with the MTGA executive team, bi-weekly executive committee meetings and, since October 2006, bi-weekly meetings relating to Project Horizon. In addition, certain members of the Tribal
Council participate at the monthly board meetings relating to our diversification efforts involving gaming opportunities being undertaken by the Menominee and Cowlitz Tribes, travel with MTGA management to look at new opportunities, including
potential opportunities in New York and Kansas as described elsewhere in this Form 10-K, and make periodic trips to Mohegan Sun at Pocono Downs. Because we believe that the 2008 activities of the Council will be consistent with their 2007
activities, we expect the Authority also will fund 60% of the compensation of these individuals for fiscal 2008.

Compensation
Committee Interlocks and Insider Participation

As noted above, the entire Management Board serves as the compensation committee of
the Authority. Effective March 5, 2007, Roland J. Harris resigned from his position in the Tribal Council, and therefore the Management Board, to accept a position as Senior Vice President of Project Management at the Authority. During the 2007
fiscal year, Mr. Harris was paid $306,286 in base salary and incentive compensation for his service as an officer of the Authority. Mr. Harris subsequently resigned from this position in December 2007.

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

We have no outstanding equity securities.



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

Procedure For Review Of
Related Party Transactions

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

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

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

On August 4, 2006, we purchased a 5.0% membership interest in Salishan-Mohegan from
Mohegan Ventures-NW and sold such 5.0% interest to the Tribe for approximately $351,000, reflecting the carrying value of such interest. On October 17, 2006, a 2.85% membership interest in Salishan-Mohegan was transferred from Salishan Company
to the Tribe, in exchange for the Tribes guarantee of the Salishan Credit Facility. The amount of the membership interest transferred was approximately $197,000, reflecting the carrying value of the 2.85% interest. Subsequent to this
transaction, Mohegan Ventures-NW holds a 49.15% membership interest, the Tribe holds a 7.85% membership interest and Salishan Company holds a 43.0% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Tribe continue to each hold one
of four seats on the Board of Managers of Salishan-Mohegan. Refer to Item 7. Managements Discussion and Analysis of Financial Condition and Results of OperationOverviewOther Diversification ProjectsCowlitz Project
for a further description of this transaction and other transactions with Salishan-Mohegan.

Services Provided by the Tribe to the
Authority

The Tribe provides governmental and certain administrative and miscellaneous services to us in conjunction with the
operation of Mohegan Sun. During the fiscal years ended September 30, 2007, 2006 and 2005, we incurred $21.8 million, $19.8 million and $17.9 million, respectively, of expenses for such services.

We purchase the majority of our utilities, including electricity, gas, water and waste water services, from an instrumentality of the Tribe, the Mohegan
Tribal Utility Authority. During the fiscal years ended September 30, 2007, 2006 and 2005, we incurred costs of $23.7 million, $19.7 million and $16.5 million, respectively, for such utilities.

The Tribe previously provided services through its Development Department for projects related to Mohegan Sun. The Development Department of the Tribe,
including personnel assigned to the department, was transferred to us during the fiscal year ended September 30, 2007. Prior to this transfer, we recorded $53,000, $2.8 million and $10.6 million of capital expenditures associated with the
Tribes Development Department for the fiscal years ended September 30, 2007, 2006, and 2005, respectively.

Leases by the
Authority to the Tribe

We had a lease agreement with Little People, LLC (an entity owned by the Tribe), whereby Little People, LLC
leased retail space located in the Shops at Mohegan Sun from us. In June 2006, the lease agreement was



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terminated, and we purchased the furniture and fixtures, inventory and various outstanding accounts receivable pertaining to these retail operations from
Little People, LLC for approximately $687,000. This retail outlet is now owned and operated by the Authority.

Leases by the Tribe to
the Authority

We lease the land on which Mohegan Sun is located from the Tribe pursuant to a long-term lease. We are required to
pay to the Tribe a nominal annual rental fee under the lease. The lease has an initial term of 25 years and is renewable for an additional 25-year term upon expiration.

The Tribe, through one of its limited liability companies, has entered into various land lease agreements with us for access, parking and related purposes for Mohegan Sun. For each of the fiscal years ended
September 30, 2007, 2006 and 2005, we expensed $262,000 relating to these land lease agreements.

Distributions by the Authority
to the Tribe

On August 1, 2001, we entered into an agreement with the Tribe, or the priority distribution agreement, which
obligates us to make monthly payments to the Tribe to the extent of our net cash flow, as defined in the priority distribution agreement. The priority distribution agreement, which has a perpetual term, limits the maximum aggregate payments by us to
the Tribe in each calendar year to $14.0 million, as adjusted annually in accordance with the formula specified in the priority distribution agreement to reflect the effects of inflation. However, payments pursuant to the priority distribution
agreement do not reduce our obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other agreements with the Tribe. The monthly payments under the priority distribution agreement
are limited obligations payable only to the extent of our net cash flow and are not secured by a lien or encumbrance on any of our assets or property. Our consolidated financial statements reflect payments associated with the priority distribution
agreement of $16.8 million, $16.3 million and $15.8 million for the fiscal years ended September 30, 2007, 2006 and 2005, respectively.

In compliance with the restrictive covenants of our new bank credit facility and indentures, we distributed to the Tribe $58.2 million, $72.6 million and $51.7 million, net of $16.8 million, $16.3 million and $15.8 million, respectively,
relating to priority distribution payments for the fiscal years ended September 30, 2007, 2006 and 2005, respectively.

Mohegan
Tribal Employment Rights Ordinance

On September 25, 1995, the Tribe adopted the Mohegan Tribal Employment Rights Ordinance, or
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, as amended, 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.

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, however, is limited to contracts of $200,000 or less and is conditioned upon the bid by the preferred certified entity
being within 5% 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.

As of September 30,
2007, approximately 125 of our employees were members of the Tribe.



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Corporate Governance and Management Board Independence

We are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in
the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board. The registered voters of the Tribe elect all members of the Tribal Council. Upon election, the Tribal Council and Management Board members each
serve for a four year term on a staggered basis. Incumbent members of the Tribal Council do not nominate candidates for election. Accordingly, the Tribal Council and Management Board do not maintain a nominating committee, nor do they utilize any
procedures to screen candidates for election. Instead, the registered voters of the Tribe elect all members of the Tribal Council. In order to qualify for, and seek election to a position on the Tribal Council, a person: (a) must be at least 21
years of age prior to the date of the election; (b) must be a registered voting member of the Tribe in good standing; (c) must not have been convicted of any violation of the Tribal Election Ordinance; and (d) must not have been
convicted of either a felony or a misdemeanor involving moral integrity, such as forgery or bribery.

As described above, all members of
the Management Board are also members of the Tribal Council and the Tribe. Due to the relationships between the Tribe and the Authority described above, none of the Management Board members would qualify as independent directors within
the rules of The New York Stock Exchange or the NASDAQ Stock Market.



Item 14. Principal Accountant Fees and Services

The following table sets forth the aggregate fees
paid or accrued for professional services rendered by PricewaterhouseCoopers LLP for the audit of our annual financial statements for fiscal year 2007 and fiscal year 2006 and the aggregate fees paid or accrued for audit-related services and all
other services rendered by PricewaterhouseCoopers LLP for fiscal year 2007 and fiscal year 2006.



|                   |  |                 |         |                 |   |        
|------------------ |  | --------------- | ------- | --------------- | - | -------
|                   |  | Fiscal Year2007 |         | Fiscal Year2006
|Audit fees         |  |                 |         |                 |   |        
|                   |  | $               | 806,981 |                 | $ | 601,332
|Audit-related fees |  |                 | 72,941  |                 |   | 144,699
|Tax fees           |  |                 | 7,400   |                 |   | 13,825 
|All other fees     |  |                 | 3,000   |                 |   | 4,515  
|                   |  |                 |         |                 |   |        
|Total              |  | $               | 890,322 |                 | $ | 764,371
|                   |  |                 |         |                 |   |        

The category of Audit fees includes fees for our annual audit, quarterly reviews and
services rendered in connection with regulatory filings with the SEC, such as the issuance of comfort letters and consents.

The category
of Audit-related fees includes employee benefit plan audits, internal control reviews and accounting consultation.

The
category of Tax fees includes consultation related to corporate development activities and the preparation of tax returns for certain subsidiaries.

The category of All other fees includes the licensure of accounting and finance research technology owned by PricewaterhouseCoopers LLP.

All above audit services, audit-related services and tax services were pre-approved by the Audit Committee, which concluded that the provision of such
services by PricewaterhouseCoopers LLP was compatible with the maintenance of that firms independence in the conduct of its auditing functions. The Audit Committees outside auditor independence policy provides for pre-approval of all
services performed by the outside auditors.



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PART IV

Item 15. Exhibits and Financial Statement Schedules

A(1). Financial Statements

The following financial statements and reports appear in this Form 10-K beginning on page F-2 and are incorporated by reference in Part II, Item 8:



|                                                                                                                                                  |  | 
|------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|Report of Independent Registered Public Accounting Firm                                                                                           |  | 
|                                                                                                                                                  | 
|Consolidated Balance Sheets of the Mohegan Tribal Gaming Authority as of September 30, 2007 and 2006                                              |  | 
|                                                                                                                                                  | 
|Consolidated Statements of Income of the Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2007, 2006 and 2005             |  | 
|                                                                                                                                                  | 
|Consolidated Statements of Changes in Capital of the Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2007, 2006
and 2005 |  | 
|                                                                                                                                                  | 
|Consolidated Statements of Cash Flows of the Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2007, 2006 and 2005         |  | 
|                                                                                                                                                  | 
|Notes to Consolidated Financial Statements of the Mohegan Tribal Gaming Authority                                                                 |  | 

A(2). Financial Statement Schedules

The following schedule appears on page S-1 of this Form 10-K and is incorporated by reference herein:



|                                                                                                                       |  | 
|---------------------------------------------------------------------------------------------------------------------- |  | 
|Schedule IIValuation and Qualifying Accounts and Reserves for the Fiscal Years EndedSeptember 30, 2007, 2006 and 2005 |  | 

Schedules other than that listed above are omitted because they are not required or are not
applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.

A (3). Exhibits

The exhibits to this Form 10-K are listed on the exhibit index, which appears elsewhere herein and is
incorporated herein by reference.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Mohegan Tribal Gaming Authority has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on December 21, 2007.



MOHEGAN TRIBAL GAMING AUTHORITYBy:

/s/    BRUCE S. BOZSUMBruce S. Bozsum Chairman, Management Board


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Mohegan Tribal Gaming Authority and in the capacities indicated on December 21, 2007.



|                                                           |  |                                                                                                      
|---------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------
|Signature                                                  |  | Title                                                                                                
|                                                           | 
|/s/    BRUCE S.
BOZSUM Bruce S. Bozsum                     |  | Chairman and Member, Management Board                                                                
|                                                           | 
|/s/    MARILYNN R.
MALERBA Marilynn R. Malerba             |  | Vice Chairman and Member, Management Board                                                           
|                                                           | 
|/s/    MITCHELL GROSSINGER
ETESS Mitchell Grossinger Etess |  | Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive Officer)               
|                                                           | 
|/s/    LEO M.
CHUPASKA Leo M. Chupaska                     |  | Chief Financial Officer, Mohegan Tribal Gaming Authority (Principal Financial and Accounting Officer)
|                                                           | 
|/s/    ALLISON D.
JOHNSON Allison D. Johnson               |  | Recording Secretary and Member, Management Board                                                     
|                                                           | 
|/s/    RALPH JAMES GESSNER
JR. Ralph James Gessner Jr.     |  | Corresponding Secretary and Member, Management Board                                                 
|                                                           | 
|/s/    WILLIAM QUIDGEON JR. William Quidgeon Jr.           |  | Treasurer and Member, Management Board                                                               
|                                                           | 
|/s/    MARK F.
BROWN Mark F. Brown                         |  | Member, Management Board                                                                             
|                                                           | 
|/s/    MARK W.
HAMILTON Mark W. Hamilton                   |  | Member, Management Board                                                                             
|                                                           | 
|/s/    CHERYL A.
TODD Cheryl A. Todd                       |  | Member, Management Board                                                                             
|                                                           | 
|/s/    THAYNE D. HUTCHINS
JR. Thayne D. Hutchins Jr.       |  | Member, Management Board                                                                             

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT
BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

The registrant has not sent an annual report or
proxy statement to security holders. The registrant will not be sending an annual report or proxy statement to its security holders subsequent to the filing of this Form 10-K.



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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                              |  |    
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|                                                                                                                                              | 
|Report of Independent Registered Public Accounting Firm                                                                                       |  | F-2
|                                                                                                                                              | 
|Consolidated Balance Sheets of Mohegan Tribal Gaming Authority as of September 30, 2007 and 2006                                              |  | F-3
|                                                                                                                                              | 
|Consolidated Statements of Income of Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2007, 2006 and 2005             |  | F-4
|                                                                                                                                              | 
|Consolidated Statements of Changes in Capital of Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2007, 2006 and 2005 |  | F-5
|                                                                                                                                              | 
|Consolidated Statements of Cash Flows of Mohegan Tribal Gaming Authority for the Fiscal Years Ended September 30, 2007, 2006 and 2005         |  | F-6
|                                                                                                                                              | 
|Notes to Consolidated Financial Statements of Mohegan Tribal Gaming Authority                                                                 |  | F-7



F-1



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

To the Management Board

of the Mohegan Tribal Gaming Authority

In our opinion, the
consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Mohegan Tribal Gaming Authority and its subsidiaries (the Authority) at
September 30, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2007 in conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Authoritys management. Our responsibility is to express an opinion on these financial statements and financial
statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/    PricewaterhouseCoopers LLP

Hartford,
Connecticut

December 20, 2007



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED BALANCE SHEETS

(in thousands)



|                                                 |  |                   |           |                   |   |           |  
|------------------------------------------------ |  | ----------------- | --------- | ----------------- | - | --------- | -
|                                                 |  | September 30,2007 |           | September 30,2006 |  
|ASSETS                                           |  |                   |           |                   |   |           |  
|Current assets:                                  |  |                   |           |                   |   |           |  
|Cash and cash equivalents                        |  | $                 | 105,596   |                   | $ | 75,246    |  
|Receivables, net                                 |  |                   | 25,005    |                   |   | 27,142    |  
|Inventories                                      |  |                   | 17,119    |                   |   | 15,353    |  
|Other current assets                             |  |                   | 19,041    |                   |   | 19,967    |  
|                                                 |  |                   |           |                   |   |           |  
|Total current assets                             |  |                   | 166,761   |                   |   | 137,708   |  
|Non-current assets:                              |  |                   |           |                   |   |           |  
|Property and equipment, net                      |  |                   | 1,401,206 |                   |   | 1,339,823 |  
|Goodwill                                         |  |                   | 39,459    |                   |   | 39,459    |  
|Other intangible assets, net                     |  |                   | 394,477   |                   |   | 339,649   |  
|Other assets, net                                |  |                   | 78,074    |                   |   | 57,718    |  
|                                                 |  |                   |           |                   |   |           |  
|Total assets                                     |  | $                 | 2,079,977 |                   | $ | 1,914,357 |  
|                                                 |  |                   |           |                   |   |           |  
|LIABILITIES AND CAPITAL                          |  |                   |           |                   |   |           |  
|Current liabilities:                             |  |                   |           |                   |   |           |  
|Current portion of long-term debt                |  | $                 | 17,591    |                   | $ | 3,550     |  
|Current portion of relinquishment liability      |  |                   | 96,486    |                   |   | 96,936    |  
|Trade payables                                   |  |                   | 21,975    |                   |   | 21,812    |  
|Accrued interest payable                         |  |                   | 20,274    |                   |   | 21,011    |  
|Other current liabilities                        |  |                   | 177,265   |                   |   | 129,039   |  
|                                                 |  |                   |           |                   |   |           |  
|Total current liabilities                        |  |                   | 333,591   |                   |   | 272,348   |  
|Non-current liabilities:                         |  |                   |           |                   |   |           |  
|Long-term debt, net of current portion           |  |                   | 1,276,109 |                   |   | 1,225,804 |  
|Relinquishment liability, net of current portion |  |                   | 406,858   |                   |   | 451,038   |  
|Other long-term liabilities                      |  |                   | 735       |                   |   | 542       |  
|                                                 |  |                   |           |                   |   |           |  
|Total liabilities                                |  |                   | 2,017,293 |                   |   | 1,949,732 |  
|Minority interests                               |  |                   | 3,933     |                   |   | 3,480     |  
|Commitments and contingencies                    |  |                   |           |                   |   |           |  
|Capital:                                         |  |                   |           |                   |   |           |  
|Retained earnings (accumulated deficit)          |  |                   | 58,751    |                   |   | (38,855   | )
|                                                 |  |                   |           |                   |   |           |  
|Total capital                                    |  |                   | 58,751    |                   |   | (38,855   | )
|                                                 |  |                   |           |                   |   |           |  
|Total liabilities and capital                    |  | $                 | 2,079,977 |                   | $ | 1,914,357 |  
|                                                 |  |                   |           |                   |   |           |  



The accompanying notes
are an integral part of these consolidated financial statements.



F-3



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED STATEMENTS OF INCOME

(in thousands)



|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|----------------------------------------------------------- |  | ------------------------------------------- | --------- | - | ------------------------------------------- | - | --------- | ------------------------------------------- |  | - | --------- | -
|                                                            |  | For the Fiscal Year EndedSeptember 30, 2007 |           |   | For the Fiscal Year EndedSeptember 30, 2006 |   |           | For the Fiscal Year EndedSeptember 30, 2005 | 
|Revenues:                                                   |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Gaming                                                      |  | $                                           | 1,469,343 |   |                                             | $ | 1,279,835 |                                             |  | $ | 1,199,823 |  
|Food and beverage                                           |  |                                             | 102,097   |   |                                             |   | 95,786    |                                             |  |   | 91,994    |  
|Hotel                                                       |  |                                             | 47,333    |   |                                             |   | 50,818    |                                             |  |   | 50,058    |  
|Retail, entertainment and other                             |  |                                             | 133,139   |   |                                             |   | 121,532   |                                             |  |   | 112,191   |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Gross revenues                                              |  |                                             | 1,751,912 |   |                                             |   | 1,547,971 |                                             |  |   | 1,454,066 |  
|LessPromotional allowances                                 |  |                                             | (131,846  | ) |                                             |   | (124,917  | )                                           |  |   | (125,148  | )
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Net revenues                                                |  |                                             | 1,620,066 |   |                                             |   | 1,423,054 |                                             |  |   | 1,328,918 |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Operating costs and expenses:                               |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Gaming                                                      |  |                                             | 869,554   |   |                                             |   | 720,063   |                                             |  |   | 682,978   |  
|Food and beverage                                           |  |                                             | 50,499    |   |                                             |   | 49,420    |                                             |  |   | 45,019    |  
|Hotel                                                       |  |                                             | 16,959    |   |                                             |   | 16,883    |                                             |  |   | 16,114    |  
|Retail, entertainment and other                             |  |                                             | 48,214    |   |                                             |   | 43,223    |                                             |  |   | 35,327    |  
|Advertising, general and administrative                     |  |                                             | 231,585   |   |                                             |   | 201,122   |                                             |  |   | 186,446   |  
|Corporate expenses                                          |  |                                             | 10,507    |   |                                             |   | 10,558    |                                             |  |   | 11,465    |  
|Pre-opening costs and expenses                              |  |                                             | 3,836     |   |                                             |   | 5,130     |                                             |  |   | 1,257     |  
|Depreciation and amortization                               |  |                                             | 93,347    |   |                                             |   | 88,016    |                                             |  |   | 87,552    |  
|Relinquishment liability reassessment                       |  |                                             | 2,997     |   |                                             |   | 39,407    |                                             |  |   | 123,624   |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Total operating costs and expenses                          |  |                                             | 1,327,498 |   |                                             |   | 1,173,822 |                                             |  |   | 1,189,782 |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Income from operations                                      |  |                                             | 292,568   |   |                                             |   | 249,232   |                                             |  |   | 139,136   |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Other income (expense):                                     |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Accretion of discount to the relinquishment liability       |  |                                             | (29,794   | ) |                                             |   | (30,707   | )                                           |  |   | (27,466   | )
|Interest income                                             |  |                                             | 3,695     |   |                                             |   | 2,245     |                                             |  |   | 673       |  
|Interest expense, net of capitalized interest               |  |                                             | (94,363   | ) |                                             |   | (90,928   | )                                           |  |   | (88,011   | )
|Loss on early extinguishment of debt                        |  |                                             |          |   |                                             |   |          |                                             |  |   | (280      | )
|Write-off of debt issuance costs                            |  |                                             | (71       | ) |                                             |   |          |                                             |  |   |          |  
|Other income (expense), net                                 |  |                                             | (137      | ) |                                             |   | 24,508    |                                             |  |   | (1,127    | )
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Total other expense                                         |  |                                             | (120,670  | ) |                                             |   | (94,882   | )                                           |  |   | (116,211  | )
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Income from continuing operations before minority interests |  |                                             | 171,898   |   |                                             |   | 154,350   |                                             |  |   | 22,925    |  
|Minority interests                                          |  |                                             | 648       |   |                                             |   | 420       |                                             |  |   | 514       |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Income from continuing operations                           |  |                                             | 172,546   |   |                                             |   | 154,770   |                                             |  |   | 23,439    |  
|Discontinued operations:                                    |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Income from discontinued operations                         |  |                                             | 94        |   |                                             |   | 147       |                                             |  |   | 228       |  
|Loss on sale of discontinued operations                     |  |                                             | (73       | ) |                                             |   |          |                                             |  |   |          |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Total income from discontinued operations (Note 17)         |  |                                             | 21        |   |                                             |   | 147       |                                             |  |   | 228       |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  
|Net income                                                  |  | $                                           | 172,567   |   |                                             | $ | 154,917   |                                             |  | $ | 23,667    |  
|                                                            |  |                                             |           |   |                                             |   |           |                                             |  |   |           |  



The accompanying notes
are an integral part of these consolidated financial statements.



F-4



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(in thousands)



|                                                              |  |               |          |  
|------------------------------------------------------------- |  | ------------- | -------- | -
|                                                              |  | Total Capital |         
|Balance, September 30, 2004                                   |  | $             | (61,039  | )
|Net income                                                    |  |               | 23,667   |  
|Distributions to Tribe                                        |  |               | (67,500  | )
|                                                              |  |               |          |  
|Balance, September 30, 2005                                   |  | $             | (104,872 | )
|                                                              |  |               |          |  
|Net income                                                    |  |               | 154,917  |  
|Distributions to Tribe                                        |  |               | (88,900  | )
|                                                              |  |               |          |  
|Balance, September 30, 2006                                   |  | $             | (38,855  | )
|                                                              |  |               |          |  
|Net income                                                    |  |               | 172,567  |  
|Distributions to Tribe                                        |  |               | (75,000  | )
|Capital adjustment from majority-owned subsidiary transaction |  |               | 39       |  
|                                                              |  |               |          |  
|Balance, September 30, 2007                                   |  | $             | 58,751   |  
|                                                              |  |               |          |  



The accompanying notes
are an integral part of these consolidated financial statements.



F-5



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ------------------ | - | -------- | ------------------ |  | - | -------- | -
|                                                                                                                          |  | For the Fiscal Years Ended |         
|                                                                                                                          |  | September 30, 2007         |          |   | September 30, 2006 |   |          | September 30, 2005 | 
|                                                                                                                          |  |                           
|Cash flows provided by (used in) operating activities:                                                                    |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Net income                                                                                                                |  | $                          | 172,567  |   |                    | $ | 154,917  |                    |  | $ | 23,667   |  
|Adjustments to reconcile net income to net cash flows provided by operating activities:                                   |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Depreciation and amortization                                                                                             |  |                            | 93,444   |   |                    |   | 88,182   |                    |  |   | 87,678   |  
|Accretion of discount to the relinquishment liability                                                                     |  |                            | 29,794   |   |                    |   | 30,707   |                    |  |   | 27,466   |  
|Relinquishment liability reassessment                                                                                     |  |                            | 2,997    |   |                    |   | 39,407   |                    |  |   | 123,624  |  
|Cash paid for accretion of discount to the relinquishment liability                                                       |  |                            | (30,022  | ) |                    |   | (29,897  | )                  |  |   | (28,085  | )
|Gain on Pocono Downs purchase settlement                                                                                  |  |                            |         |   |                    |   | (25,444  | )                  |  |   |         |  
|Accretion of discount to the gain on Pocono Downs purchase settlement                                                     |  |                            | (1,584   | ) |                    |   |         |                    |  |   |         |  
|Loss on early extinguishment of debt                                                                                      |  |                            |         |   |                    |   |         |                    |  |   | 280      |  
|Net loss on disposition of assets                                                                                         |  |                            | 1,678    |   |                    |   | 172      |                    |  |   | 1,131    |  
|Net loss on sale of Erie OTW                                                                                              |  |                            | 73       |   |                    |   |         |                    |  |   |         |  
|Provision for losses on receivables                                                                                       |  |                            | 3,396    |   |                    |   | 3,557    |                    |  |   | 2,286    |  
|Amortization of debt issuance costs                                                                                       |  |                            | 3,835    |   |                    |   | 2,976    |                    |  |   | 3,106    |  
|Write-off of debt issuance costs                                                                                          |  |                            | 71       |   |                    |   |         |                    |  |   |         |  
|Amortization of net deferred gain on settlement of derivative instruments                                                 |  |                            | 455      |   |                    |   | 444      |                    |  |   | 711      |  
|Minority interests                                                                                                        |  |                            | (648     | ) |                    |   | (420     | )                  |  |   | (514     | )
|Changes in operating assets and liabilities, net of effects of acquisitions:                                              |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Decrease (increase) in receivables                                                                                        |  |                            | 1,379    |   |                    |   | (12,886  | )                  |  |   | (2,948   | )
|(Increase) decrease in inventories                                                                                        |  |                            | (1,603   | ) |                    |   | 573      |                    |  |   | (680     | )
|Increase in other assets                                                                                                  |  |                            | (8,737   | ) |                    |   | (9,740   | )                  |  |   | (3,989   | )
|Increase (decrease) in trade payables                                                                                     |  |                            | 163      |   |                    |   | (1,038   | )                  |  |   | (4,003   | )
|Increase in other liabilities                                                                                             |  |                            | 18,831   |   |                    |   | 9,367    |                    |  |   | 17,345   |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Net cash flows provided by operating activities                                                                           |  |                            | 286,089  |   |                    |   | 250,877  |                    |  |   | 247,075  |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Cash flows provided by (used in) investing activities:                                                                    |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Purchases of property and equipment, net of increase in construction payables of $28,331, $3,417 and $1,772, respectively |  |                            | (133,864 | ) |                    |   | (98,503  | )                  |  |   | (49,219  | )
|Payment of Category One slot machine license fee                                                                          |  |                            | (50,000  | ) |                    |   |         |                    |  |   |         |  
|Acquisition of Pocono Downs, net of cash acquired of $875                                                                 |  |                            |         |   |                    |   |         |                    |  |   | (280,114 | )
|Acquisition of Menominee Project development rights and other related assets                                              |  |                            | (6,381   | ) |                    |   |         |                    |  |   |         |  
|Acquisition of Pautipaug Country Club assets                                                                              |  |                            | (4,651   | ) |                    |   |         |                    |  |   |         |  
|Proceeds from settlement of contract dispute                                                                              |  |                            | 2,000    |   |                    |   |         |                    |  |   |         |  
|Proceeds from asset sales                                                                                                 |  |                            | 362      |   |                    |   | 449      |                    |  |   | 186      |  
|Proceeds from sale of Erie OTW                                                                                            |  |                            | 6,967    |   |                    |   |         |                    |  |   |         |  
|Issuance of third party loans and advances                                                                                |  |                            | (4,461   | ) |                    |   | (3,405   | )                  |  |   | (6,494   | )
|Payments received on third-party loans                                                                                    |  |                            | 512      |   |                    |   | 678      |                    |  |   | 463      |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Net cash flows used in investing activities                                                                               |  |                            | (189,516 | ) |                    |   | (100,781 | )                  |  |   | (335,178 | )
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Cash flows provided by (used in) financing activities:                                                                    |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan                                                                      |  |                            | 278,000  |   |                    |   | 233,000  |                    |  |   | 750,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan                                                                      |  |                            | (278,000 | ) |                    |   | (233,000 | )                  |  |   | (838,000 | )
|Prior Bank Credit Facility borrowingsterm loan                                                                           |  |                            |         |   |                    |   |         |                    |  |   | 58,333   |  
|Prior Bank Credit Facility repaymentsterm loan                                                                           |  |                            |         |   |                    |   |         |                    |  |   | (150,000 | )
|New Bank Credit Facility borrowingsrevolving loan                                                                        |  |                            | 206,000  |   |                    |   |         |                    |  |   |         |  
|New Bank Credit Facility repaymentsrevolving loan                                                                        |  |                            | (173,000 | ) |                    |   |         |                    |  |   |         |  
|Salishan Credit Facility borrowingsrevolving loan                                                                        |  |                            | 17,250   |   |                    |   |         |                    |  |   |         |  
|Line of credit borrowings                                                                                                 |  |                            | 524,313  |   |                    |   | 444,226  |                    |  |   | 474,900  |  
|Line of credit repayments                                                                                                 |  |                            | (507,722 | ) |                    |   | (444,226 | )                  |  |   | (479,985 | )
|Proceeds from the issuance of long-term debt                                                                              |  |                            |         |   |                    |   |         |                    |  |   | 400,000  |  
|Payments on long-term debt, including capitalized leases                                                                  |  |                            | (3,584   | ) |                    |   | (14,970  | )                  |  |   | (2,000   | )
|Minority interest contributions and advances                                                                              |  |                            |         |   |                    |   | 1,340    |                    |  |   | 729      |  
|Principal portion of relinquishment liability payments                                                                    |  |                            | (47,399  | ) |                    |   | (44,731  | )                  |  |   | (42,540  | )
|Distributions to Tribe                                                                                                    |  |                            | (75,000  | ) |                    |   | (88,900  | )                  |  |   | (67,500  | )
|Capitalized debt issuance costs                                                                                           |  |                            | (7,081   | ) |                    |   | (14      | )                  |  |   | (7,801   | )
|Net proceeds from the settlement of derivative instruments                                                                |  |                            |         |   |                    |   |         |                    |  |   | 3,598    |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Net cash flows provided by (used in) financing activities                                                                 |  |                            | (66,223  | ) |                    |   | (147,275 | )                  |  |   | 99,734   |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Net increase in cash and cash equivalents                                                                                 |  |                            | 30,350   |   |                    |   | 2,821    |                    |  |   | 11,631   |  
|Cash and cash equivalents at beginning of year                                                                            |  |                            | 75,246   |   |                    |   | 72,425   |                    |  |   | 60,794   |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Cash and cash equivalents at end of year                                                                                  |  | $                          | 105,596  |   |                    | $ | 75,246   |                    |  | $ | 72,425   |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Supplemental disclosures:                                                                                                 |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Cash paid during the year for interest                                                                                    |  | $                          | 93,532   |   |                    | $ | 91,305   |                    |  | $ | 80,882   |  
|                                                                                                                          |  |                            |         
|Acquisition: Pocono Downs                                                                                                 |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Fair value of assets acquired, including cash of $875                                                                     |  | $                          |         |   |                    | $ |         |                    |  | $ | 285,915  |  
|Cash paid                                                                                                                 |  |                            |         |   |                    |   |         |                    |  |   | 280,989  |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  
|Fair value of liabilities assumed                                                                                         |  | $                          |         |   |                    | $ |         |                    |  | $ | 4,926    |  
|                                                                                                                          |  |                            |          |   |                    |   |          |                    |  |   |          |  

The accompanying notes are an integral part of these consolidated financial statements.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1ORGANIZATION AND BASIS OF PRESENTATION:

The Mohegan Tribe of Indians of Connecticut (the Mohegan Tribe or the Tribe) established the Mohegan Tribal Gaming Authority (the Authority) in July 1995 with the exclusive power to conduct and regulate
gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Tribe is a federally recognized Indian tribe with an approximately 507-acre reservation situated in southeastern Connecticut,
adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, subject to, among other things, the negotiation of a
compact with the affected state. The Tribe and the State of Connecticut have entered into such a compact (the Mohegan Compact), which has been approved by the United States Secretary of the Interior. The Authority is primarily engaged in
the ownership, operation and development of gaming facilities. On October 12, 1996, the Authority opened a gaming and entertainment complex known as Mohegan Sun. The Authority is governed by a nine-member Management Board, whose members also
comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in the composition of the Tribal Council results in a corresponding change in the Authoritys Management Board.

The Authority has the following wholly owned subsidiaries: Mohegan Basketball Club, LLC (MBC), Mohegan Golf, LLC (Mohegan Golf),
Mohegan Commercial Ventures PA, LLC (MCV-PA), Mohegan Ventures-Northwest, LLC (Mohegan Ventures-NW), Mohegan Ventures Wisconsin, LLC (MVW) and MTGA Gaming, LLC (MTGA Gaming). MBC owns and operates a
professional basketball team in the Womens National Basketball Association (WNBA), the Connecticut Sun, and owns approximately 3.6% of the membership interests in WNBA, LLC. Mohegan Golf owns and operates the Mohegan Sun Country
Club at Pautipaug (Mohegan Sun Country Club) golf course in southeastern Connecticut. Refer to Note 3 for further information on Mohegan Golf.

MCV-PA holds a 0.01% general partnership interest in Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P., and Northeast Concessions, L.P. (collectively, the Pocono Downs entities), while the
Authority holds a 99.99% limited partnership interest in each such entity. Downs Racing, L.P. (Downs Racing) owns and operates Mohegan Sun at Pocono Downs, a gaming and entertainment facility offering slot machines and harness racing in
Plains Township, Pennsylvania, and several off-track wagering (OTW) facilities located elsewhere in Pennsylvania (of which one referred to in Note 17 has been sold to a third party). The Authority views Mohegan Sun and the properties
owned by the Pocono Downs entities as separate operating segments.

Mohegan Ventures-NW and the Tribe hold 49.15% and 7.85% membership
interests in Salishan-Mohegan, LLC (Salishan-Mohegan), respectively, formed with an unrelated third party to participate in the development and management of a casino to be owned by the federally recognized Cowlitz Indian Tribe (the
Cowlitz Tribe) and located in Clark County, Washington (the Cowlitz Project).

MVW and Mohegan Ventures, LLC
(MV), a wholly owned subsidiary of the Tribe, hold 85.4% and 14.6% membership interests in Wisconsin Tribal Gaming, LLC (WTG), respectively, formed to participate in the development of a casino to be owned by the federally
recognized Menominee Indian Tribe of Wisconsin (the Menominee Tribe) and located in Kenosha, Wisconsin (the Menominee Project). Refer to Note 4 for further information on MVW and WTG.

MTGA Gaming was formed in July 2007 to evaluate and pursue new business opportunities on behalf of the Authority. The Authority has designated MTGA
Gaming as a restricted subsidiary, and it is therefore a guarantor of the Authoritys debt obligations under the New Bank Credit Facility, the 2005 Senior Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004
Senior Subordinated Notes and the 2005 Senior Subordinated Notes, all of which are defined in Note 9.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The
consolidated financial statements include the accounts of the Authority and its majority and wholly owned subsidiaries. In accordance with the Financial Accounting Standard Board (FASB) Interpretation No. 46(R), Consolidation
of Variable Interest Entities (revised December 2003)an interpretation of ARB No. 51 (FIN 46), the accounts of Salishan-Mohegan are consolidated into the accounts of Mohegan Ventures-NW, as it is deemed to be the primary
beneficiary. In consolidation, all intercompany balances and transactions have been eliminated.

Managements Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The most significant estimates included in
the accompanying consolidated financial statements relate to the assessment of impairment and useful lives of intangible assets, estimated collectibility of receivables, the relinquishment liability, the liability associated with unredeemed
Players Club points and employee medical coverage and workers compensation self-insurance reserves. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the fiscal year 2006 and 2005 consolidated financial statements
have been reclassified to conform to the fiscal year 2007 presentation.

Cash and Cash Equivalents

The Authority classifies as cash and cash equivalents deposits that can be redeemed on demand and investments with an original maturity of three months or
less when purchased. Cash equivalents are carried at cost, which approximates market value.

Receivables

Accounts receivable consists primarily of casino receivables, which represent credit extended to approved casino customers, and hotel and other non-gaming
receivables. The Authority maintains an allowance for doubtful accounts which is based on managements estimate of the amount expected to be uncollectible considering historical experience and the information management obtains regarding the
creditworthiness of the customer. Future business or economic trends could affect the collectibility of these receivables.

Receivables
from affiliates, which are recorded in other assets in the accompanying consolidated balance sheets, consist primarily of reimbursable costs and expenses incurred by: (1) Salishan-Mohegan for the development of a casino in La Center, Washington
to be owned by the Cowlitz Tribe (see Note 16) and (2) WTG for the development of a casino in Kenosha, Wisconsin to be owned by the Menominee Tribe (see Note 4). The Salishan-Mohegan receivables are payable upon (1) the receipt of
necessary financing for the development of the proposed casino and (2) the related property being taken into trust by the United States Department of the Interior. The WTG receivables are payable upon the receipt of necessary financing for the
development of the proposed casino. Due to the inherent uncertainty in the development of these casino projects, the Authority maintains a reserve for doubtful collection of these receivables, which is based on managements estimate of the
probability that the receivables will be collected. Future complications in the receipt of financing, the relevant



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



land being taken into trust or other matters affecting the development of the casinos could affect the collectibility of the receivables.

Inventories

Inventories are stated
at the lower of cost or market and consist principally of food and beverage, retail, hotel and operating supplies. Cost is determined using an average cost method. The Authority reduces the carrying value of slow moving inventory to net realizable
value, which is based on managements estimate of the amount of inventory that may not be used in future casino operations considering the length of time items are held in inventory and information management obtains regarding the plans to
utilize this inventory. Future business trends could affect the timely use of inventories.

Property and Equipment

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



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

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

In accordance with Financial Accounting Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS
144), the carrying value of the Authoritys assets is reviewed when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If it is determined that an impairment loss has occurred based on
current and future levels of income and expected future cash flows as well as other factors, then an impairment loss is recognized in the consolidated statement of income. The Authority believes no such impairment exists at September 30, 2007
and 2006.

Capitalized Interest

The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the
project using the weighted-average cost of the Authoritys outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period.

Goodwill

In accordance with SFAS
No. 142, Goodwill and Other Intangible Assets (SFAS 142), the goodwill associated with the acquisition of the Pocono Downs entities is not subject to amortization but is tested at least annually for impairment by
comparing the fair value of the recorded assets to their carrying amount. If the carrying amount of the goodwill exceeds its fair value, an impairment loss will be recognized immediately. The Authority assessed the goodwill for impairment and
determined there was no impairment of goodwill at September 30, 2007.



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Other Intangible Assets

In January 2005, the Authority and its wholly owned subsidiary, MCV-PA, acquired all the partnership interests in the Pocono Downs entities. As part of
the acquisition, the Authority gained the right to apply for a Category One slot machine license. The right to apply for the license was determined by management to be an intangible asset with an indefinite useful life. Management, with assistance
from a third party valuation firm, estimated the fair value of the intangible asset to be $214.0 million (see Note 13). The third party valuation firm used the Income ApproachExcess Earnings Method. Conditional and permanent Category One slot
machine licenses were granted to and approved for Downs Racing by the Pennsylvania Gaming and Control Board (PGCB) in September 2006 and December 2006, respectively. A one-time slot machine license fee of $50.0 million was paid to the
PGCB in October 2006, which was added to the existing slot machine license intangible asset of $214.0 million. The total slot machine license intangible asset of $264.0 million, with an indefinite useful life, is included in the accompanying
consolidated balance sheet as of September 30, 2007. The slot license intangible asset is assessed at least annually for impairment pursuant to SFAS 142. The Authority applied the fair value test as of September 30, 2007 and 2006 and
determined that no impairment existed.

In connection with the Relinquishment Agreement (see Note 14), Trading Cove Associates
(TCA) granted the Authority an exclusive, irrevocable, perpetual, world-wide and royalty-free license with respect to trademarks and other similar rights, including the Mohegan Sun name used at or developed for Mohegan Sun.
The trademarks were appraised by an independent valuation firm to have a value of $130.0 million. The independent valuation firm used the Income ApproachRelief from Royalty Method. The balance of the trademark is as follows (in thousands):



|                         |  |                     |         |   |      |   |         |  
|------------------------ |  | ------------------- | ------- | - | ---- | - | ------- | -
|                         |  | As of September 30, |        
|                         |  | 2007                |         |   | 2006 |  
|Trademark                |  | $                   | 130,000 |   |      | $ | 130,000 |  
|Accumulated amortization |  |                     | (10,308 | ) |      |   | (10,308 | )
|                         |  |                     |         |   |      |   |         |  
|Trademark, net           |  | $                   | 119,692 |   |      | $ | 119,692 |  
|                         |  |                     |         |   |      |   |         |  

In accordance with SFAS 142, the Mohegan Sun 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 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
the impaired trademark must be written off immediately. The Authority applied the fair value test as of September 30, 2007 and 2006 and determined that no impairment existed.

In January 2003, MBC acquired a membership in the WNBA and the right to own and operate a professional basketball team in the WNBA. As part of the
acquisition, management, with the assistance of an independent valuation firm, estimated a fair value for the player roster value, which is recorded as an intangible asset on the accompanying consolidated balance sheets, and the remainder of the
acquisition cost has been recorded as franchise value, which is also included on the accompanying consolidated balance sheets. These assets are being amortized on a straight-line basis over their estimated useful lives. The Authority writes off a
portion of the player roster value intangible asset and the related accumulated amortization when a Connecticut Sun player contract that was part of the original player roster is terminated. The loss associated with the write-off is included in
depreciation and amortization expense in the accompanying consolidated statements of income. Refer to Note 15 for further discussion regarding the Authoritys accounting for these assets.

In March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed certain liabilities from
Kenesah Gaming Development, LLC. The development rights, determined by management to be an intangible asset with an estimated fair value of $3.7 million, are included in



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



the accompanying consolidated balance sheet as of September 30, 2007. The development rights intangible asset will be amortized on a straight line basis
over its estimated useful life of seven years, which will commence upon the opening of the proposed casino, and will be periodically reviewed for impairment in accordance with SFAS 142. The Authority has determined that no impairment exists as of
September 30, 2007. Refer to Note 4 for further discussion regarding the Authoritys accounting for this asset.

In May 2007,
Mohegan Golf completed the acquisition of substantially all of the assets of Pautipaug Country Club Inc. (PCC), including a membership intangible asset resulting from the contractual agreement with PCCs members established at the
time of acquisition, valued at $1.7 million. The membership intangible asset is included in the accompanying consolidated balance sheet as of September 30, 2007, and is being amortized on a straight line basis over its estimated useful life of
fifteen years, and will be periodically reviewed for impairment in accordance with SFAS 142. The Authority has determined that no impairment exists as of September 30, 2007. Refer to Note 3 for further discussion regarding the Authoritys
accounting for this asset.

Deferred Financing Costs

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense based on the related debt agreements using the straight-line method, which approximates
the effective interest method. The unamortized amounts are included in other assets in the accompanying consolidated balance sheets.

Unredeemed Players Club Points

The Authority maintains an accrual for unredeemed Players Club points. The
accrual is based on the estimated cost of the points expected to be redeemed as of the respective balance sheet date. Management determines the adequacy of this accrual by periodically evaluating the historical redemption experience and projected
trends related to this accrual. Actual results could differ from those estimates.

Self-insurance Accruals

The Authority is self-insured up to certain limits for costs associated with workers compensation and employee medical coverage. Liabilities for
insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates of incurred but not reported claims. These accruals are included in other current liabilities in the accompanying consolidated
balance sheets. In estimating these costs, the Authority considers historical loss experience and makes judgments about the expected levels of costs per claim. The Authority also uses information provided by independent consultants to assist in the
determination of estimated accruals. These claims are accounted for based on estimates of the undiscounted claims, including those claims incurred but not reported. The Authority believes the use of these estimates to account for these liabilities
provides a consistent and effective way to measure these accruals; however, changes in health care costs, accident frequency and severity and other factors can materially affect the estimate for these liabilities. The Authority continually monitors
the potential changes in future estimates, evaluates insurance accruals and makes adjustments when necessary.

Relinquishment Liability

The Authority, in accordance with SFAS No. 5, Accounting for Contingencies (SFAS 5), has recorded a
relinquishment liability of the estimated present value of its obligations under the Relinquishment Agreement (see Note 14). The Authority reassesses the relinquishment liability (i) annually in conjunction with the Authoritys budgeting
process or (ii) when necessary to account for material increases or decreases in projected



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



revenues over the relinquishment period. If the reassessment causes an overall increase to the projected revenues over the relinquishment period, the
relinquishment liability will be increased by five percent of such increase in revenues, discounted at the Authoritys risk-free rate of investment (an incremental layer). If the reassessment causes an overall decrease to the projected revenues
over the relinquishment period, the relinquishment liability will be decreased by five percent of such decrease in revenues, discounted based upon a weighted-average discount rate (a decremental layer). The weighted-average discount rate is defined
as the average discount rate used to discount all the previous incremental layers weighted by the amount of each such incremental layer. Further, the Authority records a quarterly accretion to the relinquishment liability to reflect the impact of
the time value of money. Since there is a high level of estimates and judgments used with respect to calculating this liability, future events that affect such estimates and judgments may cause the actual liability to differ significantly from the
estimate.

Fair Value of Financial Instruments

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

The carrying amount of cash and cash
equivalents, promissory notes, mortgages and bank financing facilities approximate fair value. The fair value of the Authoritys other financing facilities is as follows (in millions):



|                                     |  |                     |       |      |   |      
|------------------------------------ |  | ------------------- | ----- | ---- | - | -----
|                                     |  | As of September 30,
|                                     |  | 2007                |       | 2006
|2005 61/8% Senior Notes              |  | $                   | 239.7 |      | $ | 244.4
|2001 83/8% Senior Subordinated Notes |  | $                   | 16.3  |      | $ | 17.0 
|2002 8% Senior Subordinated Notes    |  | $                   | 254.1 |      | $ | 258.8
|2003 63/8% Senior Subordinated Notes |  | $                   | 326.7 |      | $ | 327.5
|2004 71/8% Senior Subordinated Notes |  | $                   | 225.3 |      | $ | 223.9
|2005 67/8% Senior Subordinated Notes |  | $                   | 146.8 |      | $ | 146.3

The estimated fair value of the Authoritys other financing facilities was based on quoted
market prices on or about September 30, 2007.

Revenue Recognition

The Authority recognizes gaming revenue as gaming wins less gaming losses. Revenues from food and beverage, hotel, retail, entertainment and other
services are recognized at the time the service is performed. Minimum rental revenues are recognized on a straight-line basis over the terms of the related leases. Percentage rents are recognized in the period in which the tenants exceed their
respective percentage rent thresholds.

Promotional Allowances

The Authority operates a complimentary Players Club program in which food and beverage, hotel, retail, entertainment and other services are provided
to guests at Mohegan Sun and Mohegan Sun at Pocono Downs based on points that are earned through gaming activities. The retail value of these complimentary items is included in gross revenues and then deducted as promotional allowances, except for
the redemption at third party tenant restaurants and the Shops at Mohegan Sun, which are charged directly to gaming expenses.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In addition, the Authority has ongoing promotional programs which offer coupons to its guests for the
purchase of food, beverages, hotel and retail amenities offered at Mohegan Sun, and food, beverages and retail amenities offered at Mohegan Sun at Pocono Downs. The retail value of items or services purchased with coupons at Mohegan Sun operated
facilities and at Mohegan Sun at Pocono Downs is included in gross revenues and the respective coupon value is deducted as promotional allowances to arrive at net revenues.

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



|                                |  |                                         |         |      |   |         |  |   |        
|------------------------------- |  | --------------------------------------- | ------- | ---- | - | ------- |  | - | -------
|                                |  | For the Fiscal Years EndedSeptember 30,
|                                |  | 2007                                    |         | 2006 |   | 2005   
|Food and beverage               |  | $                                       | 48,138  |      | $ | 46,894  |  | $ | 44,757 
|Hotel                           |  |                                         | 16,385  |      |   | 17,356  |  |   | 16,292 
|Retail, entertainment and other |  |                                         | 67,323  |      |   | 60,667  |  |   | 64,099 
|                                |  |                                         |         |      |   |         |  |   |        
|Total                           |  | $                                       | 131,846 |      | $ | 124,917 |  | $ | 125,148
|                                |  |                                         |         |      |   |         |  |   |        

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



|                                |  |                                         |         |      |   |         |  |   |        
|------------------------------- |  | --------------------------------------- | ------- | ---- | - | ------- |  | - | -------
|                                |  | For the Fiscal Years EndedSeptember 30,
|                                |  | 2007                                    |         | 2006 |   | 2005   
|Food and beverage               |  | $                                       | 49,243  |      | $ | 48,352  |  | $ | 44,877 
|Hotel                           |  |                                         | 8,866   |      |   | 8,734   |  |   | 7,731  
|Retail, entertainment and other |  |                                         | 54,781  |      |   | 46,874  |  |   | 49,372 
|                                |  |                                         |         |      |   |         |  |   |        
|Total                           |  | $                                       | 112,890 |      | $ | 103,960 |  | $ | 101,980
|                                |  |                                         |         |      |   |         |  |   |        

The Authority records free or discounted food and beverage and other services in accordance with
Emerging Issues Task Force Issue No. 01-9 Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendors Products. The Authority also offers cash inducements and discounts on patron losses at Mohegan
Sun in certain circumstances that result in a reduction to gaming revenues. The offsets to gaming revenues were $10.3 million, $11.2 million and $4.4 million relating to discounts provided on patron losses for fiscal years ending September 30,
2007, 2006 and 2005, respectively, and $752,000, $577,000 and $266,000 relating to Players Club points redeemed for cash for the fiscal years ended September 30, 2007, 2006 and 2005, respectively.

Gaming Expenses

Gaming expenses
primarily include the slot win contribution, which the Authority is required to pay to the State of Connecticut (see Note 13), gaming taxes and regulatory fees, which the Authority is required to pay to the Commonwealth of Pennsylvania (see Note
13), expenses associated with operation of slot machines, table games, keno, live harness racing at Mohegan Sun at Pocono Downs and racebook, certain marketing expenses, and promotional expenses for the Players Club programs offered at Mohegan
Sun and Mohegan Sun at Pocono Downs.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Advertising

The Authority expenses the production costs of advertising the first time the advertising takes place. Prepaid rental fees associated with billboard advertising are capitalized and amortized over the term of the
related rental agreement. Total advertising costs for the fiscal years ended September 30, 2007, 2006 and 2005 were $42.8 million, $39.3 million and $39.8 million, respectively. The Company did not record any prepaid advertising at
September 30, 2007. Prepaid advertising on the Authoritys consolidated balance sheet at September 30, 2006 was $573,000.

Corporate Expenses

Corporate expenses represent unallocated payroll costs, professional fees and various other expenses not
directly related to the Authoritys operations at Mohegan Sun or Mohegan Sun at Pocono Downs. In addition, corporate expenses include the costs associated with the Authoritys evaluation and pursuit of new business opportunities, which are
expensed as incurred until development of a specific project has become probable.

Pre-Opening Costs and Expenses

For the fiscal years ended September 30, 2007, 2006 and 2005, pre-opening costs and expenses consisted primarily of direct incremental personnel,
consulting and other costs associated with the development of a Phase I slot facility at Mohegan Sun at Pocono Downs. Construction of the Phase I slot facility commenced in September 2005 and was completed in November 2006. In accordance with the
American Institute of Certified Public Accountants Statement of Position 98-5, Reporting on the Costs of Start-Up Activities, pre-opening costs and expenses were expensed as incurred.

Income Taxes

The Tribe is a
sovereign Indian nation with independent legal jurisdiction over its people and its lands. Like other sovereign governments, the Tribe and its entities, including the Authority, are not subject to federal, state or local income taxes.

New Accounting Pronouncements

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

In September 2006, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 108 (SAB 108), which provides guidance on the consideration of the effects of prior year financial statement misstatements in quantifying current year financial statement misstatements for the purpose of a materiality
assessment. SAB 108 is effective for annual financial statements issued for fiscal years ending after November 15, 2006. The application of this guidance did not have a material impact on the Authoritys financial position, results of
operations or cash flows for the fiscal year ended September 30, 2007.

In February 2007, the FASB issued SFAS No. 159, The
Fair Value Option for Financial Assets and Financial Liabilities (FAS 159). FAS 159 provides entities with the option to measure many financial



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



instruments and certain other items at fair value that are not currently required to be measured at fair value, and also establishes presentation and
disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. This standard is intended to expand the use of fair value measurement, but does not
require any new fair value measurements. FAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Authority is currently evaluating the potential impact of this standard on its financial
position, results of operations and cash flows.

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

NOTE 3MOHEGAN GOLF, LLC:

On May 17, 2007, Mohegan Golf completed the acquisition of substantially all of the
assets of PCC located in Sprague and Franklin, Connecticut, which was renamed Mohegan Sun Country Club at Pautipaug. Mohegan Golf incurred acquisition costs of $4.7 million for the property and other items acquired from PCC, which was allocated
among the following assets and liabilities: (1) property and equipment valued at $3.1 million; (2) a membership intangible asset resulting from the contractual agreement with PCCs members established at the time of acquisition,
valued at $1.7 million; (3) current assets of $210,000; (4) environmental obligations of $300,000; and (5) capital lease obligations of $34,000. The membership intangible asset will be amortized on a straight line basis over its
estimated useful life of fifteen years and will be periodically reviewed for impairment in accordance with SFAS 142. As of September 30, 2007, accumulated amortization on the membership intangible asset was $43,000. The Authority expects to
incur $113,000 in amortization expense for each of the next five years related to the membership intangible asset. The results of operations for Mohegan Sun Country Club are included in the accompanying consolidated financial statements from date of
acquisition (May 17, 2007) through September 30, 2007. Pro forma operating results for the 2007 acquisition are not presented because the results would not be materially different from historical results.

NOTE 4MOHEGAN VENTURES WISCONSIN, LLC (MENOMINEE PROJECT):

In March 2007, the Authority formed a wholly owned subsidiary, MVW, one of two members in WTG. WTG is a majority-owned subsidiary of the Authority also formed in March 2007, whose other member is MV, a wholly owned
subsidiary of the Tribe. The Authority has designated MVW and WTG as restricted subsidiaries, and they are therefore guarantors of the Authoritys debt obligations under the New Bank Credit Facility, the 2005 Senior Notes, the 2002 Senior
Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes, all of which are defined in Note 9.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In March 2007, WTG purchased the development rights for the Menominee Project, along with certain
other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC (KGD). As a result of the purchase, the Authority and the Mohegan Tribe, through MVW and MV, respectively, will receive development fees payable to WTG of
13.4% of Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and the Menominee Kenosha Gaming Authority (MKGA), which approximates net income from the Menominee Project over a period of seven years
following the opening of the casino. The Authority also currently holds the rights to manage, operate and maintain the planned casino for a period of seven years commencing with the opening of the casino, in consideration of a management fee of
13.4% of Net Revenues, as defined in the management agreement with the Menominee Tribe and MKGA, which also approximates net income from the Menominee Project. The management agreement is subject to approval by the National Indian Gaming Commission
(the NIGC).

WTG paid $6.4 million in cash for the casino development rights and other items acquired from KGD, which was
allocated among the following assets and liabilities: (1) receivables at fair value from MKGA of $4.4 million for project advances; (2) a development rights intangible asset valued at $3.7 million; (3) a note payable to MV of $1.1
million; and (4) a note payable to MKGA of $600,000. The purchase amount was contributed by MVW in return for its initial membership interest in WTG, and MV converted the $1.1 million receivable from WTG to capital in return for its initial
membership interest in WTG. The development rights intangible asset will be amortized on a straight line basis over its estimated useful life of seven years, which will commence upon the opening of the proposed casino, and will be periodically
reviewed for impairment in accordance with SFAS 142. Pursuant to the development agreement, the receivables from MKGA, and related accrued interest, generally are reimbursable to WTG upon the receipt of necessary financing for the development of the
proposed casino.

NOTE 5CASH AND CASH EQUIVALENTS:

At September 30, 2007 and 2006, the Authority had cash and cash equivalents of $105.6 million and $75.2 million, respectively. As of September 30, 2007, no amounts were invested in deposits that could be
redeemed on demand and investments with original maturities of less than three months when purchased compared to $980,000 at September 30, 2006. For reporting purposes, cash and cash equivalents include all operating cash and in-house funds.

NOTE 6RECEIVABLES, NET:

Components of receivables, net are as follows (in thousands):



|                                |  |                     |        |   |      |   |        |  
|------------------------------- |  | ------------------- | ------ | - | ---- | - | ------ | -
|                                |  | As of September 30, |       
|                                |  | 2007                |        |   | 2006 |  
|Gaming                          |  | $                   | 21,485 |   |      | $ | 23,972 |  
|Hotel                           |  |                     | 1,263  |   |      |   | 1,318  |  
|Other                           |  |                     | 6,271  |   |      |   | 5,296  |  
|                                |  |                     |        |   |      |   |        |  
|Subtotal                        |  |                     | 29,019 |   |      |   | 30,586 |  
|Allowance for doubtful accounts |  |                     | (4,014 | ) |      |   | (3,444 | )
|                                |  |                     |        |   |      |   |        |  
|Total receivables, net          |  | $                   | 25,005 |   |      | $ | 27,142 |  
|                                |  |                     |        |   |      |   |        |  



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 7PROPERTY AND EQUIPMENT, NET:

Components of property and equipment, net are as follows (in thousands):



|                                        |  |                     |           |   |      |   |           |  
|--------------------------------------- |  | ------------------- | --------- | - | ---- | - | --------- | -
|                                        |  | As of September 30, |          
|                                        |  | 2007                |           |   | 2006 |  
|Land                                    |  | $                   | 57,247    |   |      | $ | 60,007    |  
|Land improvements                       |  |                     | 48,313    |   |      |   | 48,317    |  
|Buildings and improvements              |  |                     | 1,332,138 |   |      |   | 1,268,544 |  
|Furniture and equipment                 |  |                     | 426,330   |   |      |   | 382,382   |  
|Construction in process                 |  |                     | 75,898    |   |      |   | 48,873    |  
|                                        |  |                     |           |   |      |   |           |  
|Subtotal                                |  |                     | 1,939,926 |   |      |   | 1,808,123 |  
|Less: accumulated depreciation          |  |                     | (538,720  | ) |      |   | (468,300  | )
|                                        |  |                     |           |   |      |   |           |  
|Total property plant and equipment, net |  | $                   | 1,401,206 |   |      | $ | 1,339,823 |  
|                                        |  |                     |           |   |      |   |           |  

For the fiscal years ended September 30, 2007, 2006 and 2005, depreciation expense totaled
$92.8 million, $87.2 million and $86.5 million, respectively. Capitalized interest totaled $1.7 million, $1.2 million and $21,000 for the fiscal years ended September 30, 2007, 2006 and 2005, respectively.

NOTE 8OTHER CURRENT ASSETS AND OTHER CURRENT LIABILITIES:

Components of other current assets are as follows (in thousands):



|                                    |  |                     |        |      |   |       
|----------------------------------- |  | ------------------- | ------ | ---- | - | ------
|                                    |  | As of September 30,
|                                    |  | 2007                |        | 2006
|Prepaid expenses                    |  | $                   | 7,273  |      | $ | 11,098
|Non-qualified deferred compensation |  |                     | 11,768 |      |   | 8,869 
|                                    |  |                     |        |      |   |       
|Total other current assets          |  | $                   | 19,041 |      | $ | 19,967
|                                    |  |                     |        |      |   |       

Components of other current liabilities are as follows (in thousands):



|                                               |  |                     |         |      |   |        
|---------------------------------------------- |  | ------------------- | ------- | ---- | - | -------
|                                               |  | As of September 30,
|                                               |  | 2007                |         | 2006
|Accrued payroll and related taxes and benefits |  | $                   | 60,927  |      | $ | 53,876 
|Slot win contribution payable (Note 13)        |  |                     | 19,317  |      |   | 19,547 
|Construction Payables                          |  |                     | 33,648  |      |   | 5,317  
|Miscellaneous other current liabilities        |  |                     | 63,373  |      |   | 50,299 
|                                               |  |                     |         |      |   |        
|Total other current liabilities                |  | $                   | 177,265 |      | $ | 129,039
|                                               |  |                     |         |      |   |        



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 9FINANCING FACILITIES:

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



|                                                 |  |                   |           |                   |   |          
|------------------------------------------------ |  | ----------------- | --------- | ----------------- | - | ---------
|                                                 |  | September 30,2007 |           | September 30,2006
|New Bank Credit Facility                         |  | $                 | 33,000    |                   | $ |         
|2005 61/8% Senior Notes                          |  |                   | 250,000   |                   |   | 250,000  
|2001 83/8% Senior Subordinated Notes             |  |                   | 16,345    |                   |   | 16,345   
|2002 8% Senior Subordinated Notes                |  |                   | 250,000   |                   |   | 250,000  
|2003 63/8% Senior Subordinated Notes             |  |                   | 330,000   |                   |   | 330,000  
|2004 71/8% Senior Subordinated Notes             |  |                   | 225,000   |                   |   | 225,000  
|2005 67/8% Senior Subordinated Notes             |  |                   | 150,000   |                   |   | 150,000  
|WNBA Promissory Note                             |  |                   | 4,000     |                   |   | 5,000    
|Line of Credit                                   |  |                   | 16,591    |                   |   |         
|Salishan Credit Facility                         |  |                   | 17,250    |                   |   |         
|MortgageSalishan-Mohegan                        |  |                   |          |                   |   | 2,550    
|MKGA Note Payable (Note 4)                       |  |                   | 600       |                   |   |         
|                                                 |  |                   |           |                   |   |          
|Subtotal                                         |  |                   | 1,292,786 |                   |   | 1,228,895
|Net deferred gain on derivative instruments sold |  |                   | 914       |                   |   | 459      
|                                                 |  |                   |           |                   |   |          
|Total debt                                       |  | $                 | 1,293,700 |                   | $ | 1,229,354
|                                                 |  |                   |           |                   |   |          

Maturities of the Authoritys debt as of September 30, 2007 are as follows (in
thousands):



|            |  |                          |          
|----------- |  | ------------------------ | ---------
|Fiscal Year |  | Long-Term DebtMaturities
|2008        |  | $                        | 17,591   
|2009        |  |                          | 348,250  
|2010        |  |                          | 1,000    
|2011        |  |                          | 17,345   
|2012        |  |                          | 283,000  
|Thereafter  |  |                          | 625,600  
|            |  |                          |          
|Subtotal    |  | $                        | 1,292,786
|            |  |                          |          

Prior Bank Credit Facility

On March 9, 2007, the Authority repaid the entire outstanding $55.0 million of indebtedness under its Amended and Restated Loan Agreement dated March 25, 2003, as amended (the Prior Bank Credit
Facility), for up to $450.0 million from a syndicate of financial institutions and commercial banks. As of March 9, 2007, the Prior Bank Credit Facility was extinguished and certain unamortized debt issuance costs of $71,000 were charged
as a write-off of debt issuance costs in the accompanying consolidated statement of income for the fiscal year ended September 30, 2007. Accrued interest, including commitment fees, on the Prior Bank Credit Facility was $825,000 as of
September 30, 2006.

New Bank Credit Facility

On March 9, 2007, the Authority entered into a Second Amended and Restated Loan Agreement (the New Bank Credit Facility) providing for up to $1.0 billion in borrowing capacity from a syndicate of 23
financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. The New Bank



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



Credit Facility replaces the Authoritys Prior Bank Credit Facility. The total commitment on the new facility may be increased to $1.25 billion at the
option of the Authority. The five-year senior secured revolving credit facility includes a $300.0 million term loan conversion provision which is triggered upon the initial accumulation of $300.0 million in total borrowings on the New Bank Credit
Facility. The term loan requires principal payments in quarterly installments of $750,000 after the conversion date until the maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans
are payable. As of September 30, 2007, the amount under letters of credit totaled $6.8 million, of which no amount was drawn (refer to Letters of Credit below). Inclusive of letters of credit, which reduce borrowing availability
under the New Bank Credit Facility, the Authority had approximately $960.2 million of available borrowing under the New Bank Credit Facility as of September 30, 2007 (without taking into account covenants under the Line of Credit described
below).

The New Bank Credit Facility is collateralized by a lien on substantially all of the Authoritys assets, including the assets
comprising Mohegan Sun at Pocono Downs and a leasehold mortgage on the land previously taken into trust by the federal government and improvements which comprise Mohegan Sun. The Authority will also be required to pledge additional assets as
collateral for the New Bank Credit Facility as it or its guarantor subsidiaries acquire them. The Authoritys obligations under the New Bank Credit Facility are guaranteed by MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan
Golf, MVW, WTG and MTGA Gaming. The New Bank Credit Facility subjects the Authority to a number of restrictive covenants, including financial covenants. These financial covenants relate to, among other things, its permitted total debt and senior
debt leverage ratios, its minimum fixed charge coverage ratio, the Authoritys maximum capital expenditures and a periodic test which ensures that the Authority has sufficient liquidity under its New Bank Credit Facility and other allowed
borrowings, projected cash flows over applicable construction periods and existing cash and cash equivalents to cover planned construction expenditures. The New Bank Credit Facility includes non-financial covenants by the Authority and the Tribe of
the type customarily found in loan agreements for similar transactions including requirements that:



| |  |  | the Tribe 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; and
| | - |  | ------------------------------------------------------------------------------------------------------------



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

As of September 30, 2007, the
Authority and the Tribe were in compliance with all of their respective covenant requirements in the New Bank Credit Facility.

At the
Authoritys option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on
the Authoritys Total Leverage Ratio, as each term is defined in the New Bank Credit Facility, at the time each loan is made. The Authority also pays commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the
product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is between 0.000% and 1.125%, and the Applicable Rate for Eurodollar
rate advances is between 1.250% and 2.375%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of Americas announced prime rate or the federal funds rate plus



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate
advances is payable quarterly in arrears. As of September 30, 2007, the Authority had $33.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at September 30, 2007 were comprised of:
(1) a $24.0 million loan based on a one-month Eurodollar rate of 5.75% plus an Applicable Rate of 1.25% and (2) a $9.0 million loan based on a one-month Eurodollar rate of 5.50% plus an Applicable Rate of 1.25%. The Applicable Rate for
commitment fees was 0.20% as of September 30, 2007. Accrued interest, including commitment fees, on the New Bank Credit Facility was $96,000 as of September 30, 2007.

The initial advances under the New Bank Credit Facility on March 9, 2007 totaled $62.0 million in base rate advances under the revolving loan. The
proceeds from these advances were used to refinance the Authoritys Prior Bank Credit Facility, pay costs related to entering into the New Bank Credit Facility and fund certain operating costs.

2005 61/8% Senior Notes

On February 8, 2005, the Authority issued $250.0 million
Senior Notes with fixed interest payable at a rate of 6.125% per annum (the 2005 Senior Notes). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank Credit Facility and to pay fees and
expenses associated with the issuance. The 2005 Senior Notes mature on February 15, 2013. The first call date for the 2005 Senior Notes is February 15, 2009. Interest on the 2005 Senior Notes is payable semi-annually on February 15
and August 15. The 2005 Senior Notes are uncollateralized general obligations of the Authority, which are effectively subordinated to all of the existing and future senior secured indebtedness of the Authority, including the New Bank Credit
Facility. The 2005 Senior Notes rank equally in right of payment with 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing and rank senior to the remaining 50% of the Authoritys payment
obligations under the Relinquishment Agreement that are then due and owing, the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior
Subordinated Notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Notes. Refer to Note 19 for condensed consolidating financial information of the Authority, its
guarantor subsidiaries and its non-guarantor subsidiary. As of September 30, 2007 and September 30, 2006, accrued interest on the 2005 Senior Notes was $1.9 million.

2001 83/8% Senior Subordinated Notes

In July 2001, the Authority issued $150.0 million
Senior Subordinated Notes with fixed interest payable at a rate of 8.375% per annum (the 2001 Senior Subordinated Notes). The proceeds from this financing were used to pay transaction costs, pay down $90.0 million on the then
existing bank credit facility and fund costs related to Project Sunburst. Interest on the 2001 Senior Subordinated Notes is payable semi-annually on January 1 and July 1. The 2001 Senior Subordinated Notes mature on July 1, 2011. The
first call date for the 2001 Senior Subordinated Notes was July 1, 2006. The 2001 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank Credit Facility, the 2005 Senior Notes
and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2001 Senior Subordinated Notes rank equally with the 2002 Senior Subordinated
Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC
is a guarantor of the 2001 Senior Subordinated Notes. Refer to Note 19 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



In August 2004, the Authority completed a cash tender offer and consent solicitation to repurchase
any or all of its outstanding 2001 Senior Subordinated Notes. As part of the tender offer, the Authority solicited and received requisite consents to certain proposed amendments to the indentures governing the 2001 Senior Subordinated Notes, which
eliminated substantially all of the restrictive covenants thereunder. The aggregate principal amount of 2001 Senior Subordinated Notes tendered was $133.7 million. An aggregate principal amount of $16.3 million of the 2001 Senior Subordinated Notes
remain outstanding as of September 30, 2007. As of September 30, 2007 and September 30, 2006, accrued interest on the 2001 Senior Subordinated Notes was $342,000.

2002 8% Senior Subordinated Notes

In February 2002, the Authority issued $250.0 million Senior
Subordinated Notes with fixed interest payable at a rate of 8.0% per annum (the 2002 Senior Subordinated Notes). The proceeds from this financing were used to pay transaction costs and pay down $243.0 million on the then existing
bank credit facility. Interest on the 2002 Senior Subordinated Notes is payable semi-annually on April 1 and October 1. The 2002 Senior Subordinated Notes mature on April 1, 2012. The first call date for the 2002 Senior Subordinated
Notes was April 1, 2007. The 2002 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar
proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2002 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2003 Senior Subordinated Notes,
the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono
Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2002 Senior Subordinated Notes. Refer to Note 19 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor
subsidiary. As of September 30, 2007 and September 30, 2006, accrued interest on the 2002 Senior Subordinated Notes was $10.0 million.

2003 63/8% Senior Subordinated Notes

In July 2003, the Authority issued $330.0 million
Senior Subordinated Notes with fixed interest payable at a rate of 6.375% per annum (the 2003 Senior Subordinated Notes). The proceeds from this financing were used to repurchase substantially all of the outstanding $300.0 million
8.75% Senior Subordinated Notes issued in March 1999 and to pay fees and expenses associated with the issuance. Interest on the 2003 Senior Subordinated Notes is payable semi-annually on January 15 and July 15. The 2003 Senior Subordinated
Notes mature on July 15, 2009. The 2003 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar
proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2003 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes,
the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono
Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2003 Senior Subordinated Notes. Refer to Note 19 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor
subsidiary. As of September 30, 2007 and September 30, 2006, accrued interest on the 2003 Senior Subordinated Notes was $4.4 million.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



2004 71/8% Senior Subordinated Notes

In
August 2004, the Authority issued $225.0 million Senior Subordinated Notes with fixed interest payable at a rate of 7.125% per annum (the 2004 Senior Subordinated Notes). The net proceeds from this financing, together with $130.0
million of availability under the Prior Bank Credit Facility, were used to repurchase substantially all of the outstanding 2001 Senior Subordinated Notes and substantially all of the outstanding 1999 Senior Notes tendered in the tender offers
described above and to pay fees and expenses associated with the issuance. The 2004 Senior Subordinated Notes mature on August 15, 2014. The first call date for the 2004 Senior Subordinated Notes is August 15, 2009. Interest on the 2004
Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2004 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank Credit Facility, the 2005
Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2004 Senior Subordinated Notes rank equally with the 2001
Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then
due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2004 Senior Subordinated Notes. Refer to Note 19 for condensed consolidating financial information of the
Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of September 30, 2007 and September 30, 2006, accrued interest on the 2004 Senior Subordinated Notes was $2.0 million.

2005 67/8% Senior Subordinated Notes

On February 8, 2005, the Authority issued
$150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the 2005 Senior Subordinated Notes). The net proceeds from this financing were used to repay amounts outstanding under the Prior
Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15, 2010. Interest on
the 2005 Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank Credit Facility,
the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2005 Senior Subordinated Notes rank equally with the
2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are
then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Subordinated Notes. Refer to Note 19 for condensed consolidating financial information of the
Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of September 30, 2007 and September 30, 2006, accrued interest on the 2005 Senior Subordinated Notes was $1.3 million.

The senior and senior subordinated note indentures contain certain financial and non-financial covenants with which the Authority and the Tribe must
comply. The financial covenants include, among other things, limitations on restricted payments and the incurrence of indebtedness, while the non-financial covenants include, among other things, reporting obligations, compliance with laws and
regulations and the Authoritys continued existence. As of September 30, 2007, both the Authority and the Tribe were in compliance with all of their respective covenant requirements in the senior and senior subordinated note indentures.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



WNBA Promissory Note

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

In consideration for this acquisition, MBC paid $2.0 million (with funds advanced from the Authority) and issued a promissory note to the WNBA (the
WNBA Note) for $8.0 million that accrues interest at an annual rate equal to a three-month Eurodollar rate plus 1.5%. The Authority guaranteed the obligations of MBC under the WNBA Note. Pursuant to the WNBA Note, principal payments of
$1.0 million, subject to adjustment for certain revenue thresholds, and interest payments are required to be paid to the WNBA on each anniversary of the WNBA Note. The WNBA Note is scheduled to mature in January 2011, but will mature no later than
January 2013. As of September 30, 2007 and 2006, accrued interest on the WNBA Note was $187,000 and $224,000, respectively. Refer to Note 15 for a further discussion of the Authoritys investment in a WNBA franchise.

Line of Credit

The Authority has a $25.0 million
revolving loan agreement with Bank of America (the Line of Credit). Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of the Authoritys Leverage Ratio, as
each term is defined in the Line of Credit. Borrowings under the Line of Credit are uncollateralized obligations of the Authority. The Line of Credit matures on March 31, 2008 and subjects the Authority to certain covenants, including a
covenant to maintain at least $25.0 million available for borrowing under the New Bank Credit Facility. As of September 30, 2007, the Authority had $16.6 million in loans outstanding under the Line of Credit, which were based on a one-month
Eurodollar rate of 5.14% plus an Applicable Margin of 0.90%. As of September 30, 2007, the Authority was in compliance with all covenant requirements in the Line of Credit and had $8.4 million available for borrowing under the Line of Credit.
As of September 30, 2007 and 2006, accrued interest on the Line of Credit was $17,000 and $9,000, respectively.

Mortgage Payable

In July 2004, the Authoritys wholly owned subsidiary, Mohegan Ventures-NW, formed a limited liability company, Salishan-Mohegan, with Salishan
Company, LLC (Salishan Company), an unrelated third party. Upon formation of Salishan-Mohegan, Salishan Company contributed, among other things, land with a mortgage payable of $2.6 million. The mortgage payable bore interest due on a
monthly basis at an annual rate of 9.5%, with the principal balance payable in full by Salishan-Mohegan on the maturity date of March 28, 2007. Any and all amounts paid by Salishan-Mohegan, including interest payments, pursuant to this
agreement are reimbursable by the Cowlitz Tribe provided certain events occur, as described in the development agreement between Salishan-Mohegan and the Cowlitz Tribe. In October 2006, Salishan-Mohegan paid off the mortgage payable with loan
proceeds from the Salishan Credit Facility described below. Accrued interest on the mortgage payable was $20,000 as of September 30, 2006.

Salishan-Mohegan Bank Credit Facility

In October 2006, Salishan-Mohegan entered into a $25.0 million revolving loan
agreement with Bank of America (the Salishan Credit Facility), which matures on September 30, 2009. The revolving loan has no mandatory amortization provisions and is payable in full at maturity. At the option of Salishan-Mohegan,
each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month,



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



three-month or six-month Eurodollar rate, plus a spread of 1.25% for base rate loans and 2.25% for Eurodollar loans. The base rate is the higher of Bank of
Americas announced prime rate or the federal funds rate plus 0.50%. The Salishan Credit Facility is collateralized by a lien on substantially all of the existing and future assets of Salishan-Mohegan. The obligations of Salishan-Mohegan under
the Salishan Credit Facility are also guaranteed by the Tribe. The Salishan Credit Facility subjects Salishan-Mohegan to a number of restrictive covenants, including financial and non-financial covenants customarily found in loan agreements for
similar transactions.

Immediately following the execution of the loan agreement, $10.0 million in loan proceeds were used by
Salishan-Mohegan to provide a partial repayment of its outstanding loan balance with Mohegan Ventures-NW. Another $2.6 million in loan proceeds were used to pay off a mortgage payable. As of September 30, 2007, Salishan-Mohegan had $7.7 million
of available borrowings under the Salishan Credit Facility. As of September 30, 2007, Salishan-Mohegan had $17.3 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at September 30,
2007 were comprised of : (1) a $15.5 million loan based on a one-month Eurodollar rate of 5.50% plus an Applicable Rate of 2.25% and (2) $1.8 million in loans based on a one-month Eurodollar rate of 5.80% plus an Applicable Rate of 2.25%.
The Applicable Rate for commitment fees was 0.50% as of September 30, 2007. Accrued interest on the Salishan Credit Facility was $42,000 as of September 30, 2007.

Derivative Instruments

The Authority is considered an end user of derivative instruments
and engages in derivative transactions from time to time for risk management purposes only. There were no derivative instruments held by the Authority as of September 30, 2007 or 2006.

Interest rate swap agreements hedging currently outstanding debt instruments of the Authority which qualified for hedge accounting in accordance with
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and were designated as fair value hedges were sold in prior fiscal years for a net aggregate gain of $1.7 million. The $1.7 million net aggregate gain was
deferred and added to the carrying value of the respective notes being hedged and is being amortized and recorded to interest expense over the remaining term of the respective notes. For the fiscal years ended September 30, 2007, 2006 and 2005,
the Authority recorded amortization of $455,000, $444,000 and $711,000 to reduce interest expense related to the sale of these derivative instruments. The Authority expects to record $456,000 to offset interest expense over the next twelve months.

Letters of Credit

As
of September 30, 2007, the Authority maintained four uncollateralized letters of credit to satisfy potential workers compensation liabilities, overdue pari-mutuel wagering tax liabilities of the Pocono Downs entities that may arise,
overdue amounts for purses due to horsemen at Pocono Downs that may arise and potential contractor and subcontractor liabilities relating to the Project Horizon expansion at Mohegan Sun. The letters of credit expire(d) on August 31,
2008, January 25, 2008, November 17, 2007 and September 5, 2008, respectively, subject to renewals. As of September 30, 2007, no amounts were drawn on the letters of credit.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 10LEASES:

The Authority leases space to certain tenants in the Shops at Mohegan Sun and certain other Mohegan Sun outlets. The Authority also leases, to third parties, the rights to utilize the Authoritys antenna on the
Arena. The minimum future rental income on non-cancelable leases expected to be earned by the Authority is as follows (in thousands):



|                             |  |                                  |       |      |   |       |  |      |       |      |   |            |  |       |       |  |   |       |  |   |       
|---------------------------- |  | -------------------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ---------- |  | ----- | ----- |  | - | ----- |  | - | ------
|                             |  | Fiscal Year Ending September 30,
|                             |  | 2008                             |       | 2009 |   | 2010  |  | 2011 |       | 2012 |   | Thereafter |  | Total
|Minimum Future Rental Income |  | $                                | 3,847 |      | $ | 4,000 |  | $    | 3,962 |      | $ | 4,029      |  | $     | 1,970 |  | $ | 3,725 |  | $ | 21,533

The Authority is liable under numerous operating leases for equipment and buildings for the Pocono
Downs properties, which expire in various years through 2012, subject to renewal. Total rental expense for the Pocono Downs properties was $3.2 million, $424,000 and $235,000 for the fiscal years ended September 30, 2007 and 2006 and the period
from date of acquisition to September 30, 2005, respectively. The minimum future rental expense on non-cancelable leases expected to be incurred by the Authority is as follows (in thousands):



|                              |  |                                  |     |      |   |      |  |      |   |      |   |            |  |       |   |  |   |  |   |    
|----------------------------- |  | -------------------------------- | --- | ---- | - | ---- |  | ---- | - | ---- | - | ---------- |  | ----- | - |  | - |  | - | ---
|                              |  | Fiscal Year Ending September 30,
|                              |  | 2008                             |     | 2009 |   | 2010 |  | 2011 |   | 2012 |   | Thereafter |  | Total
|Minimum Future Rental Expense |  | $                                | 304 |      | $ | 21   |  | $    | 5 |      | $ | 5          |  | $     | 4 |  |  |  | $ | 339

The Authority also has loaned funds to tenants related to the Shops at Mohegan Sun and certain
other Mohegan Sun outlets. As of September 30, 2007 and 2006, outstanding tenant loans were $2.0 million and $2.6 million, respectively. These loans mature in periods between three and ten years. These amounts, net of allowance for doubtful
accounts, have been included in other assets in the accompanying consolidated balance sheets.

NOTE 11RELATED PARTY TRANSACTIONS:

On August 4, 2006, the Authority purchased a 5.0% membership interest in Salishan-Mohegan from Mohegan Ventures-NW and sold such 5.0% interest to
the Tribe for approximately $351,000, reflecting the carrying value of such interest. On October 17, 2006, a 2.85% membership interest in Salishan-Mohegan was transferred from Salishan Company to the Tribe, in exchange for the Tribes
guarantee of the Salishan Credit Facility. The amount of the membership interest transferred was approximately $197,000, reflecting the carrying value of the 2.85% interest. Subsequent to this transaction, Mohegan Ventures-NW holds a 49.15%
membership interest, the Tribe holds a 7.85% membership interest and Salishan Company holds a 43.0% membership interest in Salishan-Mohegan (see Note 16). Mohegan Ventures-NW and the Tribe continue to each hold one of four seats on the Board of
Managers of Salishan-Mohegan.

Roland J. Harris, a member of the Authoritys Management Board, resigned from his position in the
Tribal Council, and therefore the Management Board, on December 11, 2006 to accept a position as Senior Vice President of Project Management at the Authority. Mr. Harris subsequently resigned from this position in November 2007.

The Tribe provides governmental and certain administrative and miscellaneous services to the Authority in conjunction with the operation
of Mohegan Sun. During the fiscal years ended September 30, 2007, 2006 and 2005, the Authority incurred $23.7 million, $19.8 million and $17.9 million, respectively, of expenses for such services.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Authority leases the land on which Mohegan Sun is located from the Tribe pursuant to a long-term
lease. The Authority is required to pay to the Tribe a nominal annual rental fee under the lease (see Note 13). The lease has an initial term of 25 years and is renewable for an additional 25-year term upon expiration.

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. The Authority expensed $262,000 relating to these land lease agreements for each of the fiscal years ended September 30, 2007, 2006 and 2005.

The Authority purchases the majority of its utilities, including electricity, gas, water and waste water services, from an instrumentality of the Tribe,
the Mohegan Tribal Utility Authority. During the fiscal years ended September 30, 2007, 2006 and 2005, the Authority incurred costs of $23.6 million, $19.7 million and $16.5 million, respectively, for such utilities.

The Tribe previously provided services through its Development Department for projects related to Mohegan Sun. The Development Department of the Tribe,
including personnel assigned to the department, was transferred to the Authority during the fiscal year ended September 30, 2007. Prior to this transfer, the Authority recorded $53,000, $2.8 million and $10.6 million of capital expenditures
associated with the Tribes Development Department for the fiscal years ended September 30, 2007, 2006, and 2005, respectively.

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.

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.

As of September 30, 2007, approximately 125 employees of the Authority were members of the
Tribe.

NOTE 12EMPLOYEE BENEFIT PLANS:

The Authority maintains a retirement savings plan for its employees under Section 401(k) and section 401(a) of the Internal Revenue Code (the Mohegan Retirement and 401(k) Plan). The 401(k) portion of the plan allows
employees of the Authority to defer up to the lesser of the maximum amount prescribed by the Internal Revenue Code or 25% of their income on a pre-tax basis, through contributions to the 401(k) Plan. The Authority matches 100% of the eligible
employees contributions up to a maximum of 3% of their individual earnings. Contributions to the retirement portion of the plan by the Authority are discretionary and are allocated to eligible employee accounts based on a rate of $0.30 per
qualified hour worked. Employees become eligible for the Mohegan Retirement and 401(k) plan after 90 days of employment and become fully vested after six years of credited service. For the fiscal years ended September 30, 2007, 2006 and 2005,
the Authority has contributed $10.2 million, $9.5 million and $9.1 million, net of forfeitures, to the Mohegan Retirement and 401(k) Plan, respectively.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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, 2007, 2006 and 2005, employee contributions, net
of withdrawals and changes in fair value of investments, totaled $2.9 million, $1.9 million and $2.7 million, respectively.

NOTE 13COMMITMENTS
AND CONTINGENCIES:

The Mohegan Compact

In May 1994, the Tribe and the State of Connecticut entered into a Memorandum of Understanding (MOU) which sets forth certain matters regarding implementation of the Mohegan Compact. The MOU stipulates
that a portion of the revenues earned on slot machines must be paid to the State of Connecticut (Slot Win Contribution). The Slot Win Contribution payments will not be required if the State of Connecticut legalizes any other gaming
operations with slot machines or other commercial casino table games within Connecticut, except those consented to by the Tribe and the Mashantucket Pequot Tribe. For each 12-month period commencing July 1, 1995, the Slot Win Contribution shall
be the lesser of (a) 30% of gross revenues from slot machines, or (b) the greater of (i) 25% of gross revenues from slot machines or (ii) $80.0 million.

The Authority reflected expenses associated with the Slot Win Contribution totaling $230.4 million, $226.3 million and $215.2 million for the fiscal
years ended September 30, 2007, 2006 and 2005, respectively. As of September 30, 2007 and 2006, outstanding Slot Win Contribution payments to the State of Connecticut totaled $19.3 million and $19.5 million, respectively.

Category One Slot Machine License

On
September 27, 2006, a conditional Category One slot machine license was granted to Downs Racing by the PGCB for the operation of slot machines at Mohegan Sun at Pocono Downs. After the satisfaction of certain regulatory conditions and the
payment of the one-time slot machine license fee of $50.0 million to the PGCB in October 2006, Downs Racing opened Phase I of its gaming and entertainment facility in November 2006. The PGCB approved a permanent Category One slot machine license for
Downs Racing on December 20, 2006. This license initially permits Downs Racing to install and operate up to 3,000 slot machines at Mohegan Sun at Pocono Downs. Under certain circumstances, Downs Racing may be permitted to install up to a total
of 5,000 slot machines at Mohegan Sun at Pocono Downs. A minimum of 1,500 slot machines were required to be in operation within 12 months of the issuance of the conditional slot machine license. In November 2007, the PGCB granted Downs Racing a
one-year extension to reach the 1,500 slot machine threshold.

The Race Horse Development and Gaming Act of 2004 stipulates that a portion
of the gross revenues earned on slot machines by holders of Category One licenses must be paid to the PGCB on a daily basis, which includes amounts to be paid to the Pennsylvania Harness Horsemens Association Inc. (the PHHA) and
local share assessments to be paid to the host cities and municipalities. The current assessment of the amount payable to the PGCB on a daily basis is 55% of gross slot revenues. In addition to this daily slot machine tax assessment, Downs Racing
must pay, on an annual basis, to the PGCB amounts necessary to ensure that the city and municipality hosting Mohegan Sun at Pocono Downs will receive an annual minimum of $10.0 million from the local share assessment. The local share assessment is
equal to the greater of 2.0% of annual gross slot revenues or $10.0 million. Downs Racing maintains a $5.0 million escrow deposit in the name of the Commonwealth of Pennsylvania for the payment of slot machine tax assessments to the PGCB, which is
included in other assets in the accompanying consolidated balance sheet as of September 30, 2007.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



The Authority reflected expenses associated with the PGCB slot machine tax assessments totaling $92.2
million for the fiscal year ended September 30, 2007. As of September 30, 2007, a liability for slot machine tax payments owed to the PGCB of $6.1 million was recorded in the accompanying consolidated balance sheet.

PGCB Regulatory Fees

In addition to
the slot machine tax payments described above, the holders of slot machine licenses are also required to reimburse the PGCB for administrative and operating expenses incurred. The assessment of this amount on Downs Racing and other slot facility
operators that are currently open is deferred until all licensed entities are opened. In order to fund current operations of the PGCB, two loans in the amount of $36.0 million and $22.6 million, as well as a payment of $7.0 million from current
licensees, were granted to the PGCB from gaming tax funds received by the Commonwealth of Pennsylvania. These loans cover expenses incurred by the PGCB from inception to June 30, 2008, and are expected to be repaid in total by the slot machine
licensees once all approved gaming facilities are open. Each licensees share of these costs will be proportional to each licensees gross slot machine revenues.

Based upon an estimate of Downs Racings slot machine revenues compared to current and future licensees in the Commonwealth, Downs Racing is
recording expenses associated with the reimbursement of PGCB operating expenses at a rate of 1.5% of gross slot machine revenues. This rate has been approved by the PGCB, which receives corresponding payments on a weekly basis from Downs Racing. The
Authority reflected expenses associated with this fee assessment totaling $2.4 million for the fiscal year ended September 30, 2007. As of September 30, 2007, a liability for regulatory fee payments owed to the PGCB of $54,000 was recorded
in the accompanying consolidated balance sheet. Downs Racing has also made a prepayment to the PGCB of $800,000 for a portion of their incurred expenses, which was recorded in prepaid expenses in the accompanying consolidated balance sheet as of
September 30, 2007.

Priority Distribution Agreement

On August 1, 2001, the Authority and the Tribe entered into an agreement (the Priority Distribution Agreement), which obligates the
Authority to make monthly payments to the Tribe to the extent of the Authoritys net cash flow, as defined in the Priority Distribution Agreement. The Priority Distribution Agreement, which has a perpetual term, limits the maximum aggregate
payments by the Authority to the Tribe in each calendar year to $14.0 million, as adjusted annually in accordance with the formula specified in the Priority Distribution Agreement to reflect the effects of inflation. However, payments pursuant to
the Priority Distribution Agreement do not reduce the Authoritys obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other agreements with the Tribe. The monthly
payments under the Priority Distribution Agreement are limited obligations of the Authority payable only to the extent of its net cash flow, as defined in the Priority Distribution Agreement, and are not secured by a lien or encumbrance on any
assets or property of the Authority. The Authoritys consolidated financial statements reflect payments associated with the Priority Distribution Agreement of $16.8 million, $16.3 million and $15.8 million for the fiscal years ended
September 30, 2007, 2006 and 2005, respectively.

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 an
annual payment of $500,000 to minimize the impact on the Town resulting from the decreased tax revenues on reservation land held in trust. The Tribe assigned its right and obligations in the agreement with the Town to the Authority.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



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 amended in March 2007 to update the legal description of the property
covered under the lease, which was approved by the Secretary of the Interior on April 9, 2007. 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 mortgage securing the Authoritys obligations under the New 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.



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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.

ACLS of New England, Inc.

The Authority has a 10-year laundry services agreement with ACLS of New England, Inc. (ACLS). The Authority has an option to renew the agreement for one additional 10-year term after its expiration in
October 2012. Under the laundry services agreement, the Authority will pay an agreed upon rate for laundry services, adjusted annually for the Consumer Price Index and unusual increases in energy costs. Additionally, the Authority has made a
$500,000 loan to ACLS to develop the laundry service facility. Pursuant to the terms of the loan, interest may accrue based on the exercise of the renewal options or other certain circumstances. In the event that circumstances occur where interest
will be accrued, interest shall accrue commencing from the date of the advance at an annual rate of five percent.

The Authority also
entered into a co-investment and escrow agreement with the Mashantucket Pequot Tribal Nation (MPTN) and ACLS. Under the terms of those agreements, the Authority and MPTN may, under certain circumstances, become the joint owners of the
laundry facility and be jointly and severally obligated to repay a term loan which is secured by a mortgage on the laundry facility. The term of the agreements is for ten years and, if the Authority and MPTN become obligated to repay the term loan,
the maximum potential future principal payments (undiscounted) the Authority and MPTN could be required to make are approximately $3.6 million.

Pocono Downs Purchase Settlement

On August 7, 2006, the Authority and the seller of the Pocono Downs entities, a
subsidiary of Penn National Gaming Inc. (Penn National), entered into an amendment of the Pocono Downs Purchase Agreement. Penn National joined in this amendment to confirm its continuing guaranty of the performance of its subsidiaries
under the Pocono Downs Purchase Agreement, as amended. Pursuant to the amendment, the Authority will receive an aggregate refund of $30.0 million of the original purchase price for the Pocono Downs entities, payable in five annual installments of
$7.0 million, $7.0 million, $6.5 million, $6.0 million and $3.5 million in November 2007, 2008, 2009, 2010 and 2011, respectively. The first installment of $7.0 million was received on November 14, 2007. Pursuant to the amendment, the seller
and the Authority agreed to modify certain provisions of the Pocono Downs Purchase Agreement, including: 1) the elimination of the Authoritys post-closing termination rights; 2) the elimination of the sellers indemnification obligations
for costs in excess of $2.0 million incurred with respect to remedial actions in connection with certain environmental conditions at Mohegan Sun at Pocono Downs; and 3) the elimination of certain other post-closing indemnification obligations of the
seller, including those relating to claims asserted in connection with a specific property tax matter, described below. Pursuant to SFAS 141, Business Combinations, and other relevant accounting guidance, the $25.2 million present
value of the payments for the $30.0 million refund, calculated utilizing the Authoritys risk-free rate of investment, was recorded as a non-current receivable in other assets in the consolidated balance sheet as of September 30, 2007 and
as a non-operating gain in other income in the consolidated statement of income for the fiscal year



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ended September 30, 2007. The difference between the present value and the contract value of $30.0 million is
being recorded as other non-operating income over the duration of the payment schedule. Accretion of discount to the gain on the Pocono Downs purchase settlement was $1.6 million and $216,000 for the fiscal years ended September 30, 2007 and
2006, respectively. At September 30, 2007 and 2006, the Pocono Downs purchase settlement receivable was $27.0 million and $25.4 million, respectively.

Horsemens Agreement

On January 25, 2005, Downs Racing entered into an agreement with the
PHHA, which represents owners, trainers and drivers at the Mohegan Sun at Pocono Downs harness racing facility. The agreement governs all live harness racing events and simulcasting and account wagering conducted at Mohegan Sun at Pocono Downs and
the OTW facilities through December 31, 2010.

Among other things, the agreement provides for the payment of 4.3% of all pari-mutuel
wagering held at the Mohegan Sun at Pocono Downs facilities to the PHHA. This amount comprises the payment of $420,000 in certain operating costs and expenses for the PHHA, with the remainder allocated to purses owed to the horsemen for each live
racing event. Downs Racing is also required to distribute to the PHHA 2.5% and 1.1% in fees earned on live races conducted at Mohegan Sun at Pocono Downs and simulcast to wagering locations inside and outside Pennsylvania, respectively.

Also, as previously described above, the Race Horse Development and Gaming Act of 2004 requires the holders of slot machine licenses to make payments
to the PHHA of up to 12% of slot machine revenues. Pursuant to the terms of the agreement with the PHHA, a liability for amounts due to the PHHA for purses earned by the horsemen but not yet paid, and other fees, of $2.1 million and $453,000 was
recorded in the accompanying consolidated balance sheets as of September 30, 2007 and 2006, respectively.

Pennsylvania Property
Tax Litigation

As the successor owner of Downs Racing, the Authority was involved in a dispute with the Wilkes-Barre Area School
District, which had filed an appeal in November 2001 against Downs Racings predecessor company, Pocono Downs, Inc., and the Luzerne County Board of Assessment Appeals relating to certain property tax assessments. The school district challenged
the certified assessment for the tax year 2002, and sought an increase to the assessed value of that property for 2002 and subsequent tax years, including additional assessments for tax year 2007. A final settlement was reached in June 2007 between
the various parties in the litigation and the settlement was subsequently approved by the Luzerne County Court. Based on the settlement, the Authoritys liability for this litigation covering tax periods through June 30, 2007 was
approximately $3.5 million, which was recorded as a charge to the Authoritys income from operations for the fiscal year ended September 30, 2007. Downs Racing will continue to make agreed upon payments with the Wilkes-Barre Area School
District for each tax year through 2015. The total amount of these payments is $18.2 million.

Other Litigation

The Authority is a defendant in certain litigation incurred in the normal course of business. In the opinion of management, based on the advice of
counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the Authoritys financial position, results of operations or cash flows.



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NOTE 14RELINQUISHMENT AGREEMENT:

In February 1998, the Authority and TCA entered into an agreement (the Relinquishment Agreement or the Agreement). Effective
January 1, 2000 (the Relinquishment Date), the Relinquishment Agreement superseded a then existing management agreement with TCA. The Relinquishment Agreement provides, among other things, that the Authority will make certain
payments to TCA out of, and determined as a percentage of, Revenues (as defined in the Relinquishment Agreement) generated by Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments (Senior Relinquishment
Payments and Junior Relinquishment Payments) have separate schedules and priority. Senior Relinquishment Payments commenced on April 25, 2000, twenty-five days following the end of the first three-month period after the
Relinquishment Date and continue at the end of each three-month period thereafter until January 25, 2015. Junior Relinquishment Payments commenced on July 25, 2000, twenty-five days following the end of the first six-month period after the
Relinquishment Date and continue at the end of each six-month period thereafter until January 25, 2015. Each Senior Relinquishment Payment and Junior Relinquishment Payment is an amount equal to 2.5% of the Revenues generated by Mohegan Sun
over the immediately preceding three-month or six-month payment period, as the case may be. Revenues are defined in the Relinquishment Agreement as gross gaming revenues (other than Class II gaming revenue) and all other 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 event of any bankruptcy, liquidation or reorganization or similar
proceeding relating to the Authority, the Relinquishment Agreement provides that each of the Senior and Junior Relinquishment Payments then due and owing are subordinated in right to payment of senior secured obligations, which include the New Bank
Credit Facility and capital lease obligations, and that the Junior Relinquishment Payments then due and owing are further subordinated to payment of all other senior obligations, including the Authoritys 2005 Senior Notes. The Relinquishment
Agreement also provides that all relinquishment payments are subordinated in right of payment to the minimum priority distribution payments, which are monthly payments required to be made by the Authority to the Tribe, to the extent then due. The
Authority, in accordance with SFAS 5, has recorded a relinquishment liability of the estimated present value of its obligations under the Relinquishment Agreement (see Note 2).

A relinquishment liability of $549.1 million was established at September 30, 1998 based on the present value of the estimated future Mohegan Sun
revenues utilizing the Authoritys risk-free investment rate. At September 30, 2007, the carrying amount of the relinquishment liability was $503.3 million as compared to $548.0 million at September 30, 2006. The decrease in the
relinquishment liability during the fiscal year ended September 30, 2007 is due to $77.5 million in relinquishment payments, offset by a $3.0 million reassessment adjustment of the relinquishment liability and $29.8 million representing the
accretion of discount to the relinquishment liability. Of the $77.4 million in relinquishment payments, $47.4 million represents payment of principal and $30.0 million represents payment of the accretion of discount to the relinquishment liability.
During the fiscal year ended September 30, 2006, the Authority paid $74.6 million in relinquishment payments, consisting of $44.7 million in principal amounts and $29.9 million representing the payment of the accretion of discount to the
relinquishment liability. During the fiscal year ended September 30, 2005, the Authority paid $70.6 million in relinquishment payments, consisting of $42.5 million in principal amounts and $28.1 million representing the payment of the accretion
of discount to the relinquishment liability. The accretion of discount to the relinquishment liability reflects the accretion of the discount to the present value of the relinquishment liability for the impact of the time value of money. At
September 30, 2007 and September 30, 2006, relinquishment payments earned but unpaid were $20.8 million and $20.4 million, respectively.



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The relinquishment liability reassessment adjustment of $3.0 million, $39.4 million and $123.6
million for the fiscal years ended September 30, 2007, 2006 and 2005, respectively, resulted from revised revenue projections as of the end of the current year compared to estimates of revenue projections as of the end of the prior year on the
determination of the relinquishment liability.

In fiscal year 2007, based on updated projections for Project Horizon and delayed
competition in the Northeast gaming market, both having the effect of increasing future Mohegan Sun revenues, the Authority concluded that projected revenues from Mohegan Sun subject to the Relinquishment Agreement over the remaining period of the
Agreement, which expires on December 31, 2014, would increase by approximately $139.8 million, thereby increasing the related relinquishment liability, causing the Authority to record a non-cash relinquishment liability charge of $3.0 million
for the quarter ended September 30, 2007.

In fiscal year 2006, the Authority reviewed current revenue forecasts, including estimated
timing and extent of future competition, and significantly increased revenue projections for the period in which the Relinquishment Agreement applies, primarily due to the approval by the Management Board of the Authority in October 2006 of an
expansion of Mohegan Sun referred to as Project Horizon, and managements estimates of the impact this expansion will have on future competition assumptions. The Authority concluded that projected revenues from Mohegan Sun subject
to the Relinquishment Agreement over the remaining period of the Agreement would increase by approximately $878.2 million, thereby increasing the related relinquishment liability, causing the Authority to record a non-cash relinquishment liability
charge of $39.4 million for the quarter ended September 30, 2006.

In fiscal year 2005, the Authority reviewed current revenue
forecasts, including estimated timing and extent of future competition, and significantly increased revenue projections for the period in which the Relinquishment Agreement applies, primarily due to material changes in the Connecticut gaming market
subsequent to September 30, 2005. On May 13, 2005, the United States Interior Board of Indian Appeals overturned the federal recognition of the Historical Eastern Pequot Tribe and the Schaghticoke Tribe of Kent, Connecticut. These
decisions were remanded to the United States Secretary of the Interior for reconsideration. The Authority concluded this ruling was not substantive enough to warrant a reassessment of the relinquishment liability at that time. However, on
October 12, 2005, the Bureau of Indian Affairs upon reconsideration denied the federal recognition of these two Indian tribes which had expressed interest in building casinos in the close proximity of Mohegan Sun in Connecticut. As a result of
this decision and other developments involving the revaluation of the impact to future Mohegan Sun revenues from potential competition in the Northeast gaming market, the Authority concluded events had occurred which are projected to increase
revenues at Mohegan Sun over the remaining relinquishment period by approximately $3.2 billion and, therefore, substantially increase the related relinquishment liability, causing the Authority to account for a non-cash relinquishment liability
charge of $123.6 million for the quarter ended September 30, 2005.

NOTE 15INVESTMENT IN WNBA FRANCHISE:

On January 27, 2003, the Authority created a wholly owned subsidiary, MBC, for the purpose of owning and operating a professional basketball team in
the WNBA. On January 28, 2003, the Authority and MBC entered into the Membership Agreement with WNBA, LLC. The Membership Agreement set forth the terms and conditions pursuant to which MBC acquired a membership in the WNBA and the right to own
and operate a professional basketball team in the WNBA. The Authority guaranteed the obligations of MBC under the Membership Agreement. MBC is a full and unconditional guarantor of the Authoritys outstanding indebtedness under the New Bank
Credit Facility and senior and senior subordinated notes. Refer to Note 19 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary.



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As part of the acquisition, management, with assistance from a third party valuation firm, estimated
the fair value of the player roster to be $4.8 million, and the remaining $5.5 million of MBCs aggregate investment was recorded as franchise value. The player roster value is being amortized over seven years, and the franchise value is being
amortized over thirty years. Since the date of acquisition to September 30, 2007, write-offs of player contracts included on the original player roster totaled $2.8 million. As of September 30, 2007 and 2006, accumulated amortization on
the player roster value was $1.3 million and $1.1 million, respectively. As of September 30, 2007 and 2006, accumulated amortization on the franchise value was $854,000 and $671,000, respectively. For the fiscal years ended September 30,
2007, 2006 and 2005, amortization expense associated with these intangible assets totaled $531,000, $918,000 and $1.1 million, respectively, including charges totaling $58,000, $405,000 and $458,000 related to net write-offs of certain player
contracts included on the original player roster, in the fiscal years ended September 30, 2007, 2006 and 2005, respectively. The Authority expects to incur $465,000 in amortization expense for each of the next two years, $276,000 in the third
year and $183,000 in the fourth and fifth years, respectively, related to these assets.

In connection with MBCs purchase of a
membership in the WNBA, MBC has an approximately 3.6% ownership position in WNBA, LLC, which is being accounted for under the cost method. Under the Limited Liability Company Agreement of WNBA, LLC, if at any time WNBA, LLCs Board of Governors
determines that additional funds are necessary or desirable for the WNBA, LLCs or any league entitys general business, the Board of Governors may require additional cash capital contributions. In that circumstance, each member of the
league shall be obligated to contribute to WNBA, LLC an amount of cash equal to that members proportionate share of ownership. Pursuant to the WNBA Note, the principal payment due on the WNBA Note after any such contribution made by MBC will
be reduced by the contribution amount. Through September 30, 2007, there were no cash capital contributions required by WNBA, LLC.

NOTE
16MOHEGAN VENTURES-NORTHWEST, LLC:

On July 23, 2004, the Authority formed Mohegan Ventures-NW as a wholly owned subsidiary
of the Authority and one of three members in Salishan-Mohegan, formed with Salishan Company, an unrelated third party, to participate in the development and management of a casino to be located in Clark County, Washington. The proposed casino (the
Cowlitz Project) will be owned by the Cowlitz Tribe. The Mohegan Tribe is also a member of Salishan-Mohegan. Mohegan Ventures-NW holds a 49.15% membership interest, the Tribe holds a 7.85% membership interest and Salishan Company holds a
43.0% membership interest in Salishan-Mohegan. Mohegan Ventures-NW and the Mohegan Tribe each hold one of four seats on the Board of Managers of Salishan-Mohegan. Salishan-Mohegan was designated as an unrestricted subsidiary of the Authority
and therefore is not required to be a guarantor of the Authoritys debt obligations.

Upon formation of Salishan-Mohegan, Salishan
Company contributed land purchase options related to property in Clark County, Washington. On January 3, 2006, in accordance with the option agreements, the Authority exercised certain of these options and purchased two respective parcels for
$7.5 million, including closing costs for purposes of the Cowlitz Project. On April 28, 2006, the Authority closed on the remaining option and purchased the respective parcel for $3.2 million, including closing costs and net of total purchase
option payments made in prior periods of $1.6 million. The option agreements also required a cumulative payment of $2.4 million for fees related to extending the options to purchase all three parcels, which were due at the closing of the last
parcel.

Pursuant to the development agreement described below, the notes receivable contributed to Salishan-Mohegan and amounts paid by
Salishan-Mohegan subsequent to formation related to the development of the Cowlitz Project are reimbursable to Salishan-Mohegan by the Cowlitz Tribe, subject to appropriate approvals defined in the development agreement. Reimbursements are
contingent and are to be distributed upon: (1) the



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



receipt of necessary financing for the development of the proposed casino; and (2) the property being taken into trust by the United States Department
of the Interior. Notes receivable bear interest at the Wall Street Journal Prime Rate plus 2% or 3%, compounded annually. As of September 30, 2007 and 2006, receivables from the Cowlitz Tribe totaled $20.1 million and $13.4 million,
respectively, including accrued interest, offset by a $6.0 million and $4.0 million reserve in the consolidated balance sheets, respectively.

In September 2004, Salishan-Mohegan entered into development and management agreements with the Cowlitz Tribe regarding the Cowlitz Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the
planning, designing, development, construction, and furnishing, as well as providing assistance with the financing, of the Cowlitz Project. The development agreement provides for certain development fees of 3% of total Project Costs, as defined in
the development agreement, which are payable to Mohegan VenturesNW and the Tribe pursuant to the Salishan- Mohegan operating agreement. As of April 2006, Salishan-Mohegan purchased the land to be used as the site for the planned casino, which
will be transferred to the Cowlitz Tribe or the United States under certain conditions in the development agreement. The management agreement is for a period of seven years commencing with the opening of the planned casino, during which
Salishan-Mohegan will manage, operate and maintain the planned casino. The management agreement provides for a management fee of 24% of Net Revenues, as defined in the management agreement, which approximates net income from the Cowlitz Project.
Pursuant to the operating agreement, management fees will be allocated to the members of Salishan-Mohegan based on their respective membership percentages. Development of the Cowlitz Project is subject to certain governmental and regulatory
approvals, including, but not limited to, negotiating a gaming compact with the State of Washington and the United States Department of the Interior accepting land into trust on behalf of the Cowlitz Tribe. The management agreement is subject to
approval by the NIGC.

NOTE 17DISCONTINUED OPERATIONS:

Prior to the Authoritys acquisition of the Pocono Downs entities, Penn National, the former owner of the Pocono Downs entities, entered into an agreement to sell all of the assets associated with the OTW
facility located in Erie, Pennsylvania to MTR Gaming Group, Inc. and Presque Isle Downs Inc., collectively known as Presque Isle, for $7.0 million. Penn National assigned its rights to proceeds under this agreement to Downs Racing upon its
acquisition by the Authority. Accordingly, Presque Isle was required to make the $7.0 million payment to Downs Racing upon the occurrence of either of the following two conditions: (1) the commencement by any of the Presque Isle entities of
pari-mutuel wagering in Erie, Pennsylvania or (2) the receipt by any Presque Isle entity of revenue from slot machine operations in Erie, Pennsylvania.

In October 2006, the PGCB granted Presque Isle a conditional license to operate slot machines at Presque Isle Downs in Erie County, Pennsylvania. In February 2007, Presque Isle opened slot machine gaming operations at
the Erie property. In July 2007, Presque Isle commenced pari-mutuel wagering at Presque Isle Downs and paid Downs Racing $7.0 million in return for the conveyance of the Erie OTW facility, pursuant to the terms of the agreement. The Authority has
accordingly reported the results and sale of its Erie OTW facility from its Pocono Downs operating segment as income from discontinued operations and loss on sale of discontinued operations, respectively, in the accompanying consolidated statements
of income, which includes total net revenues from the Erie OTW facility of $2.6 million, $3.4 million and $2.7 million for the fiscal years ended September 30, 2007 and 2006 and the period from date of acquisition to September 30, 2005,
respectively. As of September 30, 2006, assets held for sale totaled $7.1 million, which were comprised of the property and equipment of the Erie OTW operations, net of accumulated depreciation.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 18SEGMENT REPORTING:

As of September 30, 2007, the Authority owns and operates the Mohegan Sun and Mohegan Sun Country Club properties in Connecticut and, through the Pocono Downs entities, operates a gaming and entertainment
facility offering slot machines and harness racing and several OTW facilities in Pennsylvania (of which one referred to in Note 17 has been sold to a third party and is not reported in the below segment information). All of the Authoritys
revenues are derived from these operations. The Authoritys executive officers review and assess the performance of the operating results and determine the proper allocation of resources to the Mohegan Sun entities in Connecticut, which also
include MBCs ownership of the Connecticut Sun WNBA franchise, and the Pocono Downs entities in Pennsylvania on a separate basis. The Authority, therefore, believes that it has two operating segments, one comprised solely of Mohegan Sun, which
includes the Connecticut entities, and another, referred to as Pocono Downs herein, comprised of the operations of the Pocono Downs entities. The two operating segments are also separate reportable segments due to the differing nature of
their operations. The following tables provide financial information on each segment (in thousands):



|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|----------------------------------------------------------- |  | --------------------------------------- | --------- | - | ------------- | - | --------- | -------- |  | - | --------- | -
|                                                            |  | For the Fiscal Year Ended September 30, |          
|                                                            |  | 2007 (1)                                |           |   | 2006          |   |           | 2005 (2) | 
|Net revenues:                                               |  |                                         |           |   |               |   |           |          |  |   |           |  
|Mohegan Sun                                                 |  | $                                       | 1,430,560 |   |               | $ | 1,392,958 |          |  | $ | 1,305,686 |  
|Pocono Downs                                                |  |                                         | 189,506   |   |               |   | 30,096    |          |  |   | 23,232    |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|Total                                                       |  |                                         | 1,620,066 |   |               |   | 1,423,054 |          |  |   | 1,328,918 |  
|                                                            |  |                                         |          
|Income (loss) from operations:                              |  |                                         |           |   |               |   |           |          |  |   |           |  
|Mohegan Sun                                                 |  |                                         | 290,014   |   |               |   | 267,415   |          |  |   | 150,914   |  
|Pocono Downs                                                |  |                                         | 16,137    |   |               |   | (7,547    | )        |  |   | (295      | )
|Corporate                                                   |  |                                         | (10,586   | ) |               |   | (10,636   | )        |  |   | (11,483   | )
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|Total                                                       |  |                                         | 295,565   |   |               |   | 249,232   |          |  |   | 139,136   |  
|                                                            |  |                                         |          
|Accretion of discount to the relinquishment liability       |  |                                         | (29,794   | ) |               |   | (30,707   | )        |  |   | (27,466   | )
|Interest income                                             |  |                                         | 3,695     |   |               |   | 2,245     |          |  |   | 673       |  
|Interest expense, net of capitalized interest               |  |                                         | (94,363   | ) |               |   | (90,928   | )        |  |   | (88,011   | )
|Write-off of debt issuance costs                            |  |                                         | (71       | ) |               |   |          |          |  |   |          |  
|Loss on early extinguishment of debt                        |  |                                         |          |   |               |   |          |          |  |   | (280      | )
|Other income (expense), net                                 |  |                                         | (137      | ) |               |   | 24,508    |          |  |   | (1,127    | )
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|Income from continuing operations before minority interests |  |                                         | 174,895   |   |               |   | 154,350   |          |  |   | 22,925    |  
|Minority interests                                          |  |                                         | 648       |   |               |   | 420       |          |  |   | 514       |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|Income from continuing operations                           |  |                                         | 175,543   |   |               |   | 154,770   |          |  |   | 23,439    |  
|Total income from discontinued operations                   |  |                                         | 21        |   |               |   | 147       |          |  |   | 228       |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|Net income                                                  |  | $                                       | 175,564   |   |               | $ | 154,917   |          |  | $ | 23,667    |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|                                                            | 
|                                                            |  | For the Fiscal Year Ended September 30, |          
|                                                            |  | 2007                                    |           |   | 2006          |   |           | 2005 (2) | 
|Capital expenditures:                                       |  |                                         |           |   |               |   |           |          |  |   |           |  
|Mohegan Sun                                                 |  | $                                       | 103,742   |   |               | $ | 44,375    |          |  | $ | 45,367    |  
|Pocono Downs                                                |  |                                         | 58,449    |   |               |   | 44,448    |          |  |   | 5,148     |  
|Corporate                                                   |  |                                         | 4         |   |               |   | 13,097    |          |  |   | 476       |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|                                                            |  |                                         |          
|Total                                                       |  | $                                       | 162,195   |   |               | $ | 101,920   |          |  | $ | 50,991    |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|                                                            |  |                                         |          
|                                                            |  | September 30,                           |           |   | September 30, |   |           |          | 
|                                                            |  | 2007                                    |           |   | 2006          |   |           |          | 
|Total assets:                                               |  |                                         |           |   |               |   |           |          |  |   |           |  
|Mohegan Sun                                                 |  | $                                       | 1,540,349 |   |               | $ | 1,505,258 |          |  |   |           |  
|Pocono Downs (including goodwill of $39,459)                |  |                                         | 444,206   |   |               |   | 333,820   |          |  |   |           |  
|Corporate                                                   |  |                                         | 95,422    |   |               |   | 75,279    |          |  |   |           |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  
|Total                                                       |  | $                                       | 2,079,977 |   |               | $ | 1,914,357 |          |  |   |           |  
|                                                            |  |                                         |           |   |               |   |           |          |  |   |           |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to September 30, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Period from date of inception (January 25, 2005) to September 30, 2005 for the Pocono Downs entities.
|--- | -----------------------------------------------------------------------------------------------------



F-36



---

##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



NOTE 19SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:

As of September 30, 2007, substantially all of the Authoritys outstanding public debt, including its 2005 Senior Notes, 2002 Senior
Subordinated Notes, 2003 Senior Subordinated Notes, 2004 Senior Subordinated Notes and 2005 Senior Subordinated Notes, is fully and unconditionally guaranteed by the following subsidiaries of the Authority: MBC, Mohegan Ventures-NW, MCV-PA, the
Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming. MBC is the only subsidiary guarantor, on a full and unconditional basis, of the 2001 Senior Subordinated Notes. Separate financial statements and other disclosures concerning MBC,
Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are not presented below because the Authority believes that the summarized financial information provided below and in Note 18 is adequate for investor
analysis of these subsidiaries. Condensed consolidating financial statement information for the Authority, MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG, MTGA Gaming and the non-guarantor subsidiary,
Salishan-Mohegan, as of September 30, 2007 and 2006 and for the fiscal years ended September 30, 2007, 2006 and 2005 is as follows (in thousands):

CONDENSED CONSOLIDATING BALANCE SHEETS



|                                                 |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|------------------------------------------------ |  | ------------------------ | --------- | --------------------- | - | ----------------------- |  | ------------------------------------ | ------ |  | ----------------- | -------- | - |  | - | ---------
|                                                 |  | As of September 30, 2007
|                                                 |  | Authority                |           | GuarantorSubsidiaries |   | Non-GuarantorSubsidiary |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal
|ASSETS                                           |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Property and equipment, net                      |  | $                        | 1,260,092 |                       | $ | 121,163                 |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,401,206
|Intercompany receivables                         |  |                          | 220,006   |                       |   | 10,372                  |  |                                      |       |  |                   | (230,378 | ) |  |   |         
|Investment in subsidiaries                       |  |                          | 214,011   |                       |   | 2,788                   |  |                                      |       |  |                   | (216,799 | ) |  |   |         
|Other intangible assets, net                     |  |                          | 119,827   |                       |   | 274,650                 |  |                                      |       |  |                   |         |   |  |   | 394,477  
|Other assets, net                                |  |                          | 200,534   |                       |   | 69,491                  |  |                                      | 14,269 |  |                   |         |   |  |   | 284,294  
|                                                 |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total assets                                     |  | $                        | 2,014,470 |                       | $ | 478,464                 |  | $                                    | 34,220 |  | $                 | (447,177 | ) |  | $ | 2,079,977
|                                                 |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|LIABILITIES AND CAPITAL                          |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total current liabilities                        |  | $                        | 292,551   |                       | $ | 40,119                  |  | $                                    | 921    |  | $                 |         |   |  | $ | 333,591  
|Long-term debt, net of current portion           |  |                          | 1,255,259 |                       |   | 3,600                   |  |                                      | 17,250 |  |                   |         |   |  |   | 1,276,109
|Relinquishment liability, net of current portion |  |                          | 406,858   |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 406,858  
|Intercompany payables                            |  |                          |          |                       |   | 220,006                 |  |                                      | 10,372 |  |                   | (230,378 | ) |  |   |         
|Other long-term liabilities                      |  |                          | 735       |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 735      
|                                                 |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities                                |  |                          | 1,955,403 |                       |   | 263,725                 |  |                                      | 28,543 |  |                   | (230,378 | ) |  |   | 2,017,293
|Minority interests in subsidiaries               |  |                          |          |                       |   | 1,043                   |  |                                      |       |  |                   | 2,890    |   |  |   | 3,933    
|Total capital                                    |  |                          | 59,067    |                       |   | 213,696                 |  |                                      | 5,677  |  |                   | (219,689 | ) |  |   | 58,751   
|                                                 |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities and capital                    |  | $                        | 2,014,470 |                       | $ | 478,464                 |  | $                                    | 34,220 |  | $                 | (447,177 | ) |  | $ | 2,079,977
|                                                 |  |                          |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          



|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|------------------------------------------------ |  | ------------------------ | --------- | - | --------------------- | - | ----------------------- |  | ------------------------------------ | ------ |  | ----------------- | -------- | - |  | - | --------- | -
|                                                 | 
|                                                 |  | As of September 30, 2006 |          
|                                                 |  | Authority                |           |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiary |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal |         
|ASSETS                                           |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Property and equipment, net                      |  | $                        | 1,243,150 |   |                       | $ | 76,722                  |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,339,823 |  
|Intercompany receivables                         |  |                          | 118,415   |   |                       |   | 19,148                  |  |                                      |       |  |                   | (137,563 | ) |  |   |          |  
|Investment in subsidiaries                       |  |                          | 233,174   |   |                       |   | 3,358                   |  |                                      |       |  |                   | (236,532 | ) |  |   |          |  
|Other intangible assets, net                     |  |                          | 119,826   |   |                       |   | 219,823                 |  |                                      |       |  |                   |         |   |  |   | 339,649   |  
|Other assets, net                                |  |                          | 181,415   |   |                       |   | 44,079                  |  |                                      | 9,391  |  |                   |         |   |  |   | 234,885   |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total assets                                     |  | $                        | 1,895,980 |   |                       | $ | 363,130                 |  | $                                    | 29,342 |  | $                 | (374,095 | ) |  | $ | 1,914,357 |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|LIABILITIES AND CAPITAL                          |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total current liabilities                        |  | $                        | 261,135   |   |                       | $ | 7,858                   |  | $                                    | 3,355  |  | $                 |         |   |  | $ | 272,348   |  
|Long-term debt, net of current portion           |  |                          | 1,221,804 |   |                       |   | 4,000                   |  |                                      |       |  |                   |         |   |  |   | 1,225,804 |  
|Relinquishment liability, net of current portion |  |                          | 451,038   |   |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 451,038   |  
|Intercompany payables                            |  |                          |          |   |                       |   | 118,415                 |  |                                      | 19,148 |  |                   | (137,563 | ) |  |   |          |  
|Other long-term liabilities                      |  |                          | 542       |   |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 542       |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total liabilities                                |  |                          | 1,934,519 |   |                       |   | 130,273                 |  |                                      | 22,503 |  |                   | (137,563 | ) |  |   | 1,949,732 |  
|Minority interest in subsidiary                  |  |                          |          |   |                       |   |                        |  |                                      |       |  |                   | 3,480    |   |  |   | 3,480     |  
|Total capital                                    |  |                          | (38,539   | ) |                       |   | 232,857                 |  |                                      | 6,839  |  |                   | (240,012 | ) |  |   | (38,855   | )
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total liabilities and capital                    |  | $                        | 1,895,980 |   |                       | $ | 363,130                 |  | $                                    | 29,342 |  | $                 | (374,095 | ) |  | $ | 1,914,357 |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  



F-37



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



CONDENSED CONSOLIDATING STATEMENTS OF INCOME



|                                                                   |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|------------------------------------------------------------------ |  | -------------------------------------------- | --------- | - | --------------------- | - | ------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                   |  | For the Fiscal Year Ended September 30, 2007 |          
|                                                                   |  | Authority                                    |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                       |  | $                                            | 1,426,401 |   |                       | $ | 195,167 |                         |  | $ |                                     |   |  | $                 | (1,502 | ) |  | $ | 1,620,066 |  
|Operating costs and expenses:                                      |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                        |  |                                              | 842,843   |   |                       |   | 143,885 |                         |  |   |                                     |   |  |                   | (1,502 | ) |  |   | 985,226   |  
|Advertising, general and administrative                            |  |                                              | 216,737   |   |                       |   | 23,351  |                         |  |   | 2,004                                |   |  |                   |       |   |  |   | 242,092   |  
|Pre-opening costs and expenses                                     |  |                                              | 445       |   |                       |   | 3,391   |                         |  |   |                                     |   |  |                   |       |   |  |   | 3,836     |  
|Depreciation and amortization                                      |  |                                              | 81,950    |   |                       |   | 11,397  |                         |  |   |                                     |   |  |                   |       |   |  |   | 93,347    |  
|Relinquishment liability reassessment                              |  |                                              | 2,997     |   |                       |   |        |                         |  |   |                                     |   |  |                   |       |   |  |   | 2,997     |  
|                                                                   |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                 |  |                                              | 1,144,972 |   |                       |   | 182,024 |                         |  |   | 2,004                                |   |  |                   | (1,502 | ) |  |   | 1,327,498 |  
|                                                                   |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                      |  |                                              | 281,429   |   |                       |   | 13,143  |                         |  |   | (2,004                               | ) |  |                   |       |   |  |   | 292,568   |  
|Accretion of discount to the relinquishment liability              |  |                                              | (29,794   | ) |                       |   |        |                         |  |   |                                     |   |  |                   |       |   |  |   | (29,794   | )
|Interest expense, net of capitalized interest                      |  |                                              | (56,843   | ) |                       |   | (36,232 | )                       |  |   | (2,324                               | ) |  |                   | 1,036  |   |  |   | (94,363   | )
|Loss on interests in subsidiaries                                  |  |                                              | (22,139   | ) |                       |   | (570    | )                       |  |   |                                     |   |  |                   | 22,709 |   |  |   |          |  
|Other income (expense), net                                        |  |                                              | (86       | ) |                       |   | 1,442   |                         |  |   | 3,167                                |   |  |                   | (1,036 | ) |  |   | 3,487     |  
|                                                                   |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interests |  |                                              | 172,567   |   |                       |   | (22,217 | )                       |  |   | (1,161                               | ) |  |                   | 22,709 |   |  |   | 171,898   |  
|Minority interests                                                 |  |                                              |          |   |                       |   | 57      |                         |  |   |                                     |   |  |                   | 591    |   |  |   | 648       |  
|                                                                   |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations                           |  |                                              | 172,567   |   |                       |   | (22,160 | )                       |  |   | (1,161                               | ) |  |                   | 23,300 |   |  |   | 172,546   |  
|Income from discontinued operations                                |  |                                              |          |   |                       |   | 21      |                         |  |   |                                     |   |  |                   |       |   |  |   | 21        |  
|                                                                   |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                  |  | $                                            | 172,567   |   |                       | $ | (22,139 | )                       |  | $ | (1,161                               | ) |  | $                 | 23,300 |   |  | $ | 172,567   |  
|                                                                   |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  



|                                                                  |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|----------------------------------------------------------------- |  | -------------------------------------------- | --------- | - | --------------------- | - | ------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                  |  | For the Fiscal Year Ended September 30, 2006 |          
|                                                                  |  | Authority                                    |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                      |  | $                                            | 1,389,629 |   |                       | $ | 34,627  |                         |  | $ |                                     |   |  | $                 | (1,202 | ) |  | $ | 1,423,054 |  
|Operating costs and expenses:                                     |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                       |  |                                              | 804,522   |   |                       |   | 26,269  |                         |  |   |                                     |   |  |                   | (1,202 | ) |  |   | 829,589   |  
|Advertising, general and administrative                           |  |                                              | 199,780   |   |                       |   | 10,129  |                         |  |   | 1,771                                |   |  |                   |       |   |  |   | 211,680   |  
|Pre-opening costs and expenses                                    |  |                                              |          |   |                       |   | 5,130   |                         |  |   |                                     |   |  |                   |       |   |  |   | 5,130     |  
|Depreciation and amortization                                     |  |                                              | 84,473    |   |                       |   | 3,543   |                         |  |   |                                     |   |  |                   |       |   |  |   | 88,016    |  
|Relinquishment liability reassessment                             |  |                                              | 39,407    |   |                       |   |        |                         |  |   |                                     |   |  |                   |       |   |  |   | 39,407    |  
|                                                                  |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                |  |                                              | 1,128,182 |   |                       |   | 45,071  |                         |  |   | 1,771                                |   |  |                   | (1,202 | ) |  |   | 1,173,822 |  
|                                                                  |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                     |  |                                              | 261,447   |   |                       |   | (10,444 | )                       |  |   | (1,771                               | ) |  |                   |       |   |  |   | 249,232   |  
|Accretion of discount to the relinquishment liability             |  |                                              | (30,707   | ) |                       |   |        |                         |  |   |                                     |   |  |                   |       |   |  |   | (30,707   | )
|Interest expense, net of capitalized interest                     |  |                                              | (64,983   | ) |                       |   | (25,945 | )                       |  |   | (1,203                               | ) |  |                   | 1,203  |   |  |   | (90,928   | )
|Loss on interests in subsidiaries                                 |  |                                              | (35,469   | ) |                       |   | (484    | )                       |  |   |                                     |   |  |                   | 35,953 |   |  |   |          |  
|Other income, net                                                 |  |                                              | 24,629    |   |                       |   | 1,257   |                         |  |   | 2,070                                |   |  |                   | (1,203 | ) |  |   | 26,753    |  
|                                                                  |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interest |  |                                              | 154,917   |   |                       |   | (35,616 | )                       |  |   | (904                                 | ) |  |                   | 35,953 |   |  |   | 154,350   |  
|Minority interest                                                 |  |                                              |          |   |                       |   |        |                         |  |   |                                     |   |  |                   | 420    |   |  |   | 420       |  
|                                                                  |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations                          |  |                                              | 154,917   |   |                       |   | (35,616 | )                       |  |   | (904                                 | ) |  |                   | 36,373 |   |  |   | 154,770   |  
|Income from discontinued operations                               |  |                                              |          |   |                       |   | 147     |                         |  |   |                                     |   |  |                   |       |   |  |   | 147       |  
|                                                                  |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                 |  | $                                            | 154,917   |   |                       | $ | (35,469 | )                       |  | $ | (904                                 | ) |  | $                 | 36,373 |   |  | $ | 154,917   |  
|                                                                  |  |                                              |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  



F-38



---

##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                                  |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|----------------------------------------------------------------- |  | -------------------------------------------- | --------- | - | ------------------------- | - | ------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                  |  | For the Fiscal Year Ended September 30, 2005 |          
|                                                                  |  | Authority                                    |           |   | GuarantorSubsidiaries (1) |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                      |  | $                                            | 1,302,036 |   |                           | $ | 28,129  |                         |  | $ |                                     |   |  | $                 | (1,247 | ) |  | $ | 1,328,918 |  
|Operating costs and expenses:                                     |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                       |  |                                              | 760,501   |   |                           |   | 20,184  |                         |  |   |                                     |   |  |                   | (1,247 | ) |  |   | 779,438   |  
|Advertising, general and administrative                           |  |                                              | 189,416   |   |                           |   | 6,942   |                         |  |   | 1,553                                |   |  |                   |       |   |  |   | 197,911   |  
|Pre-opening costs and expenses                                    |  |                                              |          |   |                           |   | 1,257   |                         |  |   |                                     |   |  |                   |       |   |  |   | 1,257     |  
|Depreciation and amortization                                     |  |                                              | 84,731    |   |                           |   | 2,821   |                         |  |   |                                     |   |  |                   |       |   |  |   | 87,552    |  
|Relinquishment liability reassessment                             |  |                                              | 123,624   |   |                           |   |        |                         |  |   |                                     |   |  |                   |       |   |  |   | 123,624   |  
|                                                                  |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                |  |                                              | 1,158,272 |   |                           |   | 31,204  |                         |  |   | 1,553                                |   |  |                   | (1,247 | ) |  |   | 1,189,782 |  
|                                                                  |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                     |  |                                              | 143,764   |   |                           |   | (3,075  | )                       |  |   | (1,553                               | ) |  |                   |       |   |  |   | 139,136   |  
|Accretion of discount to the relinquishment liability             |  |                                              | (27,466   | ) |                           |   |        |                         |  |   |                                     |   |  |                   |       |   |  |   | (27,466   | )
|Interest expense, net of capitalized interest                     |  |                                              | (73,203   | ) |                           |   | (14,808 | )                       |  |   | (218                                 | ) |  |                   | 218    |   |  |   | (88,011   | )
|Loss on interests in subsidiaries                                 |  |                                              | (18,023   | ) |                           |   | (607    | )                       |  |   |                                     |   |  |                   | 18,630 |   |  |   |          |  
|Other income (expense), net                                       |  |                                              | (1,405    | ) |                           |   | 239     |                         |  |   | 650                                  |   |  |                   | (218   | ) |  |   | (734      | )
|                                                                  |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interest |  |                                              | 23,667    |   |                           |   | (18,251 | )                       |  |   | (1,121                               | ) |  |                   | 18,630 |   |  |   | 22,925    |  
|Minority interest                                                 |  |                                              |          |   |                           |   |        |                         |  |   |                                     |   |  |                   | 514    |   |  |   | 514       |  
|                                                                  |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations                          |  |                                              | 23,667    |   |                           |   | (18,251 | )                       |  |   | (1,121                               | ) |  |                   | 19,144 |   |  |   | 23,439    |  
|Income from discontinued operations                               |  |                                              |          |   |                           |   | 228     |                         |  |   |                                     |   |  |                   |       |   |  |   | 228       |  
|                                                                  |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                 |  | $                                            | 23,667    |   |                           | $ | (18,023 | )                       |  | $ | (1,121                               | ) |  | $                 | 19,144 |   |  | $ | 23,667    |  
|                                                                  |  |                                              |           |   |                           |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  

---

|(1) | Period from date of inception (July 25, 2005) to September 2005 for Pocono Downs entities and MCV-PA.
|--- | -----------------------------------------------------------------------------------------------------

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|----------------------------------------------------------- |  | -------------------------------------------- | -------- | - | --------------------- | - | ------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------- | - |  | - | -------- | -
|                                                            |  | For the Fiscal Year Ended September 30, 2007 |         
|                                                            |  | Authority                                    |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |        
|Net cash flows provided by (used in) operating activities   |  | $                                            | 250,274  |   |                       | $ | 36,956  |                         |  | $ | (1,141                               | ) |  | $                 |        |   |  | $ | 286,089  |  
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Purchases of property and equipment                         |  |                                              | (87,990  | ) |                       |   | (45,874 | )                       |  |   |                                     |   |  |                   |        |   |  |   | (133,864 | )
|Payment of Category One slot machine license fee            |  |                                              |         |   |                       |   | (50,000 | )                       |  |   |                                     |   |  |                   |        |   |  |   | (50,000  | )
|Other cash flows provided by (used in) investing activities |  |                                              | (69,169  | ) |                       |   | 4,855   |                         |  |   | (3,444                               | ) |  |                   | 62,106  |   |  |   | (5,652   | )
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                              | (157,159 | ) |                       |   | (91,019 | )                       |  |   | (3,444                               | ) |  |                   | 62,106  |   |  |   | (189,516 | )
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan        |  |                                              | 278,000  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 278,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan        |  |                                              | (278,000 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (278,000 | )
|New Bank Credit Facility borrowingsrevolving loan          |  |                                              | 206,000  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 206,000  |  
|New Bank Credit Facility repaymentsrevolving loan          |  |                                              | (173,000 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |         |   |  |   | (173,000 | )
|Line of credit borrowings                                   |  |                                              | 524,313  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 524,313  |  
|Line of credit repayments                                   |  |                                              | (507,722 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (507,722 | )
|Principal portion of relinquishment liability payments      |  |                                              | (47,399  | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (47,399  | )
|Distributions to Tribe                                      |  |                                              | (75,000  | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (75,000  | )
|Other cash flows provided by (used in) financing activities |  |                                              | (6,819   | ) |                       |   | 70,918  |                         |  |   | 4,592                                |   |  |                   | (62,106 | ) |  |   | 6,585    |  
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows provided by (used in) financing activities   |  |                                              | (79,627  | ) |                       |   | 70,918  |                         |  |   | 4,592                                |   |  |                   | (62,106 | ) |  |   | (66,223  | )
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net increase in cash and cash equivalents                   |  |                                              | 13,488   |   |                       |   | 16,855  |                         |  |   | 7                                    |   |  |                   |        |   |  |   | 30,350   |  
|Cash and cash equivalents at beginning of year              |  |                                              | 75,794   |   |                       |   | (548    | )                       |  |   |                                     |   |  |                   |        |   |  |   | 75,246   |  
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash and cash equivalents at end of year                    |  | $                                            | 89,282   |   |                       | $ | 16,307  |                         |  | $ | 7                                    |   |  | $                 |        |   |  | $ | 105,596  |  
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  



F-39



---

##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|----------------------------------------------------------- |  | -------------------------------------------- | -------- | - | --------------------- | - | ------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------- | - |  | - | -------- | -
|                                                            |  | For the Fiscal Year Ended September 30, 2006 |         
|                                                            |  | Authority                                    |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |        
|Net cash flows provided by (used in) operating activities   |  | $                                            | 259,832  |   |                       | $ | (8,959  | )                       |  | $ | 4                                    |   |  | $                 |        |   |  | $ | 250,877  |  
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Purchases of property and equipment                         |  |                                              | (43,095  | ) |                       |   | (42,326 | )                       |  |   | (13,082                              | ) |  |                   |         |   |  |   | (98,503  | )
|Other cash flows used in investing activities               |  |                                              | (64,846  | ) |                       |   | (15,157 | )                       |  |   | (3,405                               | ) |  |                   | 81,130  |   |  |   | (2,278   | )
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                              | (107,941 | ) |                       |   | (57,483 | )                       |  |   | (16,487                              | ) |  |                   | 81,130  |   |  |   | (100,781 | )
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Bank Credit Facility borrowingsrevolving loan              |  |                                              | 233,000  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 233,000  |  
|Bank Credit Facility repaymentsrevolving loan              |  |                                              | (233,000 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (233,000 | )
|Line of credit borrowings                                   |  |                                              | 444,226  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 444,226  |  
|Line of credit repayments                                   |  |                                              | (444,226 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (444,226 | )
|Principal portion of relinquishment liability payments      |  |                                              | (44,731  | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (44,731  | )
|Distributions to Tribe                                      |  |                                              | (88,900  | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (88,900  | )
|Other cash flows provided by (used in) financing activities |  |                                              | (13,970  | ) |                       |   | 64,973  |                         |  |   | 16,483                               |   |  |                   | (81,130 | ) |  |   | (13,644  | )
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows provided by (used in) financing activities   |  |                                              | (147,601 | ) |                       |   | 64,973  |                         |  |   | 16,483                               |   |  |                   | (81,130 | ) |  |   | (147,275 | )
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents        |  |                                              | 4,290    |   |                       |   | (1,469  | )                       |  |   |                                     |   |  |                   |        |   |  |   | 2,821    |  
|Cash and cash equivalents at beginning of year              |  |                                              | 71,504   |   |                       |   | 921     |                         |  |   |                                     |   |  |                   |        |   |  |   | 72,425   |  
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash and cash equivalents at end of year                    |  | $                                            | 75,794   |   |                       | $ | (548    | )                       |  | $ |                                     |   |  | $                 |        |   |  | $ | 75,246   |  
|                                                            |  |                                              |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  



|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|----------------------------------------------------------- |  | -------------------------------------------- | -------- | - | ------------------------- | - | -------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | -------- | - |  | - | -------- | -
|                                                            |  | For the Fiscal Year Ended September 30, 2005 |         
|                                                            |  | Authority                                    |          |   | GuarantorSubsidiaries (1) |   |          | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |         
|Net cash flows provided by (used in) operating activities   |  | $                                            | 247,340  |   |                           | $ | (264     | )                       |  | $ | (1                                   | ) |  | $                 |         |   |  | $ | 247,075  |  
|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Purchases of property and equipment                         |  |                                              | (45,737  | ) |                           |   | (3,482   | )                       |  |   |                                     |   |  |                   |         |   |  |   | (49,219  | )
|Acquisition of Pocono Downs, net of cash acquired of $875   |  |                                              |         |   |                           |   | (280,114 | )                       |  |   |                                     |   |  |                   |         |   |  |   | (280,114 | )
|Other cash flows used in investing activities               |  |                                              | (291,509 | ) |                           |   | (5,163   | )                       |  |   | (4,892                               | ) |  |                   | 295,719  |   |  |   | (5,845   | )
|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                              | (337,246 | ) |                           |   | (288,759 | )                       |  |   | (4,892                               | ) |  |                   | 295,719  |   |  |   | (335,178 | )
|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Bank Credit Facility borrowingsrevolving loan              |  |                                              | 750,000  |   |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | 750,000  |  
|Bank Credit Facility repaymentsrevolving loan              |  |                                              | (838,000 | ) |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | (838,000 | )
|Bank Credit Facility borrowingsterm loan                   |  |                                              | 58,333   |   |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | 58,333   |  
|Bank Credit Facility repaymentsterm loan                   |  |                                              | (150,000 | ) |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | (150,000 | )
|Line of credit borrowings                                   |  |                                              | 474,900  |   |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | 474,900  |  
|Line of credit repayments                                   |  |                                              | (479,985 | ) |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | (479,985 | )
|Proceeds from the issuance of long-term debt                |  |                                              | 400,000  |   |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | 400,000  |  
|Principal portion of relinquishment liability payments      |  |                                              | (42,540  | ) |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | (42,540  | )
|Distributions to Tribe                                      |  |                                              | (67,500  | ) |                           |   |         |                         |  |   |                                     |   |  |                   |         |   |  |   | (67,500  | )
|Other cash flows provided by (used in) financing activities |  |                                              | (4,204   | ) |                           |   | 289,556  |                         |  |   | 4,893                                |   |  |                   | (295,719 | ) |  |   | (5,474   | )
|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net cash flows provided by financing activities             |  |                                              | 101,004  |   |                           |   | 289,556  |                         |  |   | 4,893                                |   |  |                   | (295,719 | ) |  |   | 99,734   |  
|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net increase in cash and cash equivalents                   |  |                                              | 11,098   |   |                           |   | 533      |                         |  |   |                                     |   |  |                   |         |   |  |   | 11,631   |  
|Cash and cash equivalents at beginning of year              |  |                                              | 60,406   |   |                           |   | 388      |                         |  |   |                                     |   |  |                   |         |   |  |   | 60,794   |  
|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash and cash equivalents at end of year                    |  | $                                            | 71,504   |   |                           | $ | 921      |                         |  | $ |                                     |   |  | $                 |         |   |  | $ | 72,425   |  
|                                                            |  |                                              |          |   |                           |   |          |                         |  |   |                                      |   |  |                   |          |   |  |   |          |  

---

|(1) | Period from date of inception (January 25, 2005) to September 30, 2005 for Pocono Downs entities and MCV-PA.
|--- | ------------------------------------------------------------------------------------------------------------



F-40



---

##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2007, 2006 and 2005

(in thousands)



|                                                      |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|----------------------------------------------------- |  | ----------------------------- | ----- | ---------------------------- | - | --------------------------- |  | ------------------------ | --- |  | - | ------
|                                                      |  | Column A                      |       | Column B                     |   | Column C                    |  | Column D                
|                                                      |  | Balance at beginningof period |       | Charges to costsand expenses |   | Deductions fromreserves (1) |  | Balances at end ofperiod
|Description:                                          |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|Fiscal Year Ended September 30, 2007                  |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|Reserves and allowances deducted from asset accounts: |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|Reserves for uncollectible accounts                   |  | $                             | 8,116 |                              | $ | 3,396                       |  | $                        | 298 |  | $ | 11,214
|Fiscal Year Ended September 30, 2006                  |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|Reserves and allowances deducted from asset accounts: |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|Reserves for uncollectible accounts.                  |  | $                             | 4,992 |                              | $ | 3,557                       |  | $                        | 433 |  | $ | 8,116 
|Fiscal Year Ended September 30, 2005                  |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|Reserves and allowances deducted from asset accounts: |  |                               |       |                              |   |                             |  |                          |     |  |   |       
|Reserves for uncollectible accounts                   |  | $                             | 3,013 |                              | $ | 2,286                       |  | $                        | 307 |  | $ | 4,992 

---

|Note(1): | Deductions from reserves include the write-off of uncollectible accounts, net of recoveries of accounts previously written off.
|-------- | -------------------------------------------------------------------------------------------------------------------------------



S-1



---

##### Table of Contents

EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                  
|3.1         |  | Constitution of the Mohegan Tribe of Indians of Connecticut, as amended (filed as Exhibit 3.1 to the Authoritys Registration Statement on Form S-4, filed with the SEC on November 1, 2004
(the 2004 Form S-4), and incorporated by reference herein).                                                    
|            | 
|3.2         |  | Ordinance No. 95-2 of the Tribe for Gaming on Tribal Lands, enacted on July 15, 1995 (filed as Exhibit 3.2 to the Authoritys Amendment No. 1 to the Authoritys Registration Statement
on Form S-1, filed with the SEC on February 29, 1996 (the 1996 Forms S-1), and incorporated by reference herein).  
|            | 
|3.3         |  | Articles of Organization of Mohegan Basketball Club LLC, dated as of January 27, 2003 (filed as Exhibit 3.3 to the Authoritys Registration Statement on Form S-4, filed with the SEC on
September 23, 2003 (the 2003 Form S-4), and incorporated by reference herein).                                    
|            | 
|3.4         |  | Operating Agreement of Mohegan Basketball Club LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of January 24, 2003 (filed as Exhibit 3.4 to the 2003 Form S-4,
and incorporated by reference herein).                                                                     
|            | 
|3.5         |  | Certificate of Organization of Mohegan Commercial Ventures PA, LLC, dated as of January 6, 2005, as amended (filed as Exhibit 3.5 to the Authoritys Registration Statement on Form S-4,
filed with the SEC on June 7, 2005 (the 2005 Senior Subordinated Form S-4), and incorporated by reference herein).
|            | 
|3.6         |  | Operating Agreement of Mohegan Commercial Ventures PA, LLC, a Commonwealth of Pennsylvania limited liability company, dated as of December 15, 2004 (filed as Exhibit 3.6 to the 2005 Senior
Subordinated Form S-4, and incorporated by reference herein).                                                   
|            | 
|3.7         |  | Certificate of Limited Partnership of Downs Racing, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.7 to the 2005 Senior Subordinated Form S-4, and incorporated by reference
herein).                                                                                                     
|            | 
|3.8         |  | Amended and Restated Limited Partnership Agreement of Downs Racing, L.P., dated as of January 25, 2005 (filed as Exhibit 3.8 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                                
|            | 
|3.9         |  | Certificate of Limited Partnership of Backside, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.9 to the 2005 Senior Subordinated Form S-4, and incorporated by reference
herein).                                                                                                         
|            | 
|3.10        |  | Amended and Restated Limited Partnership Agreement of Backside, L.P., dated as of January 25, 2005 (filed as Exhibit 3.10 to the 2005 Senior Subordinated Form S-4, and incorporated by reference
herein).                                                                                                   
|            | 
|3.11        |  | Certificate of Limited Partnership of Mill Creek Land, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.11 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                                 
|            | 
|3.12        |  | Amended and Restated Limited Partnership Agreement of Mill Creek Land, L.P., dated as of January 25, 2005 (filed as Exhibit 3.12 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                            
|            | 
|3.13        |  | Certificate of Limited Partnership of Northeast Concessions, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.13 to the 2005 Senior Subordinated Form S-4, and incorporated by
reference herein).                                                                                           
|            | 
|3.14        |  | Amended and Restated Limited Partnership Agreement of Northeast Concessions, L.P., dated as of January 25, 2005 (filed as Exhibit 3.14 to the 2005 Senior Subordinated Form S-4, and incorporated
by reference herein).                                                                                      



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.15        |  | Articles of Organization of Mohegan Ventures-Northwest, LLC, dated as of July 23, 2004 (filed as Exhibit 3.15 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2006, filed with the SEC on August 10, 2006 (the June 2006 10-Q), and incorporated by reference herein).                                                                                                                                                                        
|            | 
|3.16        |  | Operating Agreement of Mohegan Ventures-Northwest, LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of July 23, 2004 (filed as Exhibit 3.16 to the June 2006
10-Q and incorporated by reference herein).                                                                                                                                                                                                                                               
|            | 
|3.17        |  | Articles of Organization of Mohegan Golf, LLC, dated as of November 20, 2006 (filed as Exhibit 3.17 to the Authoritys Annual Report on Form 10-K for the fiscal year ended
September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).                                                                                                                                                                                                          
|            | 
|3.18        |  | Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of February 27, 2007 (filed as Exhibit 3.18 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).                                                                                                                                                                        
|            | 
|3.19        |  | Articles of Organization of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.19 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).                                                                                                                                                                         
|            | 
|3.20        |  | Certificate of Formation of MTGA Gaming, LLC, dated as of July 27, 2007 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                
|            | 
|4.1         |  | Relinquishment Agreement, dated February 7, 1998, by and among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit
10.14 to the Authoritys Form 10-K405 for the fiscal year ended September 30, 1998, filed with the SEC on December 29, 1998, and incorporated by reference herein).                                                                                                                        
|            | 
|4.2         |  | Indenture, dated as of July 26, 2001, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the
83/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.9 to the
Authoritys Registration Statement on Form S-4, File No. 333-69472, filed with the SEC on September 14, 2001 (the 2001 Form S-4), and incorporated by reference herein).
|            | 
|4.3         |  | Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture)
and the State Street Bank and Trust Company, as Trustee, relating to the 83/8% Senior Subordinated Notes Due
2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the June 2003 10-Q, and incorporated by reference herein).                                            
|            | 
|4.4         |  | Second Supplemental Indenture, dated as of July 28, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to
State Street Bank and Trust Company), as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2011
of the Mohegan Tribal Gaming Authority (filed as exhibit 4.9 to the June 2004 10-Q and incorporated by reference herein).                                                           
|            | 
|4.5         |  | Form of Global 83/8% Senior Subordinated Notes Due 2011
of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.9 to the 2001 Form S-4, and incorporated by reference herein).                                                                                                                                                                                                                                                                             
|            | 
|4.6         |  | Indenture, dated as of February 20, 2002, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to
the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the Authoritys Registration Statement on Form S-4, filed with the SEC on March 27, 2002 (the 2002 Form S-4), and
incorporated by reference herein).                      



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.7         |  | Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture)
and the State Street Bank and Trust Company, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2003 10-Q, and incorporated by reference
herein).                                                                                                                                                                                                                                                     
|            | 
|4.8         |  | Amended and Restated Supplemental Indenture, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor
to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as exhibit 4.14 to the Authoritys Quarterly Report on Form 10-Q for the quarter ended
December 31, 2004, filed with the SEC on February 14, 2005 (the December 2004 10-Q), and incorporated by reference herein).                                                                                                               
|            | 
|4.9         |  | Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State
Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.15 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                 
|            | 
|4.10        |  | Supplemental Indenture No. 3, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association
(as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                    
|            | 
|4.11        |  | Supplemental Indenture No. 4, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as
Exhibit 4.11 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.12        |  | Supplemental Indenture No. 5, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to
the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).                                                                   
|            | 
|4.13        |  | Supplemental Indenture No. 6, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.13 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference
herein).
|            | 
|4.14        |  | Supplemental Indenture No. 7, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed herewith).                                                                                                                                                                                                                                                       



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.15        |  | Form of Global 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.12 to the 2002 Form S-4, and incorporated by reference
herein).                                                                                                                                                                                                                                                                                                                                                                                                                                  
|            | 
|4.16        |  | Indenture, dated as of July 9, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as
Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed
as Exhibit 4.19 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                               
|            | 
|4.17        |  | Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the
63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the
December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                 
|            | 
|4.18        |  | Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National
Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming
Authority (filed as Exhibit 4.21 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                    
|            | 
|4.19        |  | Supplemental Indenture No. 3, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8%
Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.20        |  | Supplemental Indenture No. 4, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior
Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.18 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and
incorporated by reference herein).                                                                   
|            | 
|4.21        |  | Supplemental Indenture No. 5, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007,
filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).
|            | 
|4.22        |  | Supplemental Indenture No. 6, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated
Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed herewith).                                                                                                                                                                                                                                                       
|            | 
|4.23        |  | Form of Global 63/8% Senior Subordinated Notes Due 2009
of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|4.24        |  | Indenture, dated as of August 3, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as
Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed
as Exhibit 4.19 to the June 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                             



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.25        |  | Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National
Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming
Authority (filed as Exhibit 4.25 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                    
|            | 
|4.26        |  | Supplemental Indenture No. 2, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8%
Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.27        |  | Supplemental Indenture No. 3, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior
Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by
reference herein).                                                                   
|            | 
|4.28        |  | Supplemental Indenture No. 4, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007,
filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).
|            | 
|4.29        |  | Supplemental Indenture No. 5, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated
Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed herewith).                                                                                                                                                                                                                                                       
|            | 
|4.30        |  | Form of Global 71/8% Senior Subordinated Notes Due 2014
of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|4.31        |  | Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and
U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 (filed as
Exhibit 4.28 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                  
|            | 
|4.32        |  | Supplemental Indenture No. 1, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8%
Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.33        |  | Supplemental Indenture No. 2, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior
Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.27 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by
reference herein).                                                                   



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.34        |  | Supplemental Indenture No. 3, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007,
filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).                                         
|            | 
|4.35        |  | Supplemental Indenture No. 4, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated
Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed herewith).                                                                                                                                                                                                                                                                                                
|            | 
|4.36        |  | Form of Global 67/8% Senior Subordinated Notes Due 2015
of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|4.37        |  | Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and
Wachovia Bank, National Association, as Trustee, relating to the 61/8% Senior Notes Due 2013 (filed as Exhibit
4.31 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                   
|            | 
|4.38        |  | Supplemental Indenture No. 1, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.39        |  | Supplemental Indenture No. 2, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC
on December 21, 2006, and incorporated by reference herein).                                                                   
|            | 
|4.40        |  | Supplemental Indenture No. 3, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.36 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007, filed with the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).
|            | 
|4.41        |  | Supplemental Indenture No. 4, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to 61/8% Senior Notes Due
2013 of the Mohegan Tribal Gaming Authority (filed herewith).                                                                                                                                                                                                                                                                                                                 
|            | 
|4.42        |  | Form of Global 61/8% Senior Notes Due 2013 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.32 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|10.1        |  | The Mohegan Tribe State of Connecticut Gaming Compact between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut (filed as Exhibit 10.1 to the 1996 Form S-1 and
incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                                                                                                                                           



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                             
|10.2        |  | Agreement, dated April 25, 1994, between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut resolving certain land claims (filed as Exhibit 10.2 to the 1996 Form S-1 and
incorporated herein by reference).                                                                                                                                      
|            | 
|10.3        |  | Memorandum of Understanding, dated April 25, 1994, between the Mohegan Tribe of Indians of Connecticut and the State of Connecticut regarding implementation of the Compact and the Resolution
Agreement (filed as Exhibit 10.3 to the 1996 Form S-1 and incorporated herein by reference).                                                                             
|            | 
|10.4        |  | Agreement, dated June 16, 1994, between the Mohegan Tribe of Indians of Connecticut and the Town of Montville, Connecticut (filed as Exhibit 10.4 to the 1996 Form S-1, and incorporated herein by
reference).                                                                                                                                                          
|            | 
|10.5        |  | Land Lease, dated September 29, 1995, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.5 to the 1996 Form S-1, and incorporated
herein by reference).                                                                                                                                                   
|            | 
|10.6        |  | Amendment to the Land Lease, dated February 19, 1999, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.6 to the 1999 Form S-4, and
incorporated herein by reference).                                                                                                                                   
|            | 
|10.7        |  | Amendment to the Land Lease, dated March 6, 2007, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed as Exhibit 10.1 to the Authoritys
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007, filed with the SEC on August 13, 2007 (the June 2007 10-Q), and incorporated herein by reference).
|            | 
|10.8        |  | Defeasance 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 (filed
as Exhibit 10.11 to the 1999 Form S-4, and incorporated herein by reference).                                                                                        
|            | 
|10.9        |  | The Merrill Lynch Non-Qualified Deferred Compensation Plan Trust Agreement, dated September 1, 1998, between the Mohegan Tribal Gaming Authority and Merrill Lynch Trust (filed as Exhibit 10.16
to the 1998 Form 10-K, and incorporated by reference herein). *                                                                                                        
|            | 
|10.10       |  | Priority Distribution Agreement between the Mohegan Tribal Gaming Authority and the Mohegan Tribe of Indians of Connecticut, dated August 1, 2001 (filed as Exhibit 10.1 to the Authoritys
Quarterly Report on Form 10-Q for the period ended June 30, 2001 (the June 2001 10-Q), and incorporated by reference herein).                                             
|            | 
|10.11       |  | Standard Form of Agreement Between Owner and Construction Manager where the Construction Manager is NOT a Constructor, AIA Document B801/Cma, and Supplemental Conditions, dated July 9, 1999
(filed as Exhibit 10.21 to the 2002 Form 10-K, and incorporated by reference herein).                                                                                     
|            | 
|10.12       |  | General Conditions of the Contract for Construction, Construction Manager-Advisor Edition, AIA Document A201/CMa, and Supplementary Conditions to the Agreement Between Owner and Construction
Manager (filed as Exhibit 10.22 to the 2002 Form 10K, and incorporated by reference herein).                                                                             
|            | 
|10.13       |  | Employment Agreement, dated October 4, 2001, by and between the Mohegan Tribal Gaming Authority and Robert Soper (filed as Exhibit 10.23 to the 2001 10-K/A, and incorporated by reference
herein). *                                                                                                                                                                   
|            | 
|10.14       |  | Membership Agreement, dated January 28, 2003, by and among WNBA, LLC, the Mohegan Basketball Club LLC, the Mohegan Tribal Gaming Authority and the Mohegan Tribe of Indians of Connecticut (filed
as Exhibit 10.1 to the Form 8-K filed with the SEC on January 30, 2003, and incorporated by reference herein).                                                        



---

##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                  
|10.15       |  | Amended and Restated Loan Agreement, dated as of March 25, 2003, by and among The Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority, the Lenders named therein and
Bank of America, N.A., as Administrative Agent (filed as Exhibit 10.1 to the Form 8-K filed with the SEC on March 27, 2003, and incorporated by reference herein).             
|            | 
|10.16       |  | Amendment No. 1 to the Amended and Restated Loan Agreement, dated as of June 26, 2003, by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Bank of
America National Trust and Savings Association (filed as Exhibit 99.1 to the Form 8-K filed with the SEC on July 1, 2003, and incorporated by reference herein).            
|            | 
|10.17       |  | Loan Agreement, dated June 27, 2003, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.2 to the June 2003 10-Q, and incorporated by reference
herein).                                                                                                                                                                                    
|            | 
|10.18       |  | Revolving Loan Note, dated June 27, 2003, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.3 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                               
|            | 
|10.19       |  | First Amendment to Loan Agreement, dated June 11, 2004, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.1 to the June 2004 10-Q, and incorporated by
reference herein).                                                                                                                                                                 
|            | 
|10.20       |  | Second Amendment to Loan Agreement, dated June 22, 2004, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.2 to the June 2004 10-Q, and incorporated by
reference herein).                                                                                                                                                                
|            | 
|10. 21      |  | Amendment No. 2 to the Amended and Restated Loan Agreement, dated as of July 28, 2004, by and among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and Bank of
America, N.A., as Administrative Agent (filed as Exhibit 10.1 to the Form 8-K filed with the SEC on July 29, 2004, and incorporated by reference herein).                   
|            | 
|10.22       |  | Management Agreement between The Cowlitz Indian Tribe and Salishan-Mohegan, LLC, dated September 21, 2004 (filed as Exhibit 10.30 to the Authoritys Registration Statement on Form S-4, File
No. 333-120119, filed with the SEC on November 1, 2004 (the 2004 Form S-4), and incorporated by reference herein).                                                           
|            | 
|10.23       |  | Development Agreement between The Cowlitz Indian Tribe and Salishan-Mohegan, LLC, dated September 21, 2004 (filed as Exhibit 10.31 to the 2004 Form S-4, and incorporated by reference herein).                                                                                                                                                                              
|            | 
|10.24       |  | Purchase Agreement by and among PNGI Pocono Corp., PNGI, LLC, and Mohegan Tribal Gaming Authority as of October 14, 2004 (filed as Exhibit 10.2 to the Form 8-K filed with the SEC on October 18,
2004, and incorporated by reference herein).                                                                                                                               
|            | 
|10.25       |  | Amendment No. 3 to Amended and Restated Loan Agreement, dated October 14, 2004, by and among the Mohegan Tribe of Indians of Connecticut, the Mohegan Tribal Gaming Authority and Bank of America,
N.A. (filed as Exhibit 10.1 to the Form 8-K filed with the SEC on October 18, 2004, and incorporated by reference herein).                                                
|            | 
|10.26       |  | Third Amendment to Loan Agreement, dated August 31, 2004, between Mohegan Tribal Gaming Authority and Fleet National Bank (filed as Exhibit 10.34 to the 2004 Form S-4, and incorporated by
reference herein).                                                                                                                                                               
|            | 
|10.27       |  | Management Agreement by and among the Menominee Indian Tribe of Wisconsin, the Menominee Kenosha Gaming Authority and the Mohegan Tribal Gaming Authority, dated October 21, 2004 (filed as
Exhibit 10.35 to the 2004 Form S-4, and incorporated by reference herein).                                                                                                       
|            | 
|10.28       |  | Trust Agreement under The Mohegan Retirement and 401(k) Plan dated July 1, 2005 between the Mohegan Tribe of Indians of Connecticut and Merrill Lynch Trust Company, FSB (filed as Exhibit 10.30
to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2005, filed with the SEC on December 9, 2005, and incorporated by reference herein). *



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                          
|10.29       |  | Employment Agreement, executed July 28, 2006, by and between the Mohegan Tribal Gaming Authority and Mitchell Grossinger Etess (filed as Exhibit 10.1 to the Form 8-K filed with the SEC on August
3, 2006, and incorporated herein by reference). *                                                                                                                                                 
|            | 
|10.30       |  | Employment Agreement, executed July 28, 2006, by and between the Mohegan Tribal Gaming Authority and Jeffrey E. Hartmann (filed as Exhibit 10.2 to the Form 8-K filed with the SEC on
August 3, 2006, and incorporated herein by reference). *                                                                                                                                                       
|            | 
|10.31       |  | Employment Agreement, executed July 28, 2006, by and between the Mohegan Tribal Gaming Authority and Leo M. Chupaska (filed as Exhibit 10.3 to the Form 8-K filed with the SEC on August 3, 2006,
and incorporated herein by reference). *                                                                                                                                                           
|            | 
|10.32       |  | Second Amendment to Purchase Agreement and Release of Claims dated as of August 7, 2006 by and among PNGI Pocono, Inc. (as successor to PNGI Pocono, Corp. and PNGI, LLC) and the Mohegan Tribal
Gaming Authority, and is joined in by Penn National Gaming, Inc. for limited purposes described in the agreement (filed as Exhibit 10.4 to the June 2006 10-Q and incorporated by reference herein).
|            | 
|10.33       |  | Employment Agreement, executed December 20, 2006, by and between the Mohegan Tribal Gaming Authority and Anthony Patrone (filed as Exhibit 10.32 to the Authoritys Annual Report on Form
10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated herein by reference).*                                                                        
|            | 
|31.1        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).                                                                                                                                                                                                                                                                                                                  
|            | 
|31.2        |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).                                                                                                                                                                                                                                                                                                                  
|            | 
|32.1        |  | Section 1350 Certification of Chief Executive Officer (filed herewith).                                                                                                                                                                                                                                                                                                                              
|            | 
|32.2        |  | Section 1350 Certification of Chief Financial Officer (filed herewith).                                                                                                                                                                                                                                                                                                                              

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|* | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



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