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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





FORM 10-Q



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

For the quarterly period ended June 30, 2008

OR



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

For the transition period from                      to

Commission
file number 033-80655





MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)







|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|Connecticut                                                    |  | 06-1436334                       
|(State or other jurisdiction of incorporation or organization) |  | (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)





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 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   |  | Smaller reporting company   ̈

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









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MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-Q



|            |  |                                                                                                                                        |  |           
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|            |  |                                                                                                                                        |  | PageNumber
|PART I.     |  | FINANCIAL INFORMATION                                                                                                                  |  |           
|            |  |                                                                                                                                       
|Item 1.     |  | Financial Statements                                                                                                                   |  |           
|            |  |                                                                                                                                       
|            |  | Condensed Consolidated Balance Sheets as of June 30, 2008 and September 30, 2007 (unaudited)                                           |  | 3         
|            |  |                                                                                                                                       
|            |  | Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended June 30, 2008 and 2007 (unaudited)              |  | 4         
|            |  |                                                                                                                                       
|            |  | Condensed Consolidated Statements of Changes in Capital for the Three Months and Nine Months Ended June 30, 2008 and 2007
 (unaudited) |  | 5         
|            |  |                                                                                                                                       
|            |  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2008 and 2007
(unaudited)                           |  | 6         
|            |  |                                                                                                                                       
|            |  | Notes to the Condensed Consolidated Financial Statements (unaudited)                                                                   |  | 7         
|            |  |                                                                                                                                       
|            |  | Report of Independent Registered Public Accounting Firm                                                                                |  | 30        
|            |  |                                                                                                                                       
|Item 2.     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                  |  | 31        
|            |  |                                                                                                                                       
|Item 3.     |  | Quantitative and Qualitative Disclosures About Market Risk                                                                             |  | 64        
|            |  |                                                                                                                                       
|Item 4.     |  | Controls and Procedures                                                                                                                |  | 65        
|            |  |                                                                                                                                       
|PART II.    |  | OTHER INFORMATION                                                                                                                      |  |           
|            |  |                                                                                                                                       
|Item 1.     |  | Legal Proceedings                                                                                                                      |  | 66        
|            |  |                                                                                                                                       
|Item 1A.    |  | Risk Factors                                                                                                                           |  | 66        
|            |  |                                                                                                                                       
|Item 6.     |  | Exhibits                                                                                                                               |  | 66        
|            |  |                                                                                                                                       
|Signatures. |  | Mohegan Tribal Gaming Authority                                                                                                        |  | 67        



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##### Table of Contents

PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

MOHEGAN TRIBAL GAMING
AUTHORITY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)



|                                                 |  |              |           |                   |   |          
|------------------------------------------------ |  | ------------ | --------- | ----------------- | - | ---------
|                                                 |  | June 30,2008 |           | September 30,2007
|ASSETS                                           |  |              |           |                   |   |          
|                                                 |  |             
|Current assets:                                  |  |              |           |                   |   |          
|Cash and cash equivalents                        |  | $            | 77,978    |                   | $ | 105,596  
|Receivables, net                                 |  |              | 34,277    |                   |   | 25,005   
|Inventories                                      |  |              | 16,970    |                   |   | 17,119   
|Other current assets                             |  |              | 29,072    |                   |   | 25,991   
|                                                 |  |              |           |                   |   |          
|Total current assets                             |  |              | 158,297   |                   |   | 173,711  
|                                                 |  |             
|Non-current assets:                              |  |              |           |                   |   |          
|Property and equipment, net                      |  |              | 1,600,285 |                   |   | 1,401,206
|Goodwill                                         |  |              | 39,459    |                   |   | 39,459   
|Other intangible assets, net                     |  |              | 393,025   |                   |   | 394,477  
|Other assets, net                                |  |              | 95,707    |                   |   | 71,124   
|                                                 |  |              |           |                   |   |          
|Total assets                                     |  | $            | 2,286,773 |                   | $ | 2,079,977
|                                                 |  |              |           |                   |   |          
|LIABILITIES AND CAPITAL                          |  |              |           |                   |   |          
|                                                 |  |             
|Current liabilities:                             |  |              |           |                   |   |          
|Current portion of long-term debt                |  | $            | 11,849    |                   | $ | 17,591   
|Current portion of relinquishment liability      |  |              | 104,822   |                   |   | 96,486   
|Trade payables                                   |  |              | 16,996    |                   |   | 18,379   
|Construction payables                            |  |              | 89,490    |                   |   | 36,402   
|Accrued interest payable                         |  |              | 31,390    |                   |   | 20,274   
|Other current liabilities                        |  |              | 138,711   |                   |   | 144,459  
|                                                 |  |              |           |                   |   |          
|Total current liabilities                        |  |              | 393,258   |                   |   | 333,591  
|                                                 |  |             
|Non-current liabilities:                         |  |              |           |                   |   |          
|Long-term debt, net of current portion           |  |              | 1,450,451 |                   |   | 1,276,109
|Relinquishment liability, net of current portion |  |              | 370,098   |                   |   | 406,858  
|Other long-term liabilities                      |  |              | 571       |                   |   | 735      
|                                                 |  |              |           |                   |   |          
|Total liabilities                                |  |              | 2,214,378 |                   |   | 2,017,293
|Minority interests                               |  |              | 11,559    |                   |   | 3,933    
|                                                 |  |             
|Commitments and contingencies                    |  |              |           |                   |   |          
|                                                 |  |             
|Capital:                                         |  |              |           |                   |   |          
|Retained earnings                                |  |              | 60,836    |                   |   | 58,751   
|                                                 |  |              |           |                   |   |          
|Total capital                                    |  |              | 60,836    |                   |   | 58,751   
|                                                 |  |              |           |                   |   |          
|Total liabilities and capital                    |  | $            | 2,286,773 |                   | $ | 2,079,977
|                                                 |  |              |           |                   |   |          

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



3



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MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands)

(unaudited)



|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|----------------------------------------------------------- |  | -------------------------------------- | ------- | - | -------------------------------------- | - | ------- | ------------------------------------- |  | - | ------------------------------------- | - |  | - | --------- | -
|                                                            |  | For theThree Months EndedJune 30, 2008 |         |   | For theThree Months EndedJune 30, 2007 |   |         | For theNine Months EndedJune 30, 2008 |  |   | For theNine Months EndedJune 30, 2007 |  
|Revenues:                                                   |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Gaming                                                      |  | $                                      | 330,532 |   |                                        | $ | 371,140 |                                       |  | $ | 1,037,054                             |   |  | $ | 1,074,310 |  
|Food and beverage                                           |  |                                        | 26,482  |   |                                        |   | 24,757  |                                       |  |   | 76,969                                |   |  |   | 73,525    |  
|Hotel                                                       |  |                                        | 12,497  |   |                                        |   | 11,120  |                                       |  |   | 36,924                                |   |  |   | 35,283    |  
|Retail, entertainment and other                             |  |                                        | 42,554  |   |                                        |   | 32,621  |                                       |  |   | 106,023                               |   |  |   | 91,182    |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Gross revenues                                              |  |                                        | 412,065 |   |                                        |   | 439,638 |                                       |  |   | 1,256,970                             |   |  |   | 1,274,300 |  
|LessPromotional allowances                                 |  |                                        | (35,220 | ) |                                        |   | (32,521 | )                                     |  |   | (100,599                              | ) |  |   | (92,576   | )
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Net revenues                                                |  |                                        | 376,845 |   |                                        |   | 407,117 |                                       |  |   | 1,156,371                             |   |  |   | 1,181,724 |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Operating costs and expenses:                               |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Gaming                                                      |  |                                        | 220,743 |   |                                        |   | 216,334 |                                       |  |   | 658,488                               |   |  |   | 625,015   |  
|Food and beverage                                           |  |                                        | 12,500  |   |                                        |   | 12,807  |                                       |  |   | 36,622                                |   |  |   | 38,386    |  
|Hotel                                                       |  |                                        | 4,488   |   |                                        |   | 4,504   |                                       |  |   | 13,090                                |   |  |   | 12,585    |  
|Retail, entertainment and other                             |  |                                        | 19,681  |   |                                        |   | 11,362  |                                       |  |   | 41,785                                |   |  |   | 32,876    |  
|Advertising, general and administrative                     |  |                                        | 56,142  |   |                                        |   | 59,401  |                                       |  |   | 169,795                               |   |  |   | 173,748   |  
|Corporate expenses                                          |  |                                        | 4,958   |   |                                        |   | 3,222   |                                       |  |   | 16,119                                |   |  |   | 8,406     |  
|Pre-opening costs and expenses                              |  |                                        | 1,314   |   |                                        |   | 84      |                                       |  |   | 1,346                                 |   |  |   | 3,829     |  
|Depreciation and amortization                               |  |                                        | 24,328  |   |                                        |   | 23,740  |                                       |  |   | 72,980                                |   |  |   | 69,851    |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Total operating costs and expenses                          |  |                                        | 344,154 |   |                                        |   | 331,454 |                                       |  |   | 1,010,225                             |   |  |   | 964,696   |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Income from operations                                      |  |                                        | 32,691  |   |                                        |   | 75,663  |                                       |  |   | 146,146                               |   |  |   | 217,028   |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Other income (expense):                                     |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Accretion of discount to the relinquishment liability       |  |                                        | (6,771  | ) |                                        |   | (7,449  | )                                     |  |   | (20,314                               | ) |  |   | (22,346   | )
|Interest income                                             |  |                                        | 913     |   |                                        |   | 1,148   |                                       |  |   | 2,870                                 |   |  |   | 2,688     |  
|Interest expense, net of capitalized interest               |  |                                        | (22,697 | ) |                                        |   | (23,840 | )                                     |  |   | (68,215                               | ) |  |   | (71,564   | )
|Write-off of debt issuance costs                            |  |                                        |        |   |                                        |   |        |                                       |  |   |                                      |   |  |   | (71       | )
|Other income (expense), net                                 |  |                                        | 390     |   |                                        |   | (96     | )                                     |  |   | 461                                   |   |  |   | (458      | )
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Total other expense                                         |  |                                        | (28,165 | ) |                                        |   | (30,237 | )                                     |  |   | (85,198                               | ) |  |   | (91,751   | )
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Income from continuing operations before minority interests |  |                                        | 4,526   |   |                                        |   | 45,426  |                                       |  |   | 60,948                                |   |  |   | 125,277   |  
|Minority interests                                          |  |                                        | 510     |   |                                        |   | 169     |                                       |  |   | 1,243                                 |   |  |   | 497       |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Income from continuing operations                           |  |                                        | 5,036   |   |                                        |   | 45,595  |                                       |  |   | 62,191                                |   |  |   | 125,774   |  
|Income from discontinued operations                         |  |                                        |        |   |                                        |   | 59      |                                       |  |   |                                      |   |  |   | 90        |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Net income                                                  |  | $                                      | 5,036   |   |                                        | $ | 45,654  |                                       |  | $ | 62,191                                |   |  | $ | 125,864   |  
|                                                            |  |                                        |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  

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



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MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(in thousands)

(unaudited)



|                                                              |  |               |         |  
|------------------------------------------------------------- |  | ------------- | ------- | -
|                                                              |  | Total Capital |        
|Balance, March 31, 2008                                       |  | $             | 72,600  |  
|Net income                                                    |  |               | 5,036   |  
|Distributions to Tribe                                        |  |               | (16,800 | )
|                                                              |  |               |         |  
|Balance, June 30, 2008                                        |  | $             | 60,836  |  
|                                                              |  |               |         |  
|Balance, September 30, 2007                                   |  | $             | 58,751  |  
|Net income                                                    |  |               | 62,191  |  
|Distributions to Tribe                                        |  |               | (60,106 | )
|                                                              |  |               |         |  
|Balance, June 30, 2008                                        |  | $             | 60,836  |  
|                                                              |  |               |         |  
|                                                              | 
|                                                              |  | Total Capital |        
|Balance, March 31, 2007                                       |  | $             | 4,913   |  
|Net income                                                    |  |               | 45,654  |  
|Distributions to Tribe                                        |  |               | (18,749 | )
|                                                              |  |               |         |  
|Balance, June 30, 2007                                        |  | $             | 31,818  |  
|                                                              |  |               |         |  
|Balance, September 30, 2006                                   |  | $             | (38,855 | )
|Net income                                                    |  |               | 125,864 |  
|Distributions to Tribe                                        |  |               | (55,230 | )
|Capital adjustment from majority-owned subsidiary transaction |  |               | 39      |  
|                                                              |  |               |         |  
|Balance, June 30, 2007                                        |  | $             | 31,818  |  
|                                                              |  |               |         |  

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



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MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------- | -------- | - | ------------------------------------- | - | -------- | -
|                                                                                                                   |  | For theNine Months EndedJune 30, 2008 |          |   | For theNine Months EndedJune 30, 2007 |  
|Cash flows provided by (used in) operating activities:                                                             |  |                                       |          |   |                                       |   |          |  
|Net income                                                                                                         |  | $                                     | 62,191   |   |                                       | $ | 125,864  |  
|Adjustments to reconcile net income to net cash flows provided by operating activities:                            |  |                                       |          |   |                                       |   |          |  
|Depreciation and amortization                                                                                      |  |                                       | 72,980   |   |                                       |   | 69,948   |  
|Accretion of discount to the relinquishment liability                                                              |  |                                       | 20,314   |   |                                       |   | 22,346   |  
|Cash paid for accretion of discount to the relinquishment liability                                                |  |                                       | (17,605  | ) |                                       |   | (18,850  | )
|Accretion of discount to the Pocono Downs purchase settlement                                                      |  |                                       | (947     | ) |                                       |   | (1,205   | )
|Net (gain) loss on disposition of assets                                                                           |  |                                       | (190     | ) |                                       |   | 1,649    |  
|Provision for losses on receivables                                                                                |  |                                       | 10,143   |   |                                       |   | 2,281    |  
|Amortization of debt issuance costs                                                                                |  |                                       | 3,563    |   |                                       |   | 2,737    |  
|Write-off of debt issuance costs                                                                                   |  |                                       |         |   |                                       |   | 71       |  
|Amortization of net deferred gain on settlement of derivative instruments                                          |  |                                       | 342      |   |                                       |   | 342      |  
|Minority interests                                                                                                 |  |                                       | (1,243   | ) |                                       |   | (497     | )
|Changes in operating assets and liabilities:                                                                       |  |                                       |          |   |                                       |   |          |  
|Increase in receivables                                                                                            |  |                                       | (14,318  | ) |                                       |   | (1,643   | )
|Decrease (increase) in inventories                                                                                 |  |                                       | 149      |   |                                       |   | (1,279   | )
|Increase in other assets                                                                                           |  |                                       | (5,145   | ) |                                       |   | (8,014   | )
|Decrease in trade payables                                                                                         |  |                                       | (1,383   | ) |                                       |   | (1,289   | )
|Increase in other liabilities                                                                                      |  |                                       | 5,918    |   |                                       |   | 30,462   |  
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Net cash flows provided by operating activities                                                                    |  |                                       | 134,769  |   |                                       |   | 222,923  |  
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Cash flows provided by (used in) investing activities:                                                             |  |                                       |          |   |                                       |   |          |  
|Purchases of property and equipment, net of increase in construction payables of $53,088 and $10,600, respectively |  |                                       | (219,212 | ) |                                       |   | (86,049  | )
|Payment of Privilege Fee for Legends Sun project                                                                   |  |                                       | (25,000  | ) |                                       |   |         |  
|Payment of Category One slot machine license fee                                                                   |  |                                       |         |   |                                       |   | (50,000  | )
|Acquisition of Menominee Project development rights and other related assets                                       |  |                                       |         |   |                                       |   | (6,381   | )
|Acquisition of Pautipaug Country Club assets                                                                       |  |                                       |         |   |                                       |   | (4,651   | )
|Proceeds from settlement of contract dispute                                                                       |  |                                       |         |   |                                       |   | 2,000    |  
|Proceeds from asset sales                                                                                          |  |                                       | 1,918    |   |                                       |   | 249      |  
|Issuance of third party loans and advances                                                                         |  |                                       | (3,756   | ) |                                       |   | (3,516   | )
|Payments received on third-party loans                                                                             |  |                                       | 551      |   |                                       |   | 454      |  
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Net cash flows used in investing activities                                                                        |  |                                       | (245,499 | ) |                                       |   | (147,894 | )
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Cash flows provided by (used in) financing activities:                                                             |  |                                       |          |   |                                       |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan                                                               |  |                                       |         |   |                                       |   | 278,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan                                                               |  |                                       |         |   |                                       |   | (278,000 | )
|Bank Credit Facility borrowingsrevolving loan                                                                     |  |                                       | 377,000  |   |                                       |   | 160,000  |  
|Bank Credit Facility repaymentsrevolving loan                                                                     |  |                                       | (205,000 | ) |                                       |   | (133,000 | )
|Salishan Credit Facility borrowingsrevolving loan                                                                 |  |                                       | 3,000    |   |                                       |   | 16,500   |  
|Line of credit borrowings                                                                                          |  |                                       | 410,990  |   |                                       |   | 426,480  |  
|Line of credit repayments                                                                                          |  |                                       | (425,065 | ) |                                       |   | (406,734 | )
|Borrowings from the Mohegan Tribe                                                                                  |  |                                       | 8,333    |   |                                       |   |         |  
|Payments on long-term debt                                                                                         |  |                                       | (1,000   | ) |                                       |   | (3,550   | )
|Minority interest contributions and advances                                                                       |  |                                       | 8,869    |   |                                       |   |         |  
|Principal portion of relinquishment liability payments                                                             |  |                                       | (31,133  | ) |                                       |   | (30,127  | )
|Distributions to Tribe                                                                                             |  |                                       | (60,106  | ) |                                       |   | (55,230  | )
|Capitalized debt issuance costs                                                                                    |  |                                       | (2,776   | ) |                                       |   | (7,081   | )
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Net cash flows provided by (used in) financing activities                                                          |  |                                       | 83,112   |   |                                       |   | (32,742  | )
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Net (decrease) increase in cash and cash equivalents                                                               |  |                                       | (27,618  | ) |                                       |   | 42,287   |  
|Cash and cash equivalents at beginning of period                                                                   |  |                                       | 105,596  |   |                                       |   | 75,246   |  
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Cash and cash equivalents at end of period                                                                         |  | $                                     | 77,978   |   |                                       | $ | 117,533  |  
|                                                                                                                   |  |                                       |          |   |                                       |   |          |  
|Supplemental disclosure:                                                                                           |  |                                       |          |   |                                       |   |          |  
|Cash paid during the period for interest                                                                           |  | $                                     | 58,593   |   |                                       | $ | 58,969   |  

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



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1ORGANIZATION AND BASIS OF PRESENTATION:

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

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

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

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

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

MTGA Gaming was
formed in July 2007 to evaluate and pursue new business opportunities on behalf of the Authority. In September 2007, MTGA Gaming, along with RED Leg Sun, LLC (RED) and Olympia Gaming-KC, LLC (Olympia), formed Leg Sun, LLC
(Leg Sun), a joint venture 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 to be located in Wyandotte County, Kansas.
At the date of formation, MTGA Gaming, RED and Olympia each owned one-third interests in Leg Sun. In March 2008, MTGA Gaming



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



was admitted as a member in Mohegan Gaming & Hospitality, LLC (MG&H), a Delaware limited liability company formed by the Tribe. In
June 2008, Leg Sun made a $25.0 million Privilege Fee payment to the State of Kansas, as required by the application process for the Legends Sun project. The Privilege Fee is refundable if the Legends Sun project is not selected. The Kansas Lottery
Gaming Facility Review Board is required to select a manager for the Wyandotte County facility by September 26, 2008.

Following the
admission of MTGA Gaming as a member in MG&H, the Tribe and MTGA Gaming hold 51% and 49% membership interests in MG&H, respectively. In connection with its admission, MTGA Gaming assigned to MG&H, its one-third membership interest in Leg
Sun, along with its right to manage and participate in the development of the planned Legends Sun complex. MG&H subsequently assigned its membership interest in Leg Sun to Mohegan Resorts, LLC (Mohegan Resorts), a Delaware limited
liability company formed by MG&H, as its sole member. In turn, Mohegan Resorts assigned its membership interest in Leg Sun to Mohegan Resorts Kansas, LLC (MRK), a Delaware limited liability company formed by Mohegan Resorts, as its
sole member. In June 2008, MRK acquired Olympias membership interest in Leg Sun and is now the holder of a two-thirds ownership interest in Leg Sun, with the remaining one-third interest held by RED. It is anticipated that, in addition to the
ownership, management and development activities related to the Legends Sun project, certain of the Authoritys and the Tribes diversification efforts will be conducted, directly or indirectly, through MG&H and Mohegan Resorts.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete consolidated financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by
accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair statement of the results for the
interim period have been included. Operating results for the three months and nine months ended June 30, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2008.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto
included in the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007. In addition, certain amounts in the 2007 condensed consolidated financial statements have been reclassified to conform to the 2008
presentation.

Principles of Consolidation

The condensed 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, and the accounts of MG&H, Mohegan Resorts and MRK are consolidated into the accounts of MTGA Gaming, as Mohegan Ventures-NW and MTGA Gaming are deemed to be the primary beneficiaries. In consolidation, all intercompany balances and
transactions are eliminated.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 condensed consolidated balance sheets, consist primarily of reimbursable costs and expenses incurred by: (1) Salishan-Mohegan for the proposed development of a casino in La Center, Washington to be owned by the Cowlitz Tribe and
(2) WTG for the proposed development of a casino in Kenosha, Wisconsin to be owned by the Menominee Tribe. 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 land being taken into trust or other matters affecting the development of the casinos could affect the collectibility of the receivables.

Menominee Project

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 were determined by management to be an intangible asset with an
estimated fair value of $3.7 million, which is periodically reviewed for impairment in accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. The Authority also
maintains an allowance on the future collection of reimbursable development costs and expenses related to the Menominee Project.

In
January 2008, the U.S Department of the Interiors Bureau of Indian Affairs (BIA) rejected 11 applications from tribes with existing reservations to take new off-reservation land into trust for the development of gaming projects.
The BIA also advised 11 other tribes that their applications were incomplete and would not be considered further. While no decision has been issued on the Menominee application, the BIA also issued a memorandum addressing its policy on applications
for off-reservation gaming projects, dated January 3, 2008, stating that the greater the distance between a proposed project and the tribes existing reservation, the greater the scrutiny that would be applied to the application, weighing
the potential benefits to the tribe against concern for the commuting distance from the existing reservation, among other factors. As a result of this new policy, the Authority recorded a $2.7 million adjustment to the allowance on the future
collection of reimbursable development costs and expenses and an $840,000 impairment charge to reduce the carrying value of the development rights to their estimated fair value, as reflected in the accompanying condensed consolidated statement of
income for the nine months ended June 30, 2008.

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



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 provided a one year deferral for the implementation of FAS 157 for non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. The
Authority does not believe the adoption of this standard will have a material impact on its financial position, results of operations, or cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (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. 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 potential impact, if any, that FAS 160 may have on its financial position, results of operations and cash flows.

In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (FAS 161)an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities (FAS 133). FAS 161 requires enhanced disclosures for derivative instruments and hedging activities, including disclosures regarding how: (i) an entity uses derivative instruments; (ii) derivative instruments
and related hedged items are accounted for under FAS 133; and (iii) derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. FAS 161 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008. The Authority is currently evaluating the potential impact, if any, that FAS 161 may have on its financial position, results of operations and cash flows.

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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



NOTE 3FINANCING FACILITIES:

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



|                                                 |  |              |           |                   |   |          
|------------------------------------------------ |  | ------------ | --------- | ----------------- | - | ---------
|                                                 |  | June 30,2008 |           | September 30,2007
|Bank Credit Facility                             |  | $            | 205,000   |                   | $ | 33,000   
|2005 61/8% Senior
Notes                          |  |              | 250,000   |                   |   | 250,000  
|2001 83/8% Senior
Subordinated Notes             |  |              | 16,345    |                   |   | 16,345   
|2002 8% Senior Subordinated Notes                |  |              | 250,000   |                   |   | 250,000  
|2003 63/8% Senior
Subordinated Notes             |  |              | 330,000   |                   |   | 330,000  
|2004 71/8% Senior
Subordinated Notes             |  |              | 225,000   |                   |   | 225,000  
|2005 67/8% Senior
Subordinated Notes             |  |              | 150,000   |                   |   | 150,000  
|WNBA Promissory Note                             |  |              | 3,000     |                   |   | 4,000    
|Line of Credit                                   |  |              | 2,516     |                   |   | 16,591   
|Salishan Credit Facility                         |  |              | 20,250    |                   |   | 17,250   
|Mohegan Tribe Promissory Note                    |  |              | 8,333     |                   |   |         
|Menominee Kenosha Gaming Authority Note Payable  |  |              | 600       |                   |   | 600      
|                                                 |  |              |           |                   |   |          
|Subtotal                                         |  |              | 1,461,044 |                   |   | 1,292,786
|Net deferred gain on derivative instruments sold |  |              | 1,256     |                   |   | 914      
|                                                 |  |              |           |                   |   |          
|Total debt                                       |  | $            | 1,462,300 |                   | $ | 1,293,700
|                                                 |  |              |           |                   |   |          

Prior Bank Credit Facility

In March 2007, the Authority extinguished its Amended and Restated Loan Agreement dated March 25, 2003, as amended (the Prior Bank Credit
Facility), for up to $450.0 million from a syndicate of financial institutions and commercial banks.

Bank Credit Facility

In March 2007, the Authority entered into a Second Amended and Restated Loan Agreement (the Bank Credit Facility) providing for
up to $1.0 billion in borrowing capacity from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. The total commitment on this 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 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 June 30, 2008, the amount under letters of credit totaled $7.7 million, of which no amount was drawn (refer to Letters of Credit below). Inclusive of letters of credit, which reduce borrowing availability under
the Bank Credit Facility, the Authority had approximately $787.3 million of borrowing capacity under the Bank Credit Facility as of June 30, 2008 (without taking into account covenants under the Line of Credit described below).

At the Authoritys option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month,
three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on the Authoritys Total Leverage Ratio, as each term is defined in the Bank Credit Facility, at the time each loan is made. The Authority
also pays commitment fees for the unused portion of



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 June 30, 2008, the Authority had $205.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at June 30,
2008 were comprised of: (1) a $134.0 million loan based on a one-month Eurodollar rate of 2.47% plus an Applicable Rate of 1.63%; (2) $60.0 million in loans based on a one-month Eurodollar rate of 2.48% plus an Applicable Rate of 1.63%;
and (3) an $11.0 million loan based on a one-month Eurodollar rate of 2.45% plus an Applicable Rate of 1.63%. The Applicable Rate for commitment fees was 0.25% as of June 30, 2008. Accrued interest, including commitment fees, on the Bank
Credit Facility was $351,000 and $96,000 as of June 30, 2008 and September 30, 2007, respectively.

The Bank Credit Facility is
collateralized by a lien on substantially all of the Authoritys assets, including the assets comprising 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 Bank Credit Facility as it or its guarantor subsidiaries acquire them. The Authoritys obligations under the Bank Credit Facility
are guaranteed by MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. The Bank Credit Facility subjects the Authority to a number of restrictive covenants, including financial covenants. These
financial covenants relate to, among other things, its permitted total debt and senior debt leverage ratios, its minimum fixed charge coverage ratio, its maximum capital expenditures and a periodic test which ensures that the Authority has
sufficient liquidity under its Bank Credit Facility and other allowed borrowings, projected cash flows over applicable construction periods and existing cash and cash equivalents to cover planned construction expenditures.

In February 2008, the Authority received requisite consent from its lenders to Amendment No. 1 to its Bank Credit Facility. Amendment No. 1,
among other things, provides for increases in the permitted capital expenditures for the expansion projects at Mohegan Sun (Project Horizon) and Mohegan Sun at Pocono Downs (Project Sunrise) from $800.0 million and $200.0
million, respectively, to $950.0 million and $215.0 million, respectively. Amendment No. 1 also modified certain provisions of the loan agreement, including the Authoritys total leverage, senior leverage and minimum fixed charge coverage
ratio covenants to conform with the increase in projected expenditures and the change in the projected completion dates for Project Horizon and Project Sunrise.

The Bank Credit Facility also includes non-financial covenants by the Authority and the Tribe of the type customarily found in loan agreements for similar transactions including requirements that:



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



| |  |  | the Tribe cause the Authority to continually operate Mohegan Sun in compliance with all applicable laws; and
| | - |  | ------------------------------------------------------------------------------------------------------------



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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



As of June 30, 2008, the Authority and the Tribe were in compliance with all of their respective
covenant requirements in the Bank Credit Facility.

2005 61/8% Senior Notes

In February 2005, the Authority issued $250.0 million Senior Notes with fixed interest payable at a rate of 6.125% per annum (the 2005 Senior Notes). The net proceeds from this financing were used to repay amounts
outstanding under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Notes mature on February 15, 2013. The first call date for the 2005 Senior Notes is February 15, 2009. Interest on
the 2005 Senior Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Notes are uncollateralized general obligations of the Authority, which are effectively subordinated to all of the existing and future senior
secured indebtedness of the Authority, including the Bank Credit Facility. The 2005 Senior Notes rank equally in right of payment with 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing and
rank senior to the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing, the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes,
the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Notes. Refer to Note 9 for condensed
consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities. As of June 30, 2008 and September 30, 2007, accrued interest on the 2005 Senior Notes was $5.7 million and $1.9 million,
respectively.

2001 83/8% Senior Subordinated Notes

In July 2001, the Authority
issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.375% per annum (the 2001 Senior Subordinated Notes). The proceeds from this financing were used to pay transaction costs, pay down $90.0
million on the then existing bank credit facility and fund costs related to Project Sunburst. Interest on the 2001 Senior Subordinated Notes is payable semi-annually on January 1 and July 1. The 2001 Senior Subordinated Notes mature on
July 1, 2011. The first call date for the 2001 Senior Subordinated Notes was July 1, 2006. The 2001 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the
2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2001 Senior Subordinated Notes rank equally with the 2002
Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then
due and owing. MBC is a guarantor of the 2001 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities.

In August 2004, the Authority completed a cash tender offer and consent solicitation to repurchase any or all of its outstanding 2001 Senior Subordinated
Notes. As part of the tender offer, the Authority solicited and received requisite consents to certain proposed amendments to the indentures governing the 2001 Senior Subordinated Notes, which eliminated substantially all of the restrictive
covenants thereunder. The aggregate principal amount of 2001 Senior Subordinated Notes tendered was $133.7 million. An aggregate principal amount of $16.3 million of the 2001 Senior Subordinated Notes remain outstanding as of June 30, 2008. As
of June 30, 2008 and September 30, 2007, accrued interest on the 2001 Senior Subordinated Notes was $684,000 and $342,000, respectively.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 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 9 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities. As of June 30, 2008 and September 30, 2007, accrued interest
on the 2002 Senior Subordinated Notes was $5.0 million and $10.0 million, respectively.

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 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 9 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities. As of June 30, 2008 and September 30, 2007, accrued interest on the 2003 Senior
Subordinated Notes was $9.6 million and $4.4 million, respectively.

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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the
Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2004 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior
Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities,
Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2004 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority and its guarantor subsidiaries and non-guarantor entities. As of
June 30, 2008 and September 30, 2007, accrued interest on the 2004 Senior Subordinated Notes was $6.0 million and $2.0 million, respectively.

2005 67/8% Senior Subordinated Notes

In February 2005, the Authority issued $150.0
million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the 2005 Senior Subordinated Notes). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank
Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15, 2010. Interest on the
2005 Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005
Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2005 Senior Subordinated Notes rank equally with the 2001 Senior
Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and
owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority and
its guarantor subsidiaries and non-guarantor entities. As of June 30, 2008 and September 30, 2007, accrued interest on the 2005 Senior Subordinated Notes was $3.9 million and $1.3 million, respectively.

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 June 30, 2008, both the Authority and the Tribe were in compliance with all of their respective covenant requirements in the senior and senior subordinated note indentures.

WNBA Promissory Note

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

In consideration for this acquisition, MBC paid $2.0 million (with funds advanced from the Authority) and issued a promissory note to the WNBA (the WNBA Note) for $8.0 million that accrues interest at an
annual rate equal to a three-month Eurodollar rate plus 1.50%. The Authority guaranteed the obligations of MBC under



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 June 30, 2008 and September 30, 2007, the principal balance
outstanding on the WNBA Note was $3.0 million and $4.0 million, respectively. As of June 30, 2008 and September 30, 2007, accrued interest on the WNBA Note was $60,000 and $187,000, respectively.

Mohegan Tribe Promissory Note

In
June 2008, the Tribe lent MG&H $8.3 million, which was used for the funding of Leg Suns $25.0 million Privilege Fee payment to the State of Kansas in connection with the Legends Sun project (see Note 1). The promissory note executed by
MG&H in favor of the Tribe (the Mohegan Tribe Promissory Note) provides for the accrual of interest at an annual rate of 12.0% and matures on October 15, 2008. As of June 30, 2008, the principal balance outstanding on the
Mohegan Tribe Promissory Note was $8.3 million and is recorded in current portion of long-term debt in the accompanying condensed consolidated balance sheet. As of June 30, 2008, accrued interest on the Mohegan Tribe Promissory Note was
$16,000.

Line of Credit

The Authority has a $25.0 million revolving loan agreement with Bank of America (the Line of Credit). Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis
of the Authoritys Leverage Ratio, as each term is defined in the Line of Credit. Borrowings under the Line of Credit are uncollateralized obligations of the Authority. The Line of Credit was amended in March 2008 to extend the maturity date
from March 31, 2008 to March 31, 2009. As of June 30, 2008, the Authority had $2.5 million in loans outstanding under the Line of Credit, which were based on a one-month Eurodollar rate of 2.46% plus an Applicable Margin of 0.90%. The
Line of Credit subjects the Authority to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under the Bank Credit Facility. As of June 30, 2008, the Authority was in compliance with all covenant
requirements in the Line of Credit and had $22.5 million of borrowing capacity under the Line of Credit. As of June 30, 2008, there was no accrued interest on the Line of Credit. As of September 30, 2007, accrued interest on the Line of
Credit was $17,000.

Salishan-Mohegan Bank Credit Facility

Salishan-Mohegan has a $25.0 million revolving loan agreement with Bank of America (the Salishan Credit Facility), which matures on
September 30, 2009. The revolving loan has no mandatory amortization provisions and is payable in full at maturity. At the option of Salishan-Mohegan, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of
a one-month, two-month, three-month or six-month Eurodollar rate, plus a spread of 1.25% for base rate loans and an Applicable Rate, as defined in the Salishan Credit Facility, of 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.

As of June 30, 2008, Salishan-Mohegan had $20.3 million in Eurodollar rate loans and no base rate loans
outstanding. The Eurodollar rate loans outstanding at June 30, 2008 were based on a one-month Eurodollar rate



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



of 2.48% plus an Applicable Rate of 2.25%. The Applicable Rate for commitment fees was 0.50% as of June 30, 2008. As of June 30, 2008,
Salishan-Mohegan had $4.7 million of borrowing capacity under the Salishan Credit Facility. As of June 30, 2008 and September 30, 2007, accrued interest on the Salishan Credit Facility was $15,000 and $42,000, respectively.

Derivative Instruments

The Authority
is considered an end user of derivative instruments and engages in derivative transactions from time to time for risk management purposes only. There were no derivative instruments held by the Authority as of June 30, 2008.

Interest rate swap agreements hedging currently outstanding debt instruments of the Authority which qualified for hedge accounting in
accordance with FAS 133 and were designated as fair value hedges were sold in prior fiscal years for a net aggregate gain of $1.7 million. The $1.7 million net aggregate gain was deferred and added to the carrying value of the respective notes being
hedged and is being amortized and recorded to interest expense over the remaining term of the respective notes. For the three months ended June 30, 2008 and 2007, the Authority recorded amortization of $114,000, and for the nine months ended
June 30, 2008 and 2007, the Authority recorded amortization of $342,000, to increase interest expense related to the sale of these derivative instruments. The Authority expects to record $455,000 to interest expense over the next twelve months.

Letters of Credit

As
of June 30, 2008, the Authority maintained six 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 the Pocono Downs entities that may arise, potential contractor and subcontractor liabilities relating to Project Horizon, and two letters of credit related to road work at the Pocono Downs entities. The letters
of credit expire on various dates from August 2008 through May 2009, subject to renewals. As of June 30, 2008, no amounts were drawn on the letters of credit.

NOTE 4RELATED PARTY TRANSACTIONS:

The Tribe provides governmental and certain administrative services to the
Authority in conjunction with the operation of Mohegan Sun. During the three months ended June 30, 2008 and 2007, the Authority incurred $6.0 million and $5.2 million, respectively, and for the nine months ended June 30, 2008 and 2007, the
Authority incurred $17.9 million and $16.3 million, respectively, of expenses for such services.

The Tribe, either directly or 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 $65,000 and $195,000 relating to these land lease agreements for
each of the three months and nine months ended June 30, 2008 and 2007, respectively. On July 1, 2008, the Authority entered into an additional land lease agreement with the Tribe relating to property located adjacent to the Tribes
reservation that is currently used by Mohegan Suns employees for parking. The capital lease agreement requires the Authority to make monthly payments equaling $75,000 and matures on June 30, 2018.

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 three months ended June 30, 2008 and 2007, the Authority incurred costs of $4.8 million and $5.7 million, respectively, for such utilities. During the nine months ended June 30, 2008 and
2007, the Authority incurred costs of $17.5 million for such utilities.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 three months ended December 31, 2006. Prior to this transfer, the Authority recorded $53,000 of
capital expenditures associated with the Tribes Development Department for the nine months ended June 30, 2007.

In September
1995, the Tribe adopted the Mohegan Tribal Employment Rights Ordinance (as amended from time to time, the TERO), which sets forth hiring and contracting preference requirements for employers and entities conducting business on Tribal
lands on or adjacent to the Mohegan Reservation. Pursuant to the TERO, the Authority and other covered employers are required to give hiring, promotion, training, retention and other employment-related preferences to Native Americans who meet the
minimum qualifications for the applicable employment position. However, this preference requirement does not apply to key employees, as such persons are defined in the TERO.

Similarly, any entity awarding a contract or subcontract valued up to $200,000 to be performed on Tribal lands must give preference, first, to certified
Mohegan entities submitting commercially responsible bids, and second, to other certified Native American entities. This contracting preference is conditioned upon the bid by the preferred certified entity being within 5% of the lowest bid by a
non-certified entity. Contracts in excess of $200,000 are awarded to the lowest commercially responsible bidder, on a competitive basis, with preference to certified Mohegan entities and then other certified Native American entities in the event of
a matching bid. The TERO establishes procedures and requirements for certifying Mohegan entities and other Native American entities. Certification is based largely on the level of ownership and control exercised by the members of the Tribe or other
Native American tribes, as the case may be, over the entity bidding on a contract.

In June 2008, the Tribe lent MG&H $8.3 million,
which was used for the funding of Leg Suns $25.0 million Privilege Fee payment to the State of Kansas in connection with the Legends Sun project (see Note 1). The Mohegan Tribe Promissory Note provides for the accrual of interest at an annual
rate of 12.0% and matures on October 15, 2008. As of June 30, 2008, the principal balance outstanding on the Mohegan Tribe Promissory Note was $8.3 million. As of June 30, 2008, accrued interest on the Mohegan Tribe Promissory Note
was $16,000.

NOTE 5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.

In 2006, the State of Connecticut asserted that Slot Win Contribution payments are
required to be made with respect to free slot promotions, such as the Authoritys e-Bonus program and the Mashantucket Pequot Tribes free play program. In December 2006, the State of Connecticut filed suit against
the Mashantucket Pequot Tribe seeking a declaratory judgment that patrons free play at Foxwoods Resort Casino constitutes a wager for purposes of calculating Slot Win Contribution payments. In October 2007, the Tribe
entered into an



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



agreement with the State of Connecticut, to escrow, on a monthly basis, an amount equal to 25% of the value of all e-Bonus plays used by patrons at Mohegan
Sun. As a result, during the three months and nine months ended June 30, 2008, the Authority reflected expenses associated with the e-Bonus escrow payments totaling $2.0 million and $4.3 million, respectively, which is included in the
Authoritys Slot Win Contribution for the three months and nine months ended June 30, 2008. Pursuant to the escrow agreement, the escrowed funds or a portion thereof associated with prizes paid for e-Bonus play, plus interest
thereon, will either be forwarded to the State of Connecticut or returned to the Authority pending the outcome of the dispute between the Tribe and the State of Connecticut and the lawsuit against the Mashantucket Pequot Tribe.

The Authority reflected expenses associated with the Slot Win Contribution and e-Bonus escrow totaling $55.3 million and $55.9 million for the three
months ended June 30, 2008 and 2007, respectively. For the nine months ended June 30, 2008 and 2007, the expenses associated with the Slot Win Contribution and e-Bonus escrow totaled $163.3 million and $168.0 million, respectively. As of
June 30, 2008 and September 30, 2007, outstanding Slot Win Contribution and e-Bonus escrow payments to the State of Connecticut totaled $18.0 million and $19.3 million, respectively.

Category One Slot Machine License

In
September 2006, a conditional Category One slot machine license was granted to Downs Racing by the Pennsylvania Gaming Control Board (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 in December 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.

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., 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 condensed consolidated balance sheets.

The Authority reflected expenses associated with the PGCB slot machine and local share
tax assessments totaling $24.4 million and $26.3 million for the three months ended June 30, 2008 and 2007, respectively. For the nine months ended June 30, 2008 and 2007, the expenses associated with the PGCB slot machine and local share
tax assessments totaled $71.4 million and $63.1 million, respectively. As of June 30, 2008 and September 30, 2007, outstanding slot machine and local share tax payments totaled $4.5 million and $6.1 million, respectively.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 is yet to be finalized. Based upon an estimate of Down 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 $626,000 and $678,000 for the three months ended June 30, 2008 and 2007, respectively. For the nine months ended
June 30, 2008 and 2007, the expenses associated with this fee assessment totaled $1.8 million and $1.6 million, respectively. As of June 30, 2008 and September 30, 2007, outstanding regulatory fee payments to the PGCB totaled $51,000
and $54,000, respectively. Additionally, in order to fund current operations of the PGCB, two loans in the amount of $36.0 million and $22.6 million, were granted to the PGCB, and a $7.0 million payment was made to the PGCB by current licensees from
gaming tax funds received by the Commonwealth of Pennsylvania. The loans and the $7.0 million payment were used to cover expenses incurred by the PGCB from inception to June 30, 2008, and are anticipated to be repaid in total by the slot
machine licensees once all approved gaming facilities are open. Each licensees share of these costs will be proportional to each licensees gross slot machine revenues. In January 2007, Downs Racing made a prepayment to the PGCB of
$800,000 for a portion of its incurred expenses, which is recorded in prepaid expenses in the accompanying condensed consolidated balance sheets.

Priority Distribution Agreement

In August 2001, the Authority and the Tribe entered into an agreement (the Priority
Distribution Agreement), which obligates the Authority to make monthly payments to the Tribe to the extent of the Authoritys net cash flow, as defined in the Priority Distribution Agreement. The Priority Distribution Agreement, which has
a perpetual term, limits the maximum aggregate payments by the Authority to the Tribe in each calendar year to $14.0 million, as adjusted annually in accordance with the formula specified in the Priority Distribution Agreement to reflect the effects
of inflation. However, payments pursuant to the Priority Distribution Agreement do not reduce the Authoritys obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other
agreements with the Tribe. The monthly payments under the Priority Distribution Agreement are limited obligations of the Authority payable only to the extent of its net cash flow, as defined in the Priority Distribution Agreement, and are not
secured by a lien or encumbrance on any assets or property of the Authority. The Authoritys condensed consolidated financial statements reflect payments associated with the Priority Distribution Agreement of $4.4 million and $4.3 million for
the three months ended June 30, 2008 and 2007, respectively. For the nine months ended June 30, 2008 and 2007, these payments totaled $13.0 million and $12.6 million, respectively.

ACLS of New England, Inc.

The
Authority has a 10-year laundry services agreement with ACLS of New England, Inc. (ACLS). The Authority has an option to renew the agreement for one additional 10-year term after its expiration in October 2012. Under the laundry services
agreement, the Authority will pay an agreed upon rate for laundry services, adjusted annually for the Consumer Price Index and unusual increases in energy costs. Additionally, the Authority has made a $500,000 loan to ACLS to develop the laundry
service facility. Pursuant to the terms of the loan, interest may accrue based on the exercise of the renewal options or other certain circumstances. In the event that circumstances occur where interest will be accrued, interest shall accrue
commencing from the date of the advance at an annual rate of 5%.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 $3.2 million.

Pennsylvania Property Tax Litigation

A final settlement was reached in June 2007 between the various parties involved in a dispute with Downs Racing, relating to certain property tax
assessments, in Wilkes-Barre, Pennsylvania. Based on the settlement, Downs Racing is required to make agreed upon payments 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.

NOTE 6RELINQUISHMENT AGREEMENT:

In February 1998, the Authority and Trading Cove Associates (TCA) entered into a relinquishment agreement (the
Relinquishment Agreement), effective January 1, 2000 (the Relinquishment Date), which 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, as defined, (including, without limitation, hotel revenues, room service, food and beverage sales, ticket revenues, fees or receipts from convention/events center and all rental or other receipts from
lessees and concessionaires but not the gross receipts of such lessees, licenses and concessionaires).

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 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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



Authority to the Tribe, to the extent then due. The Authority, in accordance with SFAS No. 5, Accounting for Contingencies, has recorded a
relinquishment liability of the estimated present value of its obligations under the Relinquishment Agreement.

A relinquishment liability
of $549.1 million was established at September 30, 1998 based on the present value of the estimated future Mohegan Sun revenues utilizing the Authoritys risk-free investment rate. At June 30, 2008, the carrying amount of the
relinquishment liability was $474.9 million as compared to $503.3 million at September 30, 2007. The decrease in the relinquishment liability during the nine months ended June 30, 2008 is due to $48.7 million in relinquishment payments,
offset by $20.3 million representing the accretion of discount to the relinquishment liability. Of the $48.7 million in relinquishment payments, $31.1 million represents payment of principal and $17.6 million represents payment of the accretion of
discount to the relinquishment liability. During the nine months ended June 30, 2007, the Authority paid $49.0 million in relinquishment payments, consisting of $30.1 million in principal amounts and $18.9 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 June 30, 2008 and September 30, 2007, relinquishment payments earned but unpaid were $27.4 million and $20.8 million, respectively.

NOTE 7DISCONTINUED OPERATIONS:

Prior to the Authoritys acquisition of the Pocono Downs Entities, Penn National
Gaming Inc. (Penn National), the former owner of the Pocono Downs Entities, entered into an agreement to sell all of the assets associated with the OTW facility located in Erie, Pennsylvania to MTR Gaming Group, Inc. and Presque Isle
Downs Inc. (collectively Presque Isle), for $7.0 million upon the occurrence of either of the following two conditions: (1) the commencement by any of the Presque Isle entities of pari-mutuel wagering in Erie, Pennsylvania or
(2) the receipt by any Presque Isle entity of revenue from slot machine operations in Erie, Pennsylvania. Penn National assigned its rights to proceeds under this agreement to Downs Racing upon its acquisition by the Authority.

In October 2006, the PGCB granted Presque Isle a conditional license to operate slot machines at Presque Isle Downs in Erie County, Pennsylvania. In
February 2007, Presque Isle opened slot machine gaming operations at the Erie property. In July 2007, Presque Isle commenced pari-mutuel wagering at Presque Isle Downs and paid Downs Racing $7.0 million in return for the conveyance of the Erie OTW
facility, pursuant to the terms of the agreement. The Authority has accordingly reported the results of the Erie OTW facility from the Pocono Downs entities as income from discontinued operations in the accompanying condensed consolidated statements
of income, which includes total net revenues from the Erie OTW facility of $821,000 and $2.4 million for the three months and nine months ended June 30, 2007, respectively.



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



NOTE 8SEGMENT REPORTING:

As of June 30, 2008, the Authority owns and operates Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun Country Club at Pautipaug in Connecticut (the Connecticut Entities), and the
Pocono Downs Entities. All of the Authoritys revenues are derived from these operations. The Authoritys executive officers review and assess the performance and operating results and determine the proper allocation of resources to the
Connecticut Entities and the Pocono Downs Entities on a separate basis. The Authority, therefore, believes that it has two operating segments, one comprised solely of Mohegan Sun, which includes the operations of the Connecticut Entities, and
another, referred to as Pocono Downs herein, comprised of the operations of the Pocono Downs Entities. The two operating segments are also separate reportable segments due to the differing nature of their operations. The following tables
provide financial information on each segment (in thousands):



|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|----------------------------------------------------------- |  | ---------------------------------- | --------- | - | --------------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                            |  | For the Three MonthsEnded June 30, |           |   | For the Nine MonthsEnded June 30, |  
|                                                            |  | 2008                               |           |   | 2007                              |   |           | 2008 |  |   | 2007 (1)  |  
|Net revenues:                                               |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  | $                                  | 326,897   |   |                                   | $ | 352,947   |      |  | $ | 1,012,791 |   |  | $ | 1,051,072 |  
|Pocono Downs                                                |  |                                    | 49,948    |   |                                   |   | 54,170    |      |  |   | 143,580   |   |  |   | 130,652   |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Total                                                       |  |                                    | 376,845   |   |                                   |   | 407,117   |      |  |   | 1,156,371 |   |  |   | 1,181,724 |  
|Income (loss) from operations:                              |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  |                                    | 34,547    |   |                                   |   | 72,364    |      |  |   | 153,329   |   |  |   | 218,562   |  
|Pocono Downs                                                |  |                                    | 3,122     |   |                                   |   | 6,543     |      |  |   | 9,836     |   |  |   | 6,932     |  
|Corporate                                                   |  |                                    | (4,978    | ) |                                   |   | (3,244    | )    |  |   | (17,019   | ) |  |   | (8,466    | )
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Total                                                       |  |                                    | 32,691    |   |                                   |   | 75,663    |      |  |   | 146,146   |   |  |   | 217,028   |  
|Accretion of discount to the relinquishment liability       |  |                                    | (6,771    | ) |                                   |   | (7,449    | )    |  |   | (20,314   | ) |  |   | (22,346   | )
|Interest income                                             |  |                                    | 913       |   |                                   |   | 1,148     |      |  |   | 2,870     |   |  |   | 2,688     |  
|Interest expense, net of capitalized interest               |  |                                    | (22,697   | ) |                                   |   | (23,840   | )    |  |   | (68,215   | ) |  |   | (71,564   | )
|Write-off of debt issuance costs                            |  |                                    |          |   |                                   |   |          |      |  |   |          |   |  |   | (71       | )
|Other income (expense), net                                 |  |                                    | 390       |   |                                   |   | (96       | )    |  |   | 461       |   |  |   | (458      | )
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Income from continuing operations before minority interests |  |                                    | 4,526     |   |                                   |   | 45,426    |      |  |   | 60,948    |   |  |   | 125,277   |  
|Minority interests                                          |  |                                    | 510       |   |                                   |   | 169       |      |  |   | 1,243     |   |  |   | 497       |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Income from continuing operations                           |  |                                    | 5,036     |   |                                   |   | 45,595    |      |  |   | 62,191    |   |  |   | 125,774   |  
|Income from discontinued operations                         |  |                                    |          |   |                                   |   | 59        |      |  |   |          |   |  |   | 90        |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Net income                                                  |  | $                                  | 5,036     |   |                                   | $ | 45,654    |      |  | $ | 62,191    |   |  | $ | 125,864   |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|                                                            |  |                                   
|                                                            |  | For the Nine MonthsEnded June 30,  |           |   |                                   |  
|                                                            |  | 2008                               |           |   | 2007                              |   |           |      |  |   |           |  
|Capital expenditures:                                       |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  | $                                  | 136,402   |   |                                   | $ | 58,840    |      |  |   |           |   |  |   |           |  
|Pocono Downs                                                |  |                                    | 135,897   |   |                                   |   | 37,805    |      |  |   |           |   |  |   |           |  
|Corporate                                                   |  |                                    | 1         |   |                                   |   | 4         |      |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Total                                                       |  | $                                  | 272,300   |   |                                   | $ | 96,649    |      |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |  
|                                                            |  | June 30,2008                       |           |   | September 30,2007                 |   |           |      |  |   |           |  
|Total assets:                                               |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  | $                                  | 1,596,690 |   |                                   | $ | 1,540,349 |      |  |   |           |   |  |   |           |  
|Pocono Downs (including goodwill of $39,459)                |  |                                    | 572,600   |   |                                   |   | 444,206   |      |  |   |           |   |  |   |           |  
|Corporate                                                   |  |                                    | 117,483   |   |                                   |   | 95,422    |      |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  
|Total                                                       |  | $                                  | 2,286,773 |   |                                   | $ | 2,079,977 |      |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |      |  |   |           |   |  |   |           |  



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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



NOTE 9SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:

As of June 30, 2008, substantially all of the Authoritys outstanding public debt, including its 2005 Senior Notes, 2002 Senior Subordinated
Notes, 2003 Senior Subordinated Notes, 2004 Senior Subordinated Notes and 2005 Senior Subordinated Notes, is fully and unconditionally guaranteed by the following subsidiaries of the Authority: MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs
Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. MBC is the only subsidiary guarantor, on a full and unconditional basis, of the 2001 Senior Subordinated Notes. Separate financial statements and other disclosures concerning MBC, Mohegan
Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are not presented below because the Authority believes that the summarized financial information provided below and in Note 8 is adequate for investor analysis of
these subsidiaries. Condensed consolidating financial statement information for the Authority, MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG, MTGA Gaming and the non-guarantor entities, Salishan-Mohegan,
MG&H, Mohegan Resorts and MRK, as of June 30, 2008 and September 30, 2007 and for the three months and nine months ended June 30, 2008 and 2007 is as follows (in thousands):

CONDENSED CONSOLIDATING BALANCE SHEETS



|                                                 |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|------------------------------------------------ |  | ------------------- | --------- | --------------------- | - | --------------------- |  | ------------------------------------ | ------ |  | ----------------- | -------- | - |  | - | ---------
|                                                 |  | As of June 30, 2008
|                                                 |  | Authority           |           | GuarantorSubsidiaries |   | Non-GuarantorEntities |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal
|ASSETS                                           |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Property and equipment, net                      |  | $                   | 1,332,090 |                       | $ | 248,244               |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,600,285
|Intercompany receivables                         |  |                     | 353,672   |                       |   | 11,164                |  |                                      |       |  |                   | (364,836 | ) |  |   |         
|Investment in subsidiaries                       |  |                     | 191,671   |                       |   | 2,683                 |  |                                      |       |  |                   | (194,354 | ) |  |   |         
|Other intangible assets, net                     |  |                     | 119,826   |                       |   | 273,199               |  |                                      |       |  |                   |         |   |  |   | 393,025  
|Other assets, net                                |  |                     | 190,110   |                       |   | 69,216                |  |                                      | 42,486 |  |                   | (8,349   | ) |  |   | 293,463  
|                                                 |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total assets                                     |  | $                   | 2,187,369 |                       | $ | 604,506               |  | $                                    | 62,437 |  | $                 | (567,539 | ) |  | $ | 2,286,773
|                                                 |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|LIABILITIES AND CAPITAL                          |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total current liabilities                        |  | $                   | 327,947   |                       | $ | 56,460                |  | $                                    | 17,200 |  | $                 | (8,349   | ) |  | $ | 393,258  
|Long-term debt, net of current portion           |  |                     | 1,427,601 |                       |   | 2,600                 |  |                                      | 20,250 |  |                   |         |   |  |   | 1,450,451
|Relinquishment liability, net of current portion |  |                     | 370,098   |                       |   |                      |  |                                      |       |  |                   |         |   |  |   | 370,098  
|Intercompany payables                            |  |                     |          |                       |   | 353,672               |  |                                      | 11,164 |  |                   | (364,836 | ) |  |   |         
|Other long-term liabilities                      |  |                     | 571       |                       |   |                      |  |                                      |       |  |                   |         |   |  |   | 571      
|                                                 |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities                                |  |                     | 2,126,217 |                       |   | 412,732               |  |                                      | 48,614 |  |                   | (373,185 | ) |  |   | 2,214,378
|Minority interests in subsidiaries               |  |                     |          |                       |   | 418                   |  |                                      | 8,358  |  |                   | 2,783    |   |  |   | 11,559   
|Total capital                                    |  |                     | 61,152    |                       |   | 191,356               |  |                                      | 5,465  |  |                   | (197,137 | ) |  |   | 60,836   
|                                                 |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities and capital                    |  | $                   | 2,187,369 |                       | $ | 604,506               |  | $                                    | 62,437 |  | $                 | (567,539 | ) |  | $ | 2,286,773
|                                                 |  |                     |           |                       |   |                       |  |                                      |        |  |                   |          |   |  |   |          



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



|                                                 |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          
|------------------------------------------------ |  | ------------------------ | --------- | --------------------- | - | ------------------- |  | ------------------------------------ | ------ |  | ----------------- | -------- | - |  | - | ---------
|                                                 |  | As of September 30, 2007
|                                                 |  | Authority                |           | GuarantorSubsidiaries |   | Non-GuarantorEntity |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal
|ASSETS                                           |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          
|Property and equipment, net                      |  | $                        | 1,260,092 |                       | $ | 121,163             |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,401,206
|Intercompany receivables                         |  |                          | 220,006   |                       |   | 10,372              |  |                                      |       |  |                   | (230,378 | ) |  |   |         
|Investment in subsidiaries                       |  |                          | 214,011   |                       |   | 2,788               |  |                                      |       |  |                   | (216,799 | ) |  |   |         
|Other intangible assets, net                     |  |                          | 119,827   |                       |   | 274,650             |  |                                      |       |  |                   |         |   |  |   | 394,477  
|Other assets, net                                |  |                          | 200,534   |                       |   | 69,491              |  |                                      | 14,269 |  |                   |         |   |  |   | 284,294  
|                                                 |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          
|Total assets                                     |  | $                        | 2,014,470 |                       | $ | 478,464             |  | $                                    | 34,220 |  | $                 | (447,177 | ) |  | $ | 2,079,977
|                                                 |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          
|LIABILITIES AND CAPITAL                          |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          
|Total current liabilities                        |  | $                        | 292,551   |                       | $ | 40,119              |  | $                                    | 921    |  | $                 |         |   |  | $ | 333,591  
|Long-term debt, net of current portion           |  |                          | 1,255,259 |                       |   | 3,600               |  |                                      | 17,250 |  |                   |         |   |  |   | 1,276,109
|Relinquishment liability, net of current portion |  |                          | 406,858   |                       |   |                    |  |                                      |       |  |                   |         |   |  |   | 406,858  
|Intercompany payables                            |  |                          |          |                       |   | 220,006             |  |                                      | 10,372 |  |                   | (230,378 | ) |  |   |         
|Other long-term liabilities                      |  |                          | 735       |                       |   |                    |  |                                      |       |  |                   |         |   |  |   | 735      
|                                                 |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities                                |  |                          | 1,955,403 |                       |   | 263,725             |  |                                      | 28,543 |  |                   | (230,378 | ) |  |   | 2,017,293
|Minority interests in subsidiaries               |  |                          |          |                       |   | 1,043               |  |                                      |       |  |                   | 2,890    |   |  |   | 3,933    
|Total capital                                    |  |                          | 59,067    |                       |   | 213,696             |  |                                      | 5,677  |  |                   | (219,689 | ) |  |   | 58,751   
|                                                 |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities and capital                    |  | $                        | 2,014,470 |                       | $ | 478,464             |  | $                                    | 34,220 |  | $                 | (447,177 | ) |  | $ | 2,079,977
|                                                 |  |                          |           |                       |   |                     |  |                                      |        |  |                   |          |   |  |   |          



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF INCOME



|                                                                   |  |                                          |         |   |                       |   |        |                       |  |   |                                      |   |  |                   |       |   |  |   |         |  
|------------------------------------------------------------------ |  | ---------------------------------------- | ------- | - | --------------------- | - | ------ | --------------------- |  | - | ------------------------------------ | - |  | ----------------- | ----- | - |  | - | ------- | -
|                                                                   |  | For the Three Months Ended June 30, 2008 |        
|                                                                   |  | Authority                                |         |   | GuarantorSubsidiaries |   |        | Non-GuarantorEntities |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |      
|Net revenues                                                       |  | $                                        | 324,802 |   |                       | $ | 52,817 |                       |  | $ |                                     |   |  | $                 | (774  | ) |  | $ | 376,845 |  
|Operating costs and expenses:                                      |  |                                          |         |   |                       |   |        |                       |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Gaming and other operations                                        |  |                                          | 218,465 |   |                       |   | 39,721 |                       |  |   |                                     |   |  |                   | (774  | ) |  |   | 257,412 |  
|Advertising, general and administrative                            |  |                                          | 54,291  |   |                       |   | 6,378  |                       |  |   | 431                                  |   |  |                   |      |   |  |   | 61,100  |  
|Pre-opening costs and expenses                                     |  |                                          | 76      |   |                       |   | 1,238  |                       |  |   |                                     |   |  |                   |      |   |  |   | 1,314   |  
|Depreciation and amortization                                      |  |                                          | 21,062  |   |                       |   | 3,266  |                       |  |   |                                     |   |  |                   |      |   |  |   | 24,328  |  
|                                                                   |  |                                          |         |   |                       |   |        |                       |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Total operating costs and expenses                                 |  |                                          | 293,894 |   |                       |   | 50,603 |                       |  |   | 431                                  |   |  |                   | (774  | ) |  |   | 344,154 |  
|                                                                   |  |                                          |         |   |                       |   |        |                       |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from operations                                      |  |                                          | 30,908  |   |                       |   | 2,214  |                       |  |   | (431                                 | ) |  |                   |      |   |  |   | 32,691  |  
|Accretion of discount to the relinquishment liability              |  |                                          | (6,771  | ) |                       |   |       |                       |  |   |                                     |   |  |                   |      |   |  |   | (6,771  | )
|Interest expense, net of capitalized interest                      |  |                                          | (12,952 | ) |                       |   | (9,436 | )                     |  |   | (502                                 | ) |  |                   | 193   |   |  |   | (22,697 | )
|Loss on interests in subsidiaries                                  |  |                                          | (6,467  | ) |                       |   | (441   | )                     |  |   |                                     |   |  |                   | 6,908 |   |  |   |        |  
|Other income, net                                                  |  |                                          | 318     |   |                       |   | 1,145  |                       |  |   | 33                                   |   |  |                   | (193  | ) |  |   | 1,303   |  
|                                                                   |  |                                          |         |   |                       |   |        |                       |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from continuing operations before minority interests |  |                                          | 5,036   |   |                       |   | (6,518 | )                     |  |   | (900                                 | ) |  |                   | 6,908 |   |  |   | 4,526   |  
|Minority interests                                                 |  |                                          |        |   |                       |   | 51     |                       |  |   |                                     |   |  |                   | 459   |   |  |   | 510     |  
|                                                                   |  |                                          |         |   |                       |   |        |                       |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Net income (loss)                                                  |  | $                                        | 5,036   |   |                       | $ | (6,467 | )                     |  | $ | (900                                 | ) |  | $                 | 7,367 |   |  | $ | 5,036   |  
|                                                                   |  |                                          |         |   |                       |   |        |                       |  |   |                                      |   |  |                   |       |   |  |   |         |  



|                                                                   |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  
|------------------------------------------------------------------ |  | ---------------------------------------- | ------- | - | --------------------- | - | ------ | ------------------- |  | - | ------------------------------------ | - |  | ----------------- | ----- | - |  | - | ------- | -
|                                                                   |  | For the Three Months Ended June 30, 2007 |        
|                                                                   |  | Authority                                |         |   | GuarantorSubsidiaries |   |        | Non-GuarantorEntity |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |      
|Net revenues                                                       |  | $                                        | 351,433 |   |                       | $ | 56,310 |                     |  | $ |                                     |   |  | $                 | (626  | ) |  | $ | 407,117 |  
|Operating costs and expenses:                                      |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Gaming and other operations                                        |  |                                          | 204,296 |   |                       |   | 41,337 |                     |  |   |                                     |   |  |                   | (626  | ) |  |   | 245,007 |  
|Advertising, general and administrative                            |  |                                          | 56,002  |   |                       |   | 6,103  |                     |  |   | 518                                  |   |  |                   |      |   |  |   | 62,623  |  
|Pre-opening costs and expenses                                     |  |                                          | 84      |   |                       |   |       |                     |  |   |                                     |   |  |                   |      |   |  |   | 84      |  
|Depreciation and amortization                                      |  |                                          | 20,443  |   |                       |   | 3,297  |                     |  |   |                                     |   |  |                   |      |   |  |   | 23,740  |  
|                                                                   |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Total operating costs and expenses                                 |  |                                          | 280,825 |   |                       |   | 50,737 |                     |  |   | 518                                  |   |  |                   | (626  | ) |  |   | 331,454 |  
|                                                                   |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from operations                                      |  |                                          | 70,608  |   |                       |   | 5,573  |                     |  |   | (518                                 | ) |  |                   |      |   |  |   | 75,663  |  
|Accretion of discount to the relinquishment liability              |  |                                          | (7,449  | ) |                       |   |       |                     |  |   |                                     |   |  |                   |      |   |  |   | (7,449  | )
|Interest expense, net of capitalized interest                      |  |                                          | (14,064 | ) |                       |   | (9,434 | )                   |  |   | (596                                 | ) |  |                   | 254   |   |  |   | (23,840 | )
|Loss on interests in subsidiaries                                  |  |                                          | (3,433  | ) |                       |   | (147   | )                   |  |   |                                     |   |  |                   | 3,580 |   |  |   |        |  
|Other income (expense), net                                        |  |                                          | (8      | ) |                       |   | 499    |                     |  |   | 815                                  |   |  |                   | (254  | ) |  |   | 1,052   |  
|                                                                   |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from continuing operations before minority interests |  |                                          | 45,654  |   |                       |   | (3,509 | )                   |  |   | (299                                 | ) |  |                   | 3,580 |   |  |   | 45,426  |  
|Minority interests                                                 |  |                                          |        |   |                       |   | 17     |                     |  |   |                                     |   |  |                   | 152   |   |  |   | 169     |  
|                                                                   |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from continuing operations                           |  |                                          | 45,654  |   |                       |   | (3,492 | )                   |  |   | (299                                 | ) |  |                   | 3,732 |   |  |   | 45,595  |  
|Income from discontinued operations                                |  |                                          |        |   |                       |   | 59     |                     |  |   |                                     |   |  |                   |      |   |  |   | 59      |  
|                                                                   |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Net income (loss)                                                  |  | $                                        | 45,654  |   |                       | $ | (3,433 | )                   |  | $ | (299                                 | ) |  | $                 | 3,732 |   |  | $ | 45,654  |  
|                                                                   |  |                                          |         |   |                       |   |        |                     |  |   |                                      |   |  |                   |       |   |  |   |         |  



26



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



|                                                                   |  |                                         |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|------------------------------------------------------------------ |  | --------------------------------------- | --------- | - | --------------------- | - | ------- | --------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                   |  | For the Nine Months Ended June 30, 2008 |          
|                                                                   |  | Authority                               |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                       |  | $                                       | 1,010,463 |   |                       | $ | 146,686 |                       |  | $ |                                     |   |  | $                 | (778   | ) |  | $ | 1,156,371 |  
|Operating costs and expenses:                                      |  |                                         |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                        |  |                                         | 639,091   |   |                       |   | 111,672 |                       |  |   |                                     |   |  |                   | (778   | ) |  |   | 749,985   |  
|Advertising, general and administrative                            |  |                                         | 163,739   |   |                       |   | 21,021  |                       |  |   | 1,154                                |   |  |                   |       |   |  |   | 185,914   |  
|Pre-opening costs and expenses                                     |  |                                         | 91        |   |                       |   | 1,255   |                       |  |   |                                     |   |  |                   |       |   |  |   | 1,346     |  
|Depreciation and amortization                                      |  |                                         | 62,494    |   |                       |   | 10,486  |                       |  |   |                                     |   |  |                   |       |   |  |   | 72,980    |  
|                                                                   |  |                                         |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                 |  |                                         | 865,415   |   |                       |   | 144,434 |                       |  |   | 1,154                                |   |  |                   | (778   | ) |  |   | 1,010,225 |  
|                                                                   |  |                                         |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                      |  |                                         | 145,048   |   |                       |   | 2,252   |                       |  |   | (1,154                               | ) |  |                   |       |   |  |   | 146,146   |  
|Accretion of discount to the relinquishment liability              |  |                                         | (20,314   | ) |                       |   |        |                       |  |   |                                     |   |  |                   |       |   |  |   | (20,314   | )
|Interest expense, net of capitalized interest                      |  |                                         | (39,259   | ) |                       |   | (27,947 | )                     |  |   | (1,656                               | ) |  |                   | 647    |   |  |   | (68,215   | )
|Loss on interests in subsidiaries                                  |  |                                         | (24,094   | ) |                       |   | (594    | )                     |  |   |                                     |   |  |                   | 24,688 |   |  |   |          |  
|Other income, net                                                  |  |                                         | 810       |   |                       |   | 1,570   |                       |  |   | 1,598                                |   |  |                   | (647   | ) |  |   | 3,331     |  
|                                                                   |  |                                         |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interests |  |                                         | 62,191    |   |                       |   | (24,719 | )                     |  |   | (1,212                               | ) |  |                   | 24,688 |   |  |   | 60,948    |  
|Minority interests                                                 |  |                                         |          |   |                       |   | 625     |                       |  |   |                                     |   |  |                   | 618    |   |  |   | 1,243     |  
|                                                                   |  |                                         |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                  |  | $                                       | 62,191    |   |                       | $ | (24,094 | )                     |  | $ | (1,212                               | ) |  | $                 | 25,306 |   |  | $ | 62,191    |  
|                                                                   |  |                                         |           |   |                       |   |         |                       |  |   |                                      |   |  |                   |        |   |  |   |           |  



|                                                                   |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|------------------------------------------------------------------ |  | --------------------------------------- | --------- | - | --------------------- | - | ------- | ------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                   |  | For the Nine Months Ended June 30, 2007 |          
|                                                                   |  | Authority                               |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntity |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                       |  | $                                       | 1,049,567 |   |                       | $ | 132,795 |                     |  | $ |                                     |   |  | $                 | (638   | ) |  | $ | 1,181,724 |  
|Operating costs and expenses:                                      |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                        |  |                                         | 610,022   |   |                       |   | 99,478  |                     |  |   |                                     |   |  |                   | (638   | ) |  |   | 708,862   |  
|Advertising, general and administrative                            |  |                                         | 162,907   |   |                       |   | 17,724  |                     |  |   | 1,523                                |   |  |                   |       |   |  |   | 182,154   |  
|Pre-opening costs and expenses                                     |  |                                         | 392       |   |                       |   | 3,437   |                     |  |   |                                     |   |  |                   |       |   |  |   | 3,829     |  
|Depreciation and amortization                                      |  |                                         | 61,548    |   |                       |   | 8,303   |                     |  |   |                                     |   |  |                   |       |   |  |   | 69,851    |  
|                                                                   |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                 |  |                                         | 834,869   |   |                       |   | 128,942 |                     |  |   | 1,523                                |   |  |                   | (638   | ) |  |   | 964,696   |  
|                                                                   |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                      |  |                                         | 214,698   |   |                       |   | 3,853   |                     |  |   | (1,523                               | ) |  |                   |       |   |  |   | 217,028   |  
|Accretion of discount to the relinquishment liability              |  |                                         | (22,346   | ) |                       |   |        |                     |  |   |                                     |   |  |                   |       |   |  |   | (22,346   | )
|Interest expense, net of capitalized interest                      |  |                                         | (43,656   | ) |                       |   | (26,990 | )                   |  |   | (1,697                               | ) |  |                   | 779    |   |  |   | (71,564   | )
|Loss on interests in subsidiaries                                  |  |                                         | (22,400   | ) |                       |   | (442    | )                   |  |   |                                     |   |  |                   | 22,842 |   |  |   |          |  
|Other income (expense), net                                        |  |                                         | (432      | ) |                       |   | 1,049   |                     |  |   | 2,321                                |   |  |                   | (779   | ) |  |   | 2,159     |  
|                                                                   |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interests |  |                                         | 125,864   |   |                       |   | (22,530 | )                   |  |   | (899                                 | ) |  |                   | 22,842 |   |  |   | 125,277   |  
|Minority interests                                                 |  |                                         |          |   |                       |   | 40      |                     |  |   |                                     |   |  |                   | 457    |   |  |   | 497       |  
|                                                                   |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations                           |  |                                         | 125,864   |   |                       |   | (22,490 | )                   |  |   | (899                                 | ) |  |                   | 23,299 |   |  |   | 125,774   |  
|Income from discontinued operations                                |  |                                         |          |   |                       |   | 90      |                     |  |   |                                     |   |  |                   |       |   |  |   | 90        |  
|                                                                   |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                  |  | $                                       | 125,864   |   |                       | $ | (22,400 | )                   |  | $ | (899                                 | ) |  | $                 | 23,299 |   |  | $ | 125,864   |  
|                                                                   |  |                                         |           |   |                       |   |         |                     |  |   |                                      |   |  |                   |        |   |  |   |           |  



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|----------------------------------------------------------- |  | --------------------------------------- | -------- | - | --------------------- | - | ------- | --------------------- |  | - | ------------------------------------ | - |  | ----------------- | -------- | - |  | - | -------- | -
|                                                            |  | For the Nine Months Ended June 30, 2008 |         
|                                                            |  | Authority                               |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntities |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |         
|Net cash flows provided by (used in) operating activities   |  | $                                       | 137,560  |   |                       | $ | (1,342  | )                     |  | $ | (1,449                               | ) |  | $                 |         |   |  | $ | 134,769  |  
|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Purchases of property and equipment                         |  |                                         | (123,705 | ) |                       |   | (95,507 | )                     |  |   |                                     |   |  |                   |         |   |  |   | (219,212 | )
|Payment of Privilege Fee for Legends Sun project            |  |                                         |         |   |                       |   |        |                       |  |   | (25,000                              | ) |  |                   |         |   |  |   | (25,000  | )
|Other cash flows used in investing activities               |  |                                         | (103,599 | ) |                       |   | (612    | )                     |  |   | (2,158                               | ) |  |                   | 105,082  |   |  |   | (1,287   | )
|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                         | (227,304 | ) |                       |   | (96,119 | )                     |  |   | (27,158                              | ) |  |                   | 105,082  |   |  |   | (245,499 | )
|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Bank Credit Facility borrowingsrevolving loan              |  |                                         | 377,000  |   |                       |   |        |                       |  |   |                                     |   |  |                   |         |   |  |   | 377,000  |  
|Bank Credit Facility repaymentsrevolving loan              |  |                                         | (205,000 | ) |                       |   |        |                       |  |   |                                     |   |  |                   |         |   |  |   | (205,000 | )
|Line of Credit Borrowings                                   |  |                                         | 410,990  |   |                       |   |        |                       |  |   |                                     |   |  |                   |         |   |  |   | 410,990  |  
|Line of Credit repayments                                   |  |                                         | (425,065 | ) |                       |   |        |                       |  |   |                                     |   |  |                   |         |   |  |   | (425,065 | )
|Principal portion of relinquishment liability payments      |  |                                         | (31,333  | ) |                       |   |        |                       |  |   |                                     |   |  |                   |         |   |  |   | (31,333  | )
|Distributions to Tribe                                      |  |                                         | (60,106  | ) |                       |   |        |                       |  |   |                                     |   |  |                   |         |   |  |   | (60,106  | )
|Other cash flows provided by (used in) financing activities |  |                                         | (3,064   | ) |                       |   | 95,604  |                       |  |   | 29,168                               |   |  |                   | (105,082 | ) |  |   | 16,626   |  
|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net cash flows provided by financing activities             |  |                                         | 63,422   |   |                       |   | 95,604  |                       |  |   | 29,168                               |   |  |                   | (105,082 | ) |  |   | 83,112   |  
|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents        |  |                                         | (26,322  | ) |                       |   | (1,857  | )                     |  |   | 561                                  |   |  |                   |         |   |  |   | (27,618  | )
|Cash and cash equivalents at beginning of period            |  |                                         | 89,282   |   |                       |   | 16,307  |                       |  |   | 7                                    |   |  |                   |         |   |  |   | 105,596  |  
|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  
|Cash and cash equivalents at end of period                  |  | $                                       | 62,960   |   |                       | $ | 14,450  |                       |  | $ | 568                                  |   |  | $                 |         |   |  | $ | 77,978   |  
|                                                            |  |                                         |          |   |                       |   |         |                       |  |   |                                      |   |  |                   |          |   |  |   |          |  



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|----------------------------------------------------------- |  | --------------------------------------- | -------- | - | --------------------- | - | ------- | ------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------- | - |  | - | -------- | -
|                                                            |  | For the Nine Months Ended June 30, 2007 |         
|                                                            |  | Authority                               |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorEntity |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |        
|Net cash flows provided by (used in) operating activities   |  | $                                       | 197,947  |   |                       | $ | 25,770  |                     |  | $ | (794                                 | ) |  | $                 |        |   |  | $ | 222,923  |  
|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Purchases of property and equipment                         |  |                                         | (52,189  | ) |                       |   | (33,860 | )                   |  |   |                                     |   |  |                   |        |   |  |   | (86,049  | )
|Payment of Category One slot machine license fee            |  |                                         |         |   |                       |   | (50,000 | )                   |  |   |                                     |   |  |                   |        |   |  |   | (50,000  | )
|Other cash flows used in investing activities               |  |                                         | (76,443  | ) |                       |   | (1,806  | )                   |  |   | (2,916                               | ) |  |                   | 69,320  |   |  |   | (11,845  | )
|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                         | (128,632 | ) |                       |   | (85,666 | )                   |  |   | (2,916                               | ) |  |                   | 69,320  |   |  |   | (147,894 | )
|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|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 | )
|Bank Credit Facility borrowingsrevolving loan              |  |                                         | 160,000  |   |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | 160,000  |  
|Bank Credit Facility repaymentsrevolving loan              |  |                                         | (133,000 | ) |                       |   |        |                     |  |   |                                     |   |  |                   |         |   |  |   | (133,000 | )
|Line of credit borrowings                                   |  |                                         | 426,480  |   |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | 426,480  |  
|Line of credit repayments                                   |  |                                         | (406,734 | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (406,734 | )
|Principal portion of relinquishment liability payments      |  |                                         | (30,127  | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (30,127  | )
|Distributions to Tribe                                      |  |                                         | (55,230  | ) |                       |   |        |                     |  |   |                                     |   |  |                   |        |   |  |   | (55,230  | )
|Other cash flows provided by (used in) financing activities |  |                                         | (6,785   | ) |                       |   | 78,145  |                     |  |   | 3,829                                |   |  |                   | (69,320 | ) |  |   | 5,869    |  
|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows provided by (used in) financing activities   |  |                                         | (45,396  | ) |                       |   | 78,145  |                     |  |   | 3,829                                |   |  |                   | (69,320 | ) |  |   | (32,742  | )
|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net increase in cash and cash equivalents                   |  |                                         | 23,919   |   |                       |   | 18,249  |                     |  |   | 119                                  |   |  |                   |        |   |  |   | 42,287   |  
|Cash and cash equivalents at beginning of period            |  |                                         | 75,794   |   |                       |   | (548    | )                   |  |   |                                     |   |  |                   |        |   |  |   | 75,246   |  
|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash and cash equivalents at end of period                  |  | $                                       | 99,713   |   |                       | $ | 17,701  |                     |  | $ | 119                                  |   |  | $                 |        |   |  | $ | 117,533  |  
|                                                            |  |                                         |          |   |                       |   |         |                     |  |   |                                      |   |  |                   |         |   |  |   |          |  



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Management Board of

Mohegan Tribal Gaming Authority

We have reviewed the accompanying condensed consolidated balance sheet of the Mohegan Tribal Gaming Authority and its subsidiaries (the
Authority) as of June 30, 2008, and the related condensed consolidated statements of income and of changes in capital for each of the three-month and nine-month periods ended June 30, 2008 and 2007 and the condensed
consolidated statement of cash flows for the nine-month periods ended June 30, 2008 and 2007. These interim financial statements are the responsibility of the Authoritys management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial
statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously
audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of September 30, 2007, and the related consolidated statements of income, of changes in capital and of
cash flows for the year then ended (not presented herein), and in our report dated December 20, 2007 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the accompanying consolidated balance sheet
information as of September 30, 2007, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut

August 13, 2008



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC,
contains 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. Such statements include 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. These statements can sometimes 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 or on our behalf. These risks and uncertainties include, but are not limited to, those relating to
increased competition (including the legalization or expansion of gaming in New England, New York, New Jersey and Pennsylvania), the financial performance of Mohegan Sun, Mohegan Sun at Pocono Downs and the off-track wagering facilities located in
Pennsylvania, collectively, the Pocono Downs entities or Pocono Downs, dependence on existing management, potential adverse changes in local, regional, national or global economic climates, our ability to complete our current expansion project at
Mohegan Sun on time and on budget, our leverage and ability to meet our debt service obligations, changes in federal, state or local 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), the continued availability of financing and the ability to achieve positive returns from our diversification projects. Additional information concerning potential factors that
could affect our financial results is included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2007, as well as our other reports and filings with the SEC. The forward-looking statements included in this Quarterly
Report on Form 10-Q are made only as of the date of this report. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances, except as required by law. We cannot assure you
that projected results or events will be achieved or will occur.

The following discussion and analysis should be read in conjunction with
our condensed consolidated financial statements and the related notes beginning on page 3 of this Quarterly Report on Form 10-Q.

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 the Pocono Downs entities, which operate a gaming and entertainment facility offering slot
machines and harness racing in Plains Township, Pennsylvania, and several off-track wagering, or OTW, facilities located elsewhere in Pennsylvania. We are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal
Council (the governing body of the Tribe). Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

Mohegan Sun

In October 1996, we opened a gaming and entertainment complex known as Mohegan
Sun. Mohegan Sun is located on a 185-acre site on the Tribes reservation overlooking the Thames River with direct access from



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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, which included increased gaming, restaurant and retail space, an entertainment arena, an approximately 1,200-room luxury Sky
hotel and approximately 100,000 square feet of convention space.

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

Casino of the Earth

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



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



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



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



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



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



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

Casino of the Sky

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



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



| |  |  | food and beverage amenities, including two full-service restaurants, two quick-service restaurants, a 24-hour coffee shop, a 330-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 2,500 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 30 different retail shops, seven of which we own;
| | - |  | -------------------------------------------------------------------------------------



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



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



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



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



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

Project Horizon

Project Horizon, Mohegan Suns second major expansion, consists of four major components
(Sunrise Square, Casino of the Wind, Earth Expansion and Property Infrastructure). The plans for Project Horizon include adding approximately 919 hotel rooms, gaming space and other new non-gaming amenities to Mohegan Sun. Upon completion of Project
Horizon, Mohegan Sun is expected to offer approximately 7,000 slot machines, 380 table games, including poker, 2,100 hotel rooms, 75 restaurant and retail outlets, 30 bars and lounges and 4 entertainment venues.

Sunrise Square, our new Asian-themed gaming area in the Casino of the Earth, was completed in August 2007 at a cost of approximately $17.0 million.
Sunrise Square includes 8,500 square feet of gaming space offering 46 table games such as Mini-Baccarat, Sic Bo and Pai Gow Poker, a 5,000-square-foot bus lobby and a 4,000-square-foot Hong Kong Street food outlet.

We are also constructing 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 670 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 and the return of Chiefs Deli, a casual dining restaurant which we will operate. Groundbreaking for the Casino of the Wind occurred in June 2007, and the new casino is scheduled to open on
August 29, 2008. The estimated cost of the Casino of the Wind is $116.0 million.

Project Horizon also includes the Earth Expansion,
which features the Earth hotel. The Earth hotel is expected to include approximately 919 rooms, including approximately 261 House of Blues-themed hotel rooms, and a House of Blues Foundation Room. The Earth Expansion also is planned to include new
House of Blues-themed dining and entertainment amenities, including an approximately 36,000-square-foot music hall and a 3,000-square-foot special events room. In addition, the Earth Expansion will include approximately 44,000 square feet of retail
space, additional food and beverage facilities, including two fine-dining options, a burger restaurant, four bars, a family-style sit down pizzeria and a four-station quick-serve dining area. Groundbreaking for the Earth Expansion occurred on
May 14, 2008. The Earth hotel and related facilities are expected to open in the fall of 2010. The estimated cost of the Earth Expansion is $695.0 million.

The Property Infrastructure component of Project Horizon is underway and includes a 1,500-space parking garage and additional surface parking lots, site development and road improvements on or adjacent to the
property. The estimated cost is $97.0 million.

Total costs for Project Horizon are currently estimated to be approximately $925.0 million,
exclusive of capitalized interest. As of June 30, 2008, costs incurred for Project Horizon, inclusive of costs incurred for Sunrise Square, the Casino of the Wind, the Earth Expansion and Property Infrastructure, excluding capitalized interest, has
totaled $156.9 million. Remaining project costs are estimated to be incurred as follows: fourth quarter of fiscal 2008, $53.2 million; fiscal year 2009, $166.2 million; fiscal year 2010, $373.5 million; and fiscal year 2011, $175.2 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.



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Mohegan Golf

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

Pocono Downs

Through Downs Racing, L.P. we own and operate the slot machine and harness racing facility known as 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.

Pocono Downs continues its harness racing
activities for the 2008 racing season, which began on April 1, 2008. Year round simulcast pari-mutuel wagering activities also are conducted at Pocono Downs and the OTW facilities. A new state of the art, pari-mutuel simulcast facility 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, L.P. secured a permanent Category
One slot machine license, which permits the installation and operation of up to 3,000 slot machines at Pocono Downs. Under certain conditions, Downs Racing, L.P. may be permitted to install up to a total of 5,000 slot machines.

Pocono Downs was the first location to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of the 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 a $50.0 million one-time slot machine license fee.

Pocono Downs recently completed Project Sunrise, a Phase II gaming and entertainment facility adjacent to the Phase I gaming facility, which opened to
the public on July 17, 2008. The combined facility now includes approximately 2,500 slot machines, several dining options, including a 300-seat buffet and a quick-serve dining area, six retail outlets, three bars/lounges, additional parking and
bus amenities. The final cost of Project Sunrise is anticipated to be approximately $203.0 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 development and management of, investment in, or ownership of other gaming
enterprises through direct investments, acquisitions, joint venture arrangements and loan transactions. In addition to the developments described below, we and the Tribe are currently exploring other opportunities, although there is no assurance
that we or the Tribe will continue to pursue any of these opportunities or that any of them will be consummated.



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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 proposed
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 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 Indian 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 Indian Tribe. The management agreement is subject to approval by the National Indian Gaming Commission, or the NIGC.

On May 20, 2008, the Bureau of Indian Affairs, or BIA, published a final rule relating to gaming on trust lands acquired after October 17,
1988. The new rule takes effect on August 25, 2008 and addresses, among other things, the process used by the BIA to determine what lands should be taken into trust for an initial reservation or restored lands for a tribe, such as the Cowlitz
Tribe seeking its initial or restored reservation. The new rule also expressly provides that a tribe may rely on earlier final agency decisions, including decisions of the NIGC. On November 11, 2005, the Cowlitz Tribe received an opinion from
the NIGC determining that if the BIA takes the Cowlitz Project site into trust, the land will constitute restored lands of the Cowlitz Tribe. As a result of this opinion by the NIGC, the additional analysis called for under the new rule is not
expected to apply to the BIAs decision for the Cowlitz Tribe. In May 2008, the BIA published a Final Environmental Impact Statement for the Cowlitz Project site.

Menominee Project

In October 2004, we entered into a management agreement with the Menominee Indian
Tribe of Wisconsin, or the Menominee Tribe, and the Menominee Kenosha Gaming Authority. 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 (our wholly owned subsidiary,
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



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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, we and the Mohegan Tribe, through MVW and MV,
respectively, will receive development fees payable to WTG of 13.4% of Available Revenue Flow, as defined in the development agreement with the Menominee Tribe and 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.

In January 2008, the BIA rejected 11
applications from tribes with existing reservations to take new off-reservation land into trust in connection with gaming projects. The BIA also advised 11 other tribes that their applications were incomplete and would not be considered further.
While no decision has been issued on the Menominee application, the BIA also issued a memorandum addressing its policy on applications for off-reservation gaming projects, dated January 3, 2008, stating that the greater the distance between a
proposed project and the tribes existing reservation, the greater the scrutiny that would be applied to the application, weighing the potential benefits to the tribe against concern for the commuting distance from the existing reservation,
among other factors. As a result of this new policy, we adjusted the allowance on the future collection of reimbursable development costs and expenses pertaining to the Menominee Project and recorded an impairment charge to reduce the carrying value
of the development rights related to the Menominee project to their estimated fair value.

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

Other Projects

New York

In April 2008, our wholly owned subsidiary, MTGA Gaming, LLC, or MTGA Gaming, and Capital Play, Inc., or Capital Play, and its partners, Extell Development Company and Plainfield Special Situations Master Fund
Limited, submitted a joint proposal to the State of New York to develop and manage the proposed VLT facility and a mixed-use retail and hotel facility to be developed at Aqueduct Racetrack in Jamaica, New York. If the joint bid is selected, MTGA
Gaming would manage the proposed 4,500 VLT facility at Aqueduct Racetrack, which we estimate would open 12 to 14 months after such selection.

Kansas

In September 2007, MTGA Gaming, along with RED Leg Sun, LLC, or RED and Olympia Gaming-KC, LLC, or Olympia, formed
Leg Sun, LLC, or Leg Sun, a joint venture 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. At
the date of formation, MTGA Gaming, RED and Olympia were the one-third owners of Leg Sun. In March 2008, MTGA Gaming restructured its ownership interest in Leg Sun, transferring its membership interest to Mohegan Resorts Kansas, LLC, or MRK, a
limited liability company owned indirectly 51% by the Tribe and 49% by MTGA Gaming through Mohegan Gaming & Hospitality, or MG&H, a Delaware limited liability company formed by the Tribe. On June 23, 2008, MRK acquired
Olympias membership interest in Leg Sun and is now the holder of a two-third ownership interest in Leg Sun, with the remaining one-third interest held by RED.



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In accordance with the Kansas Expanded Lottery Act, the project is subject to various reviews,
requirements and approvals by the Kansas Lottery Commission, which is considering three other proposals that, like Leg Sun, have received the requisite local endorsements for the right to develop a single resort casino in Wyandotte County. In June
2008, Leg Sun made a $25.0 million Privilege Fee payment to the State of Kansas. The Privilege Fee is refundable if the Legends Sun project is not selected. The Kansas Lottery Gaming Facility Review Board is required to select a manager for the
Wyandotte County facility by September 26, 2008. If the Leg Sun proposal is selected, the proposed $767.0 million Legends Sun complex would feature a wide array of attractions and amenities, that in the initial phase, will 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 and a convention and conference facility. A future phase of the project
would add approximately 200,000 square feet of mixed-use retail and approximately 200,000 square feet of residential development in an area immediately adjacent to the proposed gaming facility.

In a separate matter, in February 2008, a Kansas district court judge ruled that the Kansas Expanded Lottery Act does not violate the Kansas Constitution
and properly allows for state-owned casinos, including those being proposed in Wyandotte County. In June 2008, the Kansas Supreme Court upheld the district court judges decision.

Market and Competition from Other Gaming Operations

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, with the other operation being our sole gaming competitor in Connecticut, Foxwoods Resort Casino, including the new MGM Grand at
Foxwoods, or collectively Foxwoods. We also currently face competition from several casinos and gaming facilities located on Indian tribal lands in the state of New York and VLT facilities in the states of New York and Rhode Island, as well as
potential competition from planned gaming projects announced by other Indian tribes and the expansion of state-licensed gaming in the northeastern United States. We also face existing and future competition in the immediate Pennsylvania gaming
market (refer to Mohegan Sun at Pocono Downs below). Please refer to Part I. Item 1. BusinessMarket and Competition from Other Gaming Operations in our Annual Report on Form 10-K for the fiscal year ended
September 30, 2007 for further detail regarding our current and projected competition from other gaming operations.

The following
discussion highlights changes in our competitive landscape that have occurred since September 30, 2007.

Mohegan Sun

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

Connecticut

MGM Grand at Foxwoods opened on May 17, 2008, reportedly adding 825 hotel rooms, 1,444 slot machines, 53 table games, additional retail, entertainment, parking, meeting and convention facilities to Foxwoods, at a cost of approximately
$700.0 million.

New York

Empire CityEmpire City Gaming at Yonkers Raceway in Yonkers, New York, currently offers approximately 5,300 VLTs and reportedly plans to increase the number to 7,500 VLTs, as permitted by state law.
Empire City Gaming recently launched an advertising campaign promoting its proximity to New York City.

AqueductThe State of
New York and the New York Racing Association, or NYRA, reached an agreement on February 13, 2008 for the NYRA to continue to operate racing at the three NYRA tracks for a new term of 25



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years. The NYRAs reorganization plan was approved by a bankruptcy court on April 28, 2008, but VLT rights at the NYRAs Aqueduct Racetrack
will be awarded separately. MTGA Gaming, in conjunction with Capital Play, was one of six groups that submitted initial bids to operate at least 4,500 VLTs at the Aqueduct Racetrack and one of three groups that presented updated bids in April
2008. The other bidders are S.L. Green Realty Corporation, which has partnered with Hard Rock Entertainment, and Saratoga Harness Racing, Inc. and its partner, Delaware North Companies. According to recent reports, the VLT franchise at Aqueduct will
be awarded to the selected bidder by joint agreement of the Governor, Senate Majority Leader and House Speaker in New York. Construction of the facility is expected to take 12 to 14 months.

Seneca NationThe Seneca Nation opened a temporary facility in Buffalo in July 2007, and a permanent facility in Buffalo is under
construction, joining the tribes first two casinos in Niagara Falls and Salamanca, New York. The Seneca Buffalo Creek Casino is scheduled to open in 2010 with an expected 2,100 slot machines, 50 table games, several dining options and parking
for approximately 2,500 vehicles. In July 2008, a federal judge vacated a decision of the NIGC which established the Seneca Nations right to conduct gaming on the 9-acre parcel in downtown Buffalo. A hearing on the closure of the facility,
pending appeal, is scheduled for August 21, 2008, and the Seneca Nation is seeking intervention by the NIGC. The Seneca Nation is also pursuing gaming development in Massachusetts in connection with the Aquinnah Wampanoag Tribe of
Massachusetts.

Oneida Indian TribeCurrently, the Oneida Indian Tribe operates Turning Stone Casino Resort in Verona, New
York, approximately 270 miles from Mohegan Sun. Turning Stone Casino Resort reportedly offers approximately 2,400 VLTs, 80 table games, 20 tables for live poker and more than 800 hotel rooms. After a U.S. Supreme Court decision ruled that the Oneida
Nation-owned properties in the City of Sherill were subject to local taxes and regulations, the Oneida Nation applied to place approximately 35,000 acres of land into trust. In February 2008, the U.S. Department of the Interior recommended that
13,004 acres, including the Turning Stone Casino Resort property, be taken into trust. State and county tax actions have been rejected at the federal district court level, but those actions continue. Six lawsuits, including one by the Governor on
behalf of the State, have been filed to date challenging the Department of the Interior decision to take the land into trust.

Catskill
RegionOn January 4, 2008, the BIA notified the St. Regis Mohawk Tribe of its rejection of the tribes application to take 29 acres of land into trust for gaming adjacent to the Monticello Raceway in Monticello, New York. This
decision followed the BIAs rejection of 10 other land-into-trust applications and the issuance of new guidance regarding taking off-reservation land into trust for tribal gaming, which requires greater scrutiny of the perceived benefits to the
tribe in such acquisitions the greater the distance between a proposed project and the tribes existing reservation. On January 10, 2008, the St. Regis Mohawk Tribe filed a suit in federal district court in New York to invalidate the
BIAs decision. On February 13, 2008, the St. Regis Mohawk Tribe reported that they would be ending their pursuit of a casino at the Monticello Raceway and withdrawing their lawsuit challenging the BIA decision. According to published
reports, in February 2008, Empire Resorts closed its development office at the Monticello Raceway and entered into an agreement with Concord Associates, L.P., for the development of a resort, harness race track and VLT facility at the Concord Hotel
property in nearby Kiamesha Lake, New York, to replace the current Monticello Raceway and Mighty M VLT facility. Demolition of certain buildings at the Concord Hotel property commenced in April 2008. On July 8, 2008, Governor Patterson
signed a bill that includes various incentives for the development of the Concord Hotel property into a $1.0 billion casino and resort, including a reduction in VLT revenue-sharing payments to the State to 25%, significantly lower than the current
rate paid by Empire Resorts and other VLT operators in the State.

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. A partnership with a federally recognized, eligible Massachusetts tribe was identified as one of the criteria to be used to assess



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proposals. On March 21, 2008, the Massachusetts House of Representatives defeated Governor Patricks casino proposal bill by a vote of 108 to 46.
It has been reported that similar proposals are expected to be introduced in the next legislative session, which begins in January 2009.

The Mashpee Wampanoag Tribe, which received federal recognition in February 2007, has entered into a development agreement and secured local government support for a proposed $1.0 billion casino and 1,500-room hotel project in Middleboro,
Massachusetts. Plans for the Middleboro gaming facility include a 240,000 square-foot casino, three or four stories in height, with an adjoining 15 to 18 story-hotel.

New Jersey

The Borgata Hotel and Casino, a joint venture of Boyd Gaming and MGM Mirage, has
expanded in two phases since its opening in 2003. The second phase of the Borgata expansion was completed in June 2008 with the opening of a new 43-story hotel tower, the Water Club. The combined Borgata facility reportedly now features
approximately 2,800 rooms and suites, 161,000 square feet of gaming space, 4,100 slot machines and 200 table games.

Tropicana
Entertainment, LLC, the parent company of the Tropicana Casino and Resort, filed for bankruptcy on May 5, 2008. On June 18, 2008, state casino regulators rejected bids received for the Tropicana and gave the trustee overseeing the sale
process an additional 120 days to find a buyer for the facility, whose former owners had their casino license revoked in December 2007.

In
May 2008, Trump Entertainment Resorts, Inc. announced the sale of one of its three Atlantic City properties, Trump Marina Hotel Casino, for $316.0 million to an affiliate of Coastal Development, LLC, headed by Richard T. Fields, and the resolution
of an unrelated four-year lawsuit involving development of properties with the Seminole Tribe of Florida. The property is expected to be re-branded as a Margaritaville casino which has an association with entertainer, Jimmy Buffett. The
Trump Taj Mahal is undergoing an expansion that includes a new $255.0 million hotel tower. The nearly 800-room addition will reportedly open in stages beginning with the 2008 Labor Day weekend, with the full 40 stories ready by the end of 2008.

On April 23, 2008, the city council in Atlantic City gave final approval to an extended ban on smoking that will prohibit smoking on
all casino gaming floors effective October 15, 2008. All but one of the citys casinos have announced plans to build separate smoking rooms, which under the ordinance, may not be staffed nor offer gaming. In addition, the state legislature
has considered adding slot machines or VLTs at the state racetracks.

In March 2008, Harrah Entertainment Inc. opened its new 960-room,
44-story Waterfront Tower, which represents the final phase of a $550.0 million expansion at Harrahs Marina. At 525 feet, it becomes Atlantic Citys tallest building, and it increases Harrahs Marinas hotel room capacity by
nearly 60%, to 2,590 guest rooms and suites.

Rhode Island

In March 2008, UTGR, Inc., the owner of the Twin River VLT facility in Lincoln, reportedly failed to make a loan payment on its debt and subsequently had
its corporate credit rating downgraded. In August 2008, the company announced an extension of an earlier forbearance agreement with creditors, which allows the company until August 29, 2008 to restructure its debt. On May 6, 2008, the
Rhode Island state legislature overrode the Governors veto of a bill to expand gaming hours at Twin River and Newport Grand to 24 hours per day on weekends and holidays, and to 3 a.m. on weekdays, and the expanded hours have been adopted at
each of the two facilities.



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Pocono Downs

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

Mount PoconoIn October 2007, Mount Airy #1, LLC opened its $412.0 million Mount Airy Casino Resort, or Mount Airy, which is approximately 40
miles from Pocono Downs and houses approximately 2,500 slot machines. In late 2007, the facility introduced a 188-room hotel and Gypsies Lounge Nightclub. Reports indicate that by the end of 2008, the facility will be expanded to include 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. On January 30, 2008, the license of Mount Airy #1, LLC was suspended by the PGCB, and a trustee
was appointed to oversee casino operations at Mount Airy Casino Resort following the filing of perjury charges against Mount Airys owner, Louis A. DeNaples.

BethlehemSands Bethworks Gaming, a partnership between BethWorks and the Las Vegas Sands, Inc., owner of the Venetian Resort and Casino in Las Vegas, is developing the Sands Casino Resort in Bethlehem,
approximately 70 miles from Pocono Downs. The first phase of the project would reportedly include 3,000 slot machines, with a subsequent increase to 5,000, a 300-room hotel, retail shops and restaurants, with opening to the public expected by the
summer of 2009.

GrantvilleOn February 11, 2008, Hollywood Casino at Penn National Race Course opened. The property,
which has 2,000 slot machines, is approximately 85 miles southwest of Pocono Downs.

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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------

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

Other commonly used terms in the discussion of revenues from slot machines include progressive slot machines, progressive jackpots, net slot revenues,
slot handle, gross slot hold percentage and net slot hold percentage. Progressive slot machines retain a portion of each amount wagered and aggregate these amounts with similar amounts from other slot machines in order to create one-time winnings
that are substantially larger than those paid in the ordinary course of play. We refer to such aggregated amounts as progressive jackpots. Wide-area progressive jackpot amounts are paid by a third party vendor, and we remit a weekly payment to the
vendor based on a percentage of the slot handle for each wide-area progressive slot machine. We accrue in-house



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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 condensed consolidated statements of income. Slot handle is the total amount wagered by patrons on slot machines
during the period, including free promotional slot plays used by patrons at Mohegan Sun, or the e-Bonus program. Gross slot hold percentage is the gross slot win as a percentage of slot handle. Net slot hold percentage is the net slot win as a
percentage of slot handle.

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

We also operate a program for our guests 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 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 Pocono Downs, as applicable. The retail value of items or services purchased with coupons at Mohegan Sun operated facilities or 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 Pocono Downs. In addition to this daily assessment,
Downs Racing, L.P. must pay to the PGCB,



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on an annual basis, amounts necessary to ensure that the city and municipality hosting Pocono Downs will receive an annual minimum of $10.0 million from the
local share assessment. The local share assessment is equal to the greater of 2.0% of annual gross slot revenues or $10.0 million.

Gaming
expenses also include, among other things, expenses associated with operation of slot machines, table games, keno, live harness racing at Pocono Downs and racebook, certain marketing expenses, and promotional expenses for the Players Club
points and coupons redeemed at our hotel, restaurants and retail outlets, as well as third party tenant 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 accretion of discount to the relinquishment liability, interest income, interest expense, write-off of debt issuance costs, minority
interests, income from discontinued operations and other non-operating income and expense.

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, 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 6 to our condensed consolidated financial statements for a further discussion of how we account for the relinquishment liability.

Results of Operations

Summary Operating Results

As of June 30, 2008, we own and operate Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun Country Club at Pautipaug in Connecticut,
or the Connecticut entities, and the Pocono Downs entities. All of our revenues are derived from these operations. Our executive officers review and assess the performance and operating results and determine the proper allocation of resources to the
Connecticut entities and the Pocono Downs entities on a separate basis. We therefore believe that we have two operating segments, one comprised solely of Mohegan Sun, which includes the operations of the Connecticut entities, and another, referred
to as Pocono Downs, herein, comprised of the operations of the Pocono Downs entities. The two operating segments are also separate reportable segments due to the differing nature of their operations. See Note 8 to the condensed consolidated
financial statements for financial information about the segments.



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



|                               |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |          |           |   |                |   |           |                    |  |   |         |   |  |        |  
|------------------------------ |  | ----------------------------------- | ------- | - | ---------------------------------- | - | ------- | -------------- |  | - | ------------------ | - |  | ----- | - |  | -------- | --------- | - | -------------- | - | --------- | ------------------ |  | - | ------- | - |  | ------ | -
|                               |  | For the Three Months Ended June 30, |         |   | For the Nine Months Ended June 30, |  
|                               |  | 2008                                |         |   | 2007                               |   |         | DollarVariance |  |   | PercentageVariance |   |  | 2008  |   |  | 2007 (1) |           |   | DollarVariance |   |           | PercentageVariance | 
|Net revenues:                  |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |          |           |   |                |   |           |                    |  |   |         |   |  |        |  
|Mohegan Sun                    |  | $                                   | 326,897 |   |                                    | $ | 352,947 |                |  | $ | (26,050            | ) |  | -7.4  | % |  | $        | 1,012,791 |   |                | $ | 1,051,072 |                    |  | $ | (38,281 | ) |  | -3.6   | %
|Pocono Downs                   |  |                                     | 49,948  |   |                                    |   | 54,170  |                |  |   | (4,222             | ) |  | -7.8  | % |  |          | 143,580   |   |                |   | 130,652   |                    |  |   | 12,928  |   |  | 9.9    | %
|                               |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |          |           |   |                |   |           |                    |  |   |         |   |  |        |  
|Total                          |  | $                                   | 376,845 |   |                                    | $ | 407,117 |                |  | $ | (30,272            | ) |  | -7.4  | % |  | $        | 1,156,371 |   |                | $ | 1,181,724 |                    |  | $ | (25,353 | ) |  | -2.1   | %
|Income (loss) from operations: |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |          |           |   |                |   |           |                    |  |   |         |   |  |        |  
|Mohegan Sun                    |  | $                                   | 34,547  |   |                                    | $ | 72,364  |                |  | $ | (37,817            | ) |  | -52.3 | % |  | $        | 153,329   |   |                | $ | 218,562   |                    |  | $ | (65,233 | ) |  | -29.8  | %
|Pocono Downs                   |  |                                     | 3,122   |   |                                    |   | 6,543   |                |  |   | (3,421             | ) |  | -52.3 | % |  |          | 9,836     |   |                |   | 6,932     |                    |  |   | 2,904   |   |  | 41.9   | %
|Corporate expenses             |  |                                     | (4,978  | ) |                                    |   | (3,244  | )              |  |   | (1,734             | ) |  | -53.5 | % |  |          | (17,019   | ) |                |   | (8,466    | )                  |  |   | (8,553  | ) |  | -101.0 | %
|                               |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |          |           |   |                |   |           |                    |  |   |         |   |  |        |  
|Total                          |  | $                                   | 32,691  |   |                                    | $ | 75,663  |                |  | $ | (42,972            | ) |  | -56.8 | % |  | $        | 146,146   |   |                | $ | 217,028   |                    |  | $ | (70,882 | ) |  | -32.7  | %
|Net income                     |  | $                                   | 5,036   |   |                                    | $ | 45,654  |                |  | $ | (40,618            | ) |  | -89.0 | % |  | $        | 62,191    |   |                | $ | 125,864   |                    |  | $ | (63,673 | ) |  | -50.6  | %



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

The important factors and trends that most contributed to our financial performance for the three months and nine months ended June 30, 2008 and
2007 are as follows:



| |  |  | lower slot revenues at Mohegan Sun in the three months and nine months ended June 30, 2008, due to increased competition in the Northeast slot and VLT gaming
market from recently expanded VLT facilities at Empire City in Yonkers, New York and Twin River in Lincoln, Rhode Island, and, to a lesser extent, Foxwoods, following the opening of their new and expanded gaming facility on May 17, 2008;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | unfavorable macroeconomic conditions and the continued weakening of consumer spending in the Northeast region resulting in lower spending by gaming patrons;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher gas prices, as we believe some customers in the New York City and Boston markets may have chosen to frequent closer gaming facilities, thereby reducing slot
revenues at Mohegan Sun for the three months and nine months ended June 30, 2008;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





| |  |  | the opening of the Phase I slot facility at Pocono Downs in November 2006, which generated gross slot revenues of $120.5 million and $107.1 million for the nine
months ended June 30, 2008 and 2007, respectively;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | lower slot revenues at Pocono Downs in the three months ended June 30, 2008, due to new competition, following the opening of Mount Airy in Mount Pocono,
Pennsylvania, in October 2007, and, to a lesser extent, the continued weakening of the regional economy and disruptions caused by Project Sunrise construction;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher table games drop at Mohegan Sun in the three months and nine months ended June 30, 2008, resulting from an increase in Mohegan Suns targeted
high-end play and the continued success of our Asian table games business;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a significant increase in the number of shows at the Mohegan Sun Arena, including more headliner shows, in the three months and nine months ended June 30,
2008, which we believe contributes to gaming, food and beverage, hotel and retail and other revenues;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher marketing and promotional costs in response to the increased competition in the Northeast slot and VLT gaming market from Empire City, Twin River and
Foxwoods; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Other significant factors that affected our financial performance for the three months and nine months ended
June 30, 2008 and 2007 are as follows:



| |  |  | a significant decrease in table games hold percentage at Mohegan Sun in the three months ended June 30, 2008, which can fluctuate considerably over interim
financial periods;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | abnormally high promotional activities in December 2007 from Foxwoods, which had the effect of reducing slot revenues for the Connecticut slot gaming market for the
nine months ended June 30, 2008, including slot revenues at Mohegan Sun;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | unfavorable weather conditions in the Northeast region compared to the prior year, which also contributed to the decrease in slot revenues at Mohegan Sun for the
nine months ended June 30, 2008;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a $3.5 million non-cash charge in the nine months ended June 30, 2008 due to an adjustment to the allowance on the future collection of reimbursable
development costs and expenses, and an impairment charge to reduce the carrying value of development rights, both pertaining to the Menominee project as discussed above under Overview-Other Diversification Projects-Menominee Project;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a $3.3 million charge recorded in the nine months ended June 30, 2007 in connection with a settlement of property tax litigation related to the Pocono Downs
facility; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | higher allowances for doubtful accounts related to gaming receivables at Mohegan Sun.
| | - |  | -------------------------------------------------------------------------------------

Net revenues decreased for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year primarily as a result
of the decline in gaming revenues at Mohegan Sun and increases in promotional allowances at both Mohegan Sun and Pocono Downs. This decrease was partially offset by an increase in non-gaming revenues, primarily entertainment revenues, at Mohegan
Sun. The decrease in net revenues for the nine months ended June 30, 2008 compared to the same period in the prior year was also partially offset by the increase in slot revenues at Pocono Downs due to a full period of operations of the slot
facility.

Income from operations decreased for the three months and nine months ended June 30, 2008 compared to the same periods in
the prior year as a result of the decline in net revenues of 7.4% and 2.1%, respectively, and increases in operating costs and expenses of 3.8% and 4.7%, respectively. Our operating margin, or income from operations as a percentage of net revenues,
for the three months and nine months ended June 30, 2008 decreased to 8.7% and 12.6%, respectively, from 18.6% and 18.4%, respectively, for the same periods in the prior year. This decline was primarily attributable to decreases in Mohegan
Suns operating margin for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year of 990 and 570 basis points, respectively, to 10.6% and 15.1% for the three months and nine months ended
June 30, 2008, respectively, from 20.5% and 20.8% for the three months and nine months ended June 30, 2007, respectively. The overall decrease in operating margin for the nine months ended June 30, 2008 was also due to a full period
of operations of the slot facility at Pocono Downs, which has a significantly lower operating margin than Mohegan Sun due to higher gaming tax rates assessed by the Commonwealth of Pennsylvania, and the $8.5 million increase in corporate related
expenses as further discussed below under Corporate Expenses and Other Income (Expense). The decline in Mohegan Suns operating margin was primarily attributable to the decrease in gaming revenues; higher direct entertainment costs
resulting from the increased number of shows at the Mohegan Sun Arena; higher allowances for doubtful accounts related to gaming receivables; and higher promotional expenditures. The decrease in Mohegan Suns operating margin for the nine
months ended June 30, 2008 also resulted from higher labor costs and increased medical benefit costs.

Net income decreased for the
three months and nine months ended June 30, 2008 compared to the same periods in the prior year primarily due to the decrease in income from operations, partially offset by lower interest costs as further discussed below under Corporate
Expenses and Other Income (Expense).



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Mohegan Sun

Gross Revenues

Gross revenues consisted of the following (in thousands):



|                                |  |                                     |         |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |         |   |  |      |  
|------------------------------- |  | ----------------------------------- | ------- | ---- | ---------------------------------- | -------------- |  | - | ------------------ | - |  | ----- | - | ---- | - | -------------- |  | - | ------------------ |  | - | ------- | - |  | ---- | -
|                                |  | For the Three Months Ended June 30, |         |      | For the Nine Months Ended June 30, |               
|                                |  | 2008                                |         | 2007 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2008  |   | 2007 |   | DollarVariance |  |   | PercentageVariance | 
|Gaming                          |  | $                                   | 282,356 |      | $                                  | 318,967        |  | $ | (36,611            | ) |  | -11.5 | % |      | $ | 898,316        |  | $ | 948,814            |  | $ | (50,498 | ) |  | -5.3 | %
|Food and beverage               |  |                                     | 23,815  |      |                                    | 22,615         |  |   | 1,200              |   |  | 5.3   | % |      |   | 69,778         |  |   | 68,762             |  |   | 1,016   |   |  | 1.5  | %
|Hotel                           |  |                                     | 12,497  |      |                                    | 11,120         |  |   | 1,377              |   |  | 12.4  | % |      |   | 36,924         |  |   | 35,283             |  |   | 1,641   |   |  | 4.7  | %
|Retail, entertainment and other |  |                                     | 41,398  |      |                                    | 31,617         |  |   | 9,781              |   |  | 30.9  | % |      |   | 102,547        |  |   | 88,846             |  |   | 13,701  |   |  | 15.4 | %
|                                |  |                                     |         |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |         |   |  |      |  
|Total                           |  | $                                   | 360,066 |      | $                                  | 384,319        |  | $ | (24,253            | ) |  | -6.3  | % |      | $ | 1,107,565      |  | $ | 1,141,705          |  | $ | (34,140 | ) |  | -3.0 | %
|                                |  |                                     |         |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |         |   |  |      |  

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



|                                |  |                                    |   |  |                                   |   |  |       |   |  |       |  
|------------------------------- |  | ---------------------------------- | - |  | --------------------------------- | - |  | ----- | - |  | ----- | -
|                                |  | For the Three MonthsEnded June 30, |   |  | For the Nine MonthsEnded June 30, |  
|                                |  | 2008                               |   |  | 2007                              |   |  | 2008  |   |  | 2007  |  
|Gaming                          |  | 78.4                               | % |  | 83.0                              | % |  | 81.1  | % |  | 83.1  | %
|Food and beverage               |  | 6.6                                | % |  | 5.9                               | % |  | 6.3   | % |  | 6.0   | %
|Hotel                           |  | 3.5                                | % |  | 2.9                               | % |  | 3.3   | % |  | 3.1   | %
|Retail, entertainment and other |  | 11.5                               | % |  | 8.2                               | % |  | 9.3   | % |  | 7.8   | %
|                                |  |                                    |   |  |                                   |   |  |       |   |  |       |  
|Total                           |  | 100.0                              | % |  | 100.0                             | % |  | 100.0 | % |  | 100.0 | %
|                                |  |                                    |   |  |                                   |   |  |       |   |  |       |  

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



|                                                    |  |                                     |       |   |                                    |   |       |          |  |   |                    |   |  |       |   |  |      |       |   |          |   |       |                    |  |   |      |   |  |       |  
|--------------------------------------------------- |  | ----------------------------------- | ----- | - | ---------------------------------- | - | ----- | -------- |  | - | ------------------ | - |  | ----- | - |  | ---- | ----- | - | -------- | - | ----- | ------------------ |  | - | ---- | - |  | ----- | -
|                                                    |  | For the Three Months Ended June 30, |       |   | For the Nine Months Ended June 30, |  
|                                                    |  | 2008                                |       |   | 2007                               |   |       | Variance |  |   | PercentageVariance |   |  | 2008  |   |  | 2007 |       |   | Variance |   |       | PercentageVariance | 
|Slot handle                                         |  | $                                   | 2,498 |   |                                    | $ | 2,585 |          |  | $ | (87                | ) |  | -3.4  | % |  | $    | 7,489 |   |          | $ | 7,777 |                    |  | $ | (288 | ) |  | -3.7  | %
|Gross slot revenues                                 |  | $                                   | 213   |   |                                    | $ | 223   |          |  | $ | (10                | ) |  | -4.5  | % |  | $    | 635   |   |          | $ | 672   |                    |  | $ | (37  | ) |  | -5.5  | %
|Net slot revenues                                   |  | $                                   | 204   |   |                                    | $ | 215   |          |  | $ | (11                | ) |  | -5.1  | % |  | $    | 612   |   |          | $ | 649   |                    |  | $ | (37  | ) |  | -5.7  | %
|Weighted average number of slot machines (in units) |  |                                     | 5,974 |   |                                    |   | 5,939 |          |  |   | 35                 |   |  | 0.6   | % |  |      | 6,107 |   |          |   | 6,076 |                    |  |   | 31   |   |  | 0.5   | %
|Gross slot hold percentage                          |  |                                     | 8.5   | % |                                    |   | 8.6   | %        |  |   | -0.1               | % |  | -1.2  | % |  |      | 8.5   | % |          |   | 8.6   | %                  |  |   | -0.1 | % |  | -1.2  | %
|Gross slot win per unit per day(in dollars)         |  | $                                   | 392   |   |                                    | $ | 413   |          |  | $ | (21                | ) |  | -5.1  | % |  | $    | 380   |   |          | $ | 405   |                    |  | $ | (25  | ) |  | -6.2  | %
|Table games drop                                    |  | $                                   | 650   |   |                                    | $ | 611   |          |  | $ | 39                 |   |  | 6.4   | % |  | $    | 1,965 |   |          | $ | 1,820 |                    |  | $ | 145  |   |  | 8.0   | %
|Table games revenues                                |  | $                                   | 75    |   |                                    | $ | 101   |          |  | $ | (26                | ) |  | -25.7 | % |  | $    | 278   |   |          | $ | 292   |                    |  | $ | (14  | ) |  | -4.8  | %
|Weighted average number of table games (in units)   |  |                                     | 321   |   |                                    |   | 278   |          |  |   | 43                 |   |  | 15.5  | % |  |      | 322   |   |          |   | 296   |                    |  |   | 26   |   |  | 8.8   | %
|Table games hold percentage (1)                     |  |                                     | 11.6  | % |                                    |   | 16.5  | %        |  |   | -4.9               | % |  | -29.7 | % |  |      | 14.2  | % |          |   | 16.0  | %                  |  |   | -1.8 | % |  | -11.3 | %
|Table games revenue per unit per day (in dollars)   |  | $                                   | 2,578 |   |                                    | $ | 3,990 |          |  | $ | (1,412             | ) |  | -35.4 | % |  | $    | 3,148 |   |          | $ | 3,609 |                    |  | $ | (461 | ) |  | -12.8 | %



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



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Gaming revenues for the three months and nine months ended June 30, 2008 compared to the same
periods in the prior year decreased due to the declines in slot and table games revenues. The decrease in slot revenues was primarily attributable to the increased competition in the Northeast slot and VLT gaming market from Empire City and Twin
River and, to a lesser extent, Foxwoods, following the opening of their new and expanded gaming facility on May 17, 2008. We believe the decrease in slot revenues was also attributable, in part, to unfavorable macroeconomic conditions and the
continued weakening of consumer spending in the Northeast region resulting in lower spending by gaming patrons, and higher gas prices, which may have led some customers in the New York City and Boston markets to frequent closer gaming facilities.
The decline in slot revenues for the nine months ended June 30, 2008 compared to the same period in the prior year was also attributable to the abnormally high December 2007 promotional activities from Foxwoods, which had the effect of reducing
slot revenues for the Connecticut slot gaming market, including slot revenues at Mohegan Sun. During the nine months ended June 30, 2008, Foxwoods issued free promotional slot plays to their patrons totaling $51.1 million compared to $25.1
million for the same period in the prior year. The decrease in Mohegan Suns gross slot hold percentage, or gross slot revenues divided by slot handle, was primarily attributable to the introduction of $8.1 million and $17.3 million in free
promotional slot play during the three and nine months ended June 30, 2008, respectively. The decrease in table games revenues for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year was
primarily attributable to a significant decrease in table games hold percentage. Table games hold percentage is relatively predictable over long periods of time, but can fluctuate significantly over shorter periods. The growth in table drop for the
three months and nine months ended June 30, 2008 compared to the same periods in the prior year is due to an increase in our targeted high-end play and the continued success of our Asian table games business.

Food and beverage revenues for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year increased
primarily as a result of the addition of new revenues from the 4,000-square-foot Hong Kong Street food outlet in Sunrise Square, which opened in August 2007, and increased banquet revenues from the Mohegan Sun convention center. The
increase in food and beverage revenues was also due to the increase in the number of entertainment events at the Mohegan Sun Arena during the three months and nine months ended June 30, 2008 compared to the same periods in the prior year, as
further discussed below.

The following table presents data related to hotel revenues:



|                                    |  |                                     |         |   |                                    |   |         |          |  |   |                    |   |  |      |   |  |      |         |   |          |   |         |                    |  |   |       |   |  |     |  
|----------------------------------- |  | ----------------------------------- | ------- | - | ---------------------------------- | - | ------- | -------- |  | - | ------------------ | - |  | ---- | - |  | ---- | ------- | - | -------- | - | ------- | ------------------ |  | - | ----- | - |  | --- | -
|                                    |  | For the Three Months Ended June 30, |         |   | For the Nine Months Ended June 30, |  
|                                    |  | 2008                                |         |   | 2007                               |   |         | Variance |  |   | PercentageVariance |   |  | 2008 |   |  | 2007 |         |   | Variance |   |         | PercentageVariance | 
|Rooms occupied                      |  |                                     | 102,090 |   |                                    |   | 100,918 |          |  |   | 1,172              |   |  | 1.2  | % |  |      | 298,399 |   |          |   | 294,058 |                    |  |   | 4,341 |   |  | 1.5 | %
|Average daily room rate (ADR)       |  | $                                   | 114     |   |                                    | $ | 104     |          |  | $ | 10                 |   |  | 9.6  | % |  | $    | 115     |   |          | $ | 114     |                    |  | $ | 1     |   |  | 0.9 | %
|Occupancy rate                      |  |                                     | 95.5    | % |                                    |   | 94.4    | %        |  |   | 1.1                | % |  | 1.2  | % |  |      | 92.7    | % |          |   | 91.7    | %                  |  |   | 1.0   | % |  | 1.1 | %
|Revenue per available room (REVPAR) |  | $                                   | 108     |   |                                    | $ | 98      |          |  | $ | 10                 |   |  | 10.2 | % |  | $    | 106     |   |          | $ | 104     |                    |  | $ | 2     |   |  | 1.9 | %

Hotel revenues for the three months and nine months ended June 30, 2008 compared to the same
periods in the prior year increased primarily as a result of increases in ADR and hotel occupancy. The increase in ADR is consistent with increases in room rates offered to transient and group hotel guests in the Northeast gaming market. The
increase in ADR was also supported by the growth in entertainment business, as further discussed below. The increase in hotel occupancy is partially attributable to rooms being out of service during the three months and nine months ended
June 30, 2007 due to the Sky hotel room renovation program, which began in January 2007 and was completed in June 2007.

Retail,
entertainment and other revenues for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year increased primarily as a result of increases in entertainment revenues of $10.4 million, or 91.6%, and
$12.8 million, or 39.8%, respectively. The growth in entertainment revenues for the three months and nine months ended June 30, 2008 compared to the same periods in the prior



46



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year was due to increases in Arena ticket sales of 41.7% and 18.2%, respectively, and average price per ticket at the Arena of 40.5% and 21.7%, respectively.
The increases in Arena ticket sales and average price per ticket at the Arena resulted from significant increases in the number of shows at the Mohegan Sun Arena, including more headliner shows. The increase in retail, entertainment and other
revenues for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year was partially offset by decreases in retail revenues of $1.2 million, or 16.6%, and $2.6 million, or 11.9%. The increase in retail,
entertainment and other revenues for the nine months ended June 30, 2008 compared to the same period in the prior year was also the result of a $2.0 million, or 10.6%, increase in gasoline revenues due to an increase in average cost per gallon
of gasoline sold at the Mohegan Sun gasoline and convenience center.

Promotional Allowance

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



|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |      |   |      |   |                |  |   |                    |  |   |       |   |  |      |  
|------------------------------- |  | ----------------------------------- | ------ | ---- | ---------------------------------- | -------------- |  | - | ------------------ | - |  | ---- | - | ---- | - | -------------- |  | - | ------------------ |  | - | ----- | - |  | ---- | -
|                                |  | For the Three Months Ended June 30, |        |      | For the Nine Months Ended June 30, |               
|                                |  | 2008                                |        | 2007 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2008 |   | 2007 |   | DollarVariance |  |   | PercentageVariance | 
|Food and beverage               |  | $                                   | 10,879 |      | $                                  | 10,879         |  | $ |                   |   |  |     |   |      | $ | 32,534         |  | $ | 32,077             |  | $ | 457   |   |  | 1.4  | %
|Hotel                           |  |                                     | 3,646  |      |                                    | 3,801          |  |   | (155               | ) |  | -4.1 | % |      |   | 11,254         |  |   | 12,018             |  |   | (764  | ) |  | -6.4 | %
|Retail, entertainment and other |  |                                     | 18,644 |      |                                    | 16,692         |  |   | 1,952              |   |  | 11.7 | % |      |   | 50,986         |  |   | 46,538             |  |   | 4,448 |   |  | 9.6  | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |      |   |      |   |                |  |   |                    |  |   |       |   |  |      |  
|Total                           |  | $                                   | 33,169 |      | $                                  | 31,372         |  | $ | 1,797              |   |  | 5.7  | % |      | $ | 94,774         |  | $ | 90,633             |  | $ | 4,141 |   |  | 4.6  | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |      |   |      |   |                |  |   |                    |  |   |       |   |  |      |  

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



|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |       |   |  |      |  
|------------------------------- |  | ----------------------------------- | ------ | ---- | ---------------------------------- | -------------- |  | - | ------------------ | - |  | ----- | - | ---- | - | -------------- |  | - | ------------------ |  | - | ----- | - |  | ---- | -
|                                |  | For the Three Months Ended June 30, |        |      | For the Nine Months Ended June 30, |               
|                                |  | 2008                                |        | 2007 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2008  |   | 2007 |   | DollarVariance |  |   | PercentageVariance | 
|Food and beverage               |  | $                                   | 11,283 |      | $                                  | 11,574         |  | $ | (291               | ) |  | -2.5  | % |      | $ | 34,031         |  | $ | 33,221             |  | $ | 810   |   |  | 2.4  | %
|Hotel                           |  |                                     | 1,899  |      |                                    | 2,211          |  |   | (312               | ) |  | -14.1 | % |      |   | 5,884          |  |   | 6,353              |  |   | (469  | ) |  | -7.4 | %
|Retail, entertainment and other |  |                                     | 16,464 |      |                                    | 13,355         |  |   | 3,109              |   |  | 23.3  | % |      |   | 43,358         |  |   | 37,853             |  |   | 5,505 |   |  | 14.5 | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |       |   |  |      |  
|Total                           |  | $                                   | 29,646 |      | $                                  | 27,140         |  | $ | 2,506              |   |  | 9.2   | % |      | $ | 83,273         |  | $ | 77,427             |  | $ | 5,846 |   |  | 7.6  | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |       |   |  |      |  

Promotional allowances for the three months and nine months ended June 30, 2008 compared to
the same periods in the prior year increased as a result of an increase in retail, entertainment and other promotional allowances, driven primarily by the higher retail price of entertainment offerings and gasoline as discussed above under
Gross Revenues.



47



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Operating Costs and Expenses

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



|                                        |  |                                     |         |      |                                    |                |  |   |                    |   |  |      |   |      |   |                |  |   |                    |  |   |        |   |  |       |  
|--------------------------------------- |  | ----------------------------------- | ------- | ---- | ---------------------------------- | -------------- |  | - | ------------------ | - |  | ---- | - | ---- | - | -------------- |  | - | ------------------ |  | - | ------ | - |  | ----- | -
|                                        |  | For the Three Months Ended June 30, |         |      | For the Nine Months Ended June 30, |               
|                                        |  | 2008                                |         | 2007 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2008 |   | 2007 |   | DollarVariance |  |   | PercentageVariance | 
|Gaming                                  |  | $                                   | 183,744 |      | $                                  | 178,302        |  | $ | 5,442              |   |  | 3.1  | % |      | $ | 552,073        |  | $ | 532,777            |  | $ | 19,296 |   |  | 3.6   | %
|Food and beverage                       |  |                                     | 11,855  |      |                                    | 11,444         |  |   | 411                |   |  | 3.6  | % |      |   | 34,895         |  |   | 34,423             |  |   | 472    |   |  | 1.4   | %
|Hotel                                   |  |                                     | 4,488   |      |                                    | 4,504          |  |   | (16                | ) |  | -0.4 | % |      |   | 13,090         |  |   | 12,585             |  |   | 505    |   |  | 4.0   | %
|Retail, entertainment and other         |  |                                     | 19,469  |      |                                    | 10,976         |  |   | 8,493              |   |  | 77.4 | % |      |   | 41,298         |  |   | 31,857             |  |   | 9,441  |   |  | 29.6  | %
|Advertising, general and administrative |  |                                     | 51,346  |      |                                    | 54,666         |  |   | (3,320             | ) |  | -6.1 | % |      |   | 154,700        |  |   | 158,478            |  |   | (3,778 | ) |  | -2.4  | %
|Pre-opening costs and expenses          |  |                                     | 76      |      |                                    | 84             |  |   | (8                 | ) |  | -9.5 | % |      |   | 91             |  |   | 392                |  |   | (301   | ) |  | -76.8 | %
|Depreciation and amortization           |  |                                     | 21,372  |      |                                    | 20,610         |  |   | 762                |   |  | 3.7  | % |      |   | 63,315         |  |   | 61,999             |  |   | 1,316  |   |  | 2.1   | %
|                                        |  |                                     |         |      |                                    |                |  |   |                    |   |  |      |   |      |   |                |  |   |                    |  |   |        |   |  |       |  
|Total                                   |  | $                                   | 292,350 |      | $                                  | 280,586        |  | $ | 11,764             |   |  | 4.2  | % |      | $ | 859,462        |  | $ | 832,511            |  | $ | 26,951 |   |  | 3.2   | %
|                                        |  |                                     |         |      |                                    |                |  |   |                    |   |  |      |   |      |   |                |  |   |                    |  |   |        |   |  |       |  

Gaming costs and expenses increased for the three months and nine months ended June 30, 2008
compared to the same periods in the prior year primarily as a result of additional expenses associated with the e-Bonus escrow payments; higher allowances for doubtful accounts related to gaming receivables; higher promotional expenditures; and an
increase in non-gaming complimentaries redeemed by casino patrons at Authority-owned outlets. The increase in gaming costs and expenses for the nine months ended June 30, 2008 compared to the same period in the prior year also resulted from
higher labor costs and increased medical benefit costs. The increase in gaming costs and expenses for the three months and nine months ended June 30, 2008 was partially offset by a decrease in slot win contribution to the State of Connecticut
commensurate with lower slot revenues and decreased redemption costs due to decreased utilization of Players Club points and promotional coupons at third party outlets. Slot win contribution expenses totaled $55.3 million and $163.3 million
for the three months and nine months ended June 30, 2008, respectively, and $55.9 million and $168.0 million for the three months and nine months ended June 30, 2007, respectively. As a result of the cost increases mentioned above, gaming
costs and expenses as a percentage of gaming revenues increased to 65.1% and 61.5% for the three months and nine months ended June 30, 2008, respectively, from 55.9% and 56.2% for the three months and nine months ended June 30, 2007,
respectively.

Food and beverage costs and expenses increased for the three months ended June 30, 2008 compared to the same period in
the prior year primarily due decreased food and beverage complimentaries resulting in a lower amount of food and beverage costs being allocated to gaming costs and expenses. Food and beverage costs and expenses increased for the nine months ended
June 30, 2008 compared to the same period in the prior year as a result of higher labor costs and increased medical benefit costs, partially offset by a higher amount of food and beverage complimentaries, resulting in an increased amount of
food and beverage costs being allocated to gaming costs and expenses.

Hotel costs and expenses for the three months ended June 30,
2008 were comparable to hotel costs and expenses for the same period in the prior year. Hotel costs and expenses increased for the nine months ended June 30, 2008 compared to the same period in the prior year primarily as a result of higher
labor costs and increased medical benefit costs.

Retail, entertainment and other costs and expenses increased for the three months and
nine months ended June 30, 2008 compared to the same periods in the prior year primarily due to a substantial increase in direct entertainment costs resulting from the increased number of shows at the Mohegan Sun Arena, including more headliner
shows. Additionally, the increase in retail, entertainment and other costs and expenses was due to



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increased cost of goods sold for gasoline resulting from the increase in average cost per gallon of gasoline sold at the Mohegan Sun gasoline and convenience
center. The increase in retail, entertainment and other costs and expenses for the three months and nine months ended June 30, 2008 was partially offset by increased entertainment and other complimentaries resulting in a higher amount of
retail, entertainment and other costs and expenses being allocated to gaming costs and expenses, as well as decreased cost of goods sold for retail due to lower patronage at Authority-owned retail outlets.

Advertising, general and administrative costs and expenses decreased for the three months ended June 30, 2008 compared to the same period in the
prior year primarily as a result of decreased property maintenance costs and other one-time costs, such as costs relating to the Sky hotel room renovation program, which occurred in 2007, as well as decreases in advertising expenditures and utility
costs, partially offset by higher labor costs due primarily to market driven compensation adjustments and increased medical benefit costs, and increased professional costs and consulting expenditures. Advertising, general and administrative costs
and expenses decreased for the nine months ended June 30, 2008 compared to the same period in the prior year primarily as a result of approximately $2.0 million in non-recurring costs recorded during the nine months ended June 30, 2007 in
connection with the Mohegan Sun ten-year anniversary festivities for employees and casino patrons, as well as decreases in property maintenance costs and other one-time costs, as discussed above. The decrease in advertising, general and
administrative costs and expenses for the nine months ended June 30, 2008 was partially offset by higher labor costs due primarily to market driven compensation adjustments and increased medical benefit costs, increased professional costs and
consulting expenditures, and higher allowances for doubtful accounts.

Pre-opening costs and expenses for the three months and nine months
ended June 30, 2008 and 2007 were comprised of personnel, consulting and other costs associated with the development plans for Project Horizon, as described above under Overview-Mohegan Sun. Pre-opening costs and expenses for the
nine months ended June 30, 2007 related primarily to the Sunrise Square component of Project Horizon, which opened in August 2007.

Pocono Downs

Gross Revenues

Gross revenues consisted of the following (in thousands):



|                  |  |                                     |        |      |                                    |                |  |   |                    |   |  |      |   |          |   |                |  |                    |         |  |   |        |  |      |  
|----------------- |  | ----------------------------------- | ------ | ---- | ---------------------------------- | -------------- |  | - | ------------------ | - |  | ---- | - | -------- | - | -------------- |  | ------------------ | ------- |  | - | ------ |  | ---- | -
|                  |  | For the Three Months Ended June 30, |        |      | For the Nine Months Ended June 30, |               
|                  |  | 2008                                |        | 2007 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2008 |   | 2007 (1) |   | DollarVariance |  | PercentageVariance |        
|Gaming            |  | $                                   | 48,176 |      | $                                  | 52,173         |  | $ | (3,997             | ) |  | -7.7 | % |          | $ | 138,738        |  | $                  | 125,496 |  | $ | 13,242 |  | 10.6 | %
|Food and beverage |  |                                     | 2,667  |      |                                    | 2,142          |  |   | 525                |   |  | 24.5 | % |          |   | 7,191          |  |                    | 4,763   |  |   | 2,428  |  | 51.0 | %
|Retail and other  |  |                                     | 1,156  |      |                                    | 1,004          |  |   | 152                |   |  | 15.1 | % |          |   | 3,476          |  |                    | 2,336   |  |   | 1,140  |  | 48.8 | %
|                  |  |                                     |        |      |                                    |                |  |   |                    |   |  |      |   |          |   |                |  |                    |         |  |   |        |  |      |  
|Total             |  | $                                   | 51,999 |      | $                                  | 55,319         |  | $ | (3,320             | ) |  | -6.0 | % |          | $ | 149,405        |  | $                  | 132,595 |  | $ | 16,810 |  | 12.7 | %
|                  |  |                                     |        |      |                                    |                |  |   |                    |   |  |      |   |          |   |                |  |                    |         |  |   |        |  |      |  



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

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



|                  |  |                                    |   |  |                                   |   |  |       |   |  |          |  
|----------------- |  | ---------------------------------- | - |  | --------------------------------- | - |  | ----- | - |  | -------- | -
|                  |  | For the Three MonthsEnded June 30, |   |  | For the Nine MonthsEnded June 30, |  
|                  |  | 2008                               |   |  | 2007                              |   |  | 2008  |   |  | 2007 (1) |  
|Gaming            |  | 92.7                               | % |  | 94.3                              | % |  | 92.9  | % |  | 94.6     | %
|Food and beverage |  | 5.1                                | % |  | 3.9                               | % |  | 4.8   | % |  | 3.6      | %
|Retail and other  |  | 2.2                                | % |  | 1.8                               | % |  | 2.3   | % |  | 1.8      | %
|                  |  |                                    |   |  |                                   |   |  |       |   |  |          |  
|Total             |  | 100.0                              | % |  | 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 June 30, 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



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



|                                                    |  |                                     |         |   |                                    |   |         |          |  |   |                    |   |  |       |   |  |          |           |   |          |   |           |                    |  |   |         |   |  |       |  
|--------------------------------------------------- |  | ----------------------------------- | ------- | - | ---------------------------------- | - | ------- | -------- |  | - | ------------------ | - |  | ----- | - |  | -------- | --------- | - | -------- | - | --------- | ------------------ |  | - | ------- | - |  | ----- | -
|                                                    |  | For the Three Months Ended June 30, |         |   | For the Nine Months Ended June 30, |  
|                                                    |  | 2008                                |         |   | 2007                               |   |         | Variance |  |   | PercentageVariance |   |  | 2008  |   |  | 2007 (1) |           |   | Variance |   |           | PercentageVariance | 
|Slot handle                                         |  | $                                   | 476,548 |   |                                    | $ | 486,467 |          |  | $ | (9,919             | ) |  | -2.0  | % |  | $        | 1,389,470 |   |          | $ | 1,122,577 |                    |  | $ | 266,893 |   |  | 23.8  | %
|Gross slot revenues                                 |  | $                                   | 41,265  |   |                                    | $ | 44,836  |          |  | $ | (3,571             | ) |  | -8.0  | % |  | $        | 120,458   |   |          | $ | 107,051   |                    |  | $ | 13,407  |   |  | 12.5  | %
|Net slot revenues                                   |  | $                                   | 41,146  |   |                                    | $ | 44,671  |          |  | $ | (3,525             | ) |  | -7.9  | % |  | $        | 120,232   |   |          | $ | 106,153   |                    |  | $ | 14,079  |   |  | 13.3  | %
|Weighted average number of slot machines (in units) |  |                                     | 1,202   |   |                                    |   | 1,142   |          |  |   | 60                 |   |  | 5.3   | % |  |          | 1,203     |   |          |   | 1,120     |                    |  |   | 83      |   |  | 7.4   | %
|Gross slot hold percentage                          |  |                                     | 8.7     | % |                                    |   | 9.2     | %        |  |   | -0.5               | % |  | -5.4  | % |  |          | 8.7       | % |          |   | 9.5       | %                  |  |   | -0.8    | % |  | -8.4  | %
|Gross slot win per unit per day (in dollars)        |  | $                                   | 377     |   |                                    | $ | 431     |          |  | $ | (54                | ) |  | -12.5 | % |  | $        | 366       |   |          | $ | 418       |                    |  | $ | (52     | ) |  | -12.4 | %



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

Gaming revenues for the three months ended June 30, 2008 compared to the same period in the prior year decreased primarily as a result of a decline
in slot revenues due to the opening of Mount Airy in October 2007, and, to a lesser extent, the continued weakening of the regional economy and disruptions caused by Project Sunrise construction. Gaming revenues for the nine months ended
June 30, 2008 compared to the same period in the prior year increased as a result of the increase in slot revenues due to a full period of operations of the slot facility, which opened in November 2006. Gaming revenues for the nine months ended
June 30, 2008 were also negatively impacted by the items discussed above. Gross slot win per unit per day for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year decreased primarily due to
the lower gross slot hold percentage and the opening of Mount Airy, which had the effect of increasing slot product in the Northeastern Pennsylvania slot gaming market. The decrease in gross slot hold percentage was primarily attributable to the
introduction of electronic blackjack games during the period and a greater demand for higher denomination slot machines, both of which had a lower hold percentage than other slot machines.

Food and beverage revenues for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year increased
primarily as a result of increased utilization of Pocono Downs Players Club points and promotional coupons at the propertys restaurants. The increase in food and beverage revenues for the nine months ended June 30, 2008 is also
attributable to the full period of operations of the slot facility, which resulted in increased patron visitation to the facility.

Retail
and other revenues for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year increased primarily as a result of increased utilization of Pocono Downs Players Club points and promotional
coupons at the propertys retail outlet. The increase in retail and other revenues for the nine months ended June 30, 2008 is also attributable to the full period of operations of the slot facility, which resulted in increased patron
visitation to the facility.



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Promotional Allowances

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



|                  |  |                                     |       |      |                                    |                |  |                    |     |  |      |   |          |   |                |  |                    |       |  |   |       |  |       |  
|----------------- |  | ----------------------------------- | ----- | ---- | ---------------------------------- | -------------- |  | ------------------ | --- |  | ---- | - | -------- | - | -------------- |  | ------------------ | ----- |  | - | ----- |  | ----- | -
|                  |  | For the Three Months Ended June 30, |       |      | For the Nine Months Ended June 30, |               
|                  |  | 2008                                |       | 2007 |                                    | DollarVariance |  | PercentageVariance |     |  | 2008 |   | 2007 (1) |   | DollarVariance |  | PercentageVariance |      
|Food and beverage |  | $                                   | 1,615 |      | $                                  | 809            |  | $                  | 806 |  | 99.6 | % |          | $ | 4,442          |  | $                  | 1,333 |  | $ | 3,109 |  | 233.2 | %
|Retail            |  |                                     | 436   |      |                                    | 340            |  |                    | 96  |  | 28.2 | % |          |   | 1,383          |  |                    | 610   |  |   | 773   |  | 126.7 | %
|                  |  |                                     |       |      |                                    |                |  |                    |     |  |      |   |          |   |                |  |                    |       |  |   |       |  |       |  
|Total             |  | $                                   | 2,051 |      | $                                  | 1,149          |  | $                  | 902 |  | 78.5 | % |          | $ | 5,825          |  | $                  | 1,943 |  | $ | 3,882 |  | 199.8 | %
|                  |  |                                     |       |      |                                    |                |  |                    |     |  |      |   |          |   |                |  |                    |       |  |   |       |  |       |  



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

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



|                  |  |                                     |       |      |                                    |                |  |                    |       |  |       |   |          |   |                |  |                    |       |  |   |       |  |       |  
|----------------- |  | ----------------------------------- | ----- | ---- | ---------------------------------- | -------------- |  | ------------------ | ----- |  | ----- | - | -------- | - | -------------- |  | ------------------ | ----- |  | - | ----- |  | ----- | -
|                  |  | For the Three Months Ended June 30, |       |      | For the Nine Months Ended June 30, |               
|                  |  | 2008                                |       | 2007 |                                    | DollarVariance |  | PercentageVariance |       |  | 2008  |   | 2007 (1) |   | DollarVariance |  | PercentageVariance |      
|Food and beverage |  | $                                   | 1,864 |      | $                                  | 893            |  | $                  | 971   |  | 108.7 | % |          | $ | 5,403          |  | $                  | 1,542 |  | $ | 3,861 |  | 250.4 | %
|Retail            |  |                                     | 661   |      |                                    | 302            |  |                    | 359   |  | 118.9 | % |          |   | 1,762          |  |                    | 613   |  |   | 1,149 |  | 187.4 | %
|                  |  |                                     |       |      |                                    |                |  |                    |       |  |       |   |          |   |                |  |                    |       |  |   |       |  |       |  
|Total             |  | $                                   | 2,525 |      | $                                  | 1,195          |  | $                  | 1,330 |  | 111.3 | % |          | $ | 7,165          |  | $                  | 2,155 |  | $ | 5,010 |  | 232.5 | %
|                  |  |                                     |       |      |                                    |                |  |                    |       |  |       |   |          |   |                |  |                    |       |  |   |       |  |       |  



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

Promotional allowances increased for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year primarily
due to higher redemptions under the Players Club program.

Operating Costs and Expenses

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



|                                        |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |          |   |                |  |   |                    |  |   |        |   |  |       |  
|--------------------------------------- |  | ----------------------------------- | ------ | ---- | ---------------------------------- | -------------- |  | - | ------------------ | - |  | ----- | - | -------- | - | -------------- |  | - | ------------------ |  | - | ------ | - |  | ----- | -
|                                        |  | For the Three Months Ended June 30, |        |      | For the Nine Months Ended June 30, |               
|                                        |  | 2008                                |        | 2007 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2008  |   | 2007 (1) |   | DollarVariance |  |   | PercentageVariance | 
|Gaming                                  |  | $                                   | 36,999 |      | $                                  | 38,032         |  | $ | (1,033             | ) |  | -2.7  | % |          | $ | 106,415        |  | $ | 92,238             |  | $ | 14,177 |   |  | 15.4  | %
|Food and beverage                       |  |                                     | 645    |      |                                    | 1,363          |  |   | (718               | ) |  | -52.7 | % |          |   | 1,727          |  |   | 3,963              |  |   | (2,236 | ) |  | -56.4 | %
|Retail and other                        |  |                                     | 212    |      |                                    | 386            |  |   | (174               | ) |  | -45.1 | % |          |   | 487            |  |   | 1,019              |  |   | (532   | ) |  | -52.2 | %
|Advertising, general and administrative |  |                                     | 4,796  |      |                                    | 4,735          |  |   | 61                 |   |  | 1.3   | % |          |   | 15,095         |  |   | 15,270             |  |   | (175   | ) |  | -1.1  | %
|Pre-opening costs and expenses          |  |                                     | 1,238  |      |                                    |               |  |   | 1,238              |   |  | 100.0 | % |          |   | 1,255          |  |   | 3,437              |  |   | (2,182 | ) |  | -63.5 | %
|Depreciation and amortization           |  |                                     | 2,936  |      |                                    | 3,111          |  |   | (175               | ) |  | -5.6  | % |          |   | 8,765          |  |   | 7,793              |  |   | 972    |   |  | 12.5  | %
|                                        |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |          |   |                |  |   |                    |  |   |        |   |  |       |  
|Total                                   |  | $                                   | 46,826 |      | $                                  | 47,627         |  | $ | (801               | ) |  | -1.7  | % |          | $ | 133,744        |  | $ | 123,720            |  | $ | 10,024 |   |  | 8.1   | %
|                                        |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |          |   |                |  |   |                    |  |   |        |   |  |       |  



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



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Gaming costs and expenses decreased for the three months ended June 30, 2008 compared to the same
period in the prior year primarily due to lower expenses associated with the PGCB slot machine and local share tax assessments commensurate with the decline in gross slot revenues for the period, partially offset by an increase in non-gaming
complimentaries redeemed by casino patrons at food and beverage and retail outlets at the facility. Gaming costs and expenses increased for the nine months ended June 30, 2008 compared to the same period in the prior year primarily as a result
of higher operating costs and expenses necessary to support the full period of slot operations, including expenses associated with the PGCB slot machine and local share tax assessments, as well as an increase in non-gaming complimentaries redeemed
by casino patrons at food and beverage and retail outlets at the facility. Slot machine and local share tax assessments to the PGCB totaled $24.4 million and $26.3 million for the three months ended June 30, 2008 and 2007, respectively, and
$71.4 million and $63.1 million for the nine months ended June 30, 2008 and 2007, respectively. Gaming costs and expenses as a percentage of gaming revenues increased to 76.8% and 76.7% for the three months and nine months ended June 30,
2008, respectively, from 72.9% and 73.5% for the three months and nine months ended June 30, 2007, respectively.

Food and beverage
costs and expenses decreased for the three months and nine months ended June 30, 2008 compared to the same periods in the prior year primarily due to a higher amount of food and beverage complimentaries resulting in an increased amount of food
and beverage costs being allocated to gaming costs and expenses.

Retail and other costs and expenses decreased for the three months and
nine months ended June 30, 2008 compared to the same periods in the prior year primarily due to a higher amount of retail and other complimentaries resulting in an increased amount of retail and other costs being allocated to gaming costs and
expenses.

Advertising, general and administrative costs and expenses increased for the three months ended June 30, 2008 compared to
the same period in the prior year primarily due to higher advertising expenditures in response to the new competition. Advertising, general and administrative costs and expenses decreased for the nine months ended June 30, 2008 compared to the
same period in the prior year primarily due to the $3.3 million non-recurring charge recorded during the nine months ended June 30, 2007 in connection with a settlement of property tax litigation related to the Pocono Downs facility. This
decrease was partially offset by increased advertising expenditures in response to the new competition and higher operating costs and expenses necessary to support the full period of slot operations.

Pre-opening costs and expenses for the three months and nine months ended June 30, 2008 were comprised of personnel, consulting and other costs
associated with the development plans for Project Sunrise, as described above under Overview-Pocono Downs. Pre-opening costs and expenses for the nine months ended June 30, 2007 related primarily to the opening of the Phase I slot
facility.



52



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Corporate Expenses and Other Income (Expense)

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



|                                                         |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |        |   |  |      |         |   |                |   |                    |   |  |   |       |  |        |  
|-------------------------------------------------------- |  | ----------------------------------- | ------- | - | ---------------------------------- | - | ------- | -------------- |  | - | ------------------ | - |  | ------ | - |  | ---- | ------- | - | -------------- | - | ------------------ | - |  | - | ----- |  | ------ | -
|                                                         |  | For the Three Months Ended June 30, |         |   | For the Nine Months Ended June 30, |  
|                                                         |  | 2008                                |         |   | 2007                               |   |         | DollarVariance |  |   | PercentageVariance |   |  | 2008   |   |  | 2007 |         |   | DollarVariance |   | PercentageVariance |  
|Corporate expenses:                                      |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |        |   |  |      |         |   |                |   |                    |   |  |   |       |  |        |  
|Depreciation and amortization                            |  | $                                   | 20      |   |                                    | $ | 19      |                |  | $ | 1                  |   |  | 5.3    | % |  | $    | 900     |   |                | $ | 59                 |   |  | $ | 841   |  | 1425.4 | %
|Corporate expenses                                       |  |                                     | 4,958   |   |                                    |   | 3,222   |                |  |   | 1,736              |   |  | 53.9   | % |  |      | 16,119  |   |                |   | 8,406              |   |  |   | 7,713 |  | 91.8   | %
|                                                         |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |        |   |  |      |         |   |                |   |                    |   |  |   |       |  |        |  
|Total corporate expenses                                 |  | $                                   | 4,978   |   |                                    | $ | 3,241   |                |  | $ | 1,737              |   |  | 53.6   | % |  | $    | 17,019  |   |                | $ | 8,465              |   |  | $ | 8,554 |  | 101.1  | %
|                                                         |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |        |   |  |      |         |   |                |   |                    |   |  |   |       |  |        |  
|Other income (expense):                                  |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |        |   |  |      |         |   |                |   |                    |   |  |   |       |  |        |  
|Accretion of discount to the relinquishmentliability (1) |  | $                                   | (6,771  | ) |                                    | $ | (7,449  | )              |  | $ | 678                |   |  | -9.1   | % |  | $    | (20,314 | ) |                | $ | (22,346            | ) |  | $ | 2,032 |  | -9.1   | %
|Interest income (2)                                      |  |                                     | 913     |   |                                    |   | 1,148   |                |  |   | (235               | ) |  | -20.5  | % |  |      | 2,870   |   |                |   | 2,688              |   |  |   | 182   |  | 6.8    | %
|Interest expense, net of capitalized interest            |  |                                     | (22,697 | ) |                                    |   | (23,840 | )              |  |   | 1,143              |   |  | -4.8   | % |  |      | (68,215 | ) |                |   | (71,564            | ) |  |   | 3,349 |  | -4.7   | %
|Write-off of debt issuance costs (3)                     |  |                                     |        |   |                                    |   |        |                |  |   |                   |   |  |       |   |  |      |        |   |                |   | (71                | ) |  |   | 71    |  | -100.0 | %
|Other income (expense), net                              |  |                                     | 390     |   |                                    |   | (96     | )              |  |   | 486                |   |  | -506.3 | % |  |      | 461     |   |                |   | (458               | ) |  |   | 919   |  | -200.7 | %
|                                                         |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |        |   |  |      |         |   |                |   |                    |   |  |   |       |  |        |  
|Total other expense, net                                 |  | $                                   | (28,165 | ) |                                    | $ | (30,237 | )              |  | $ | 2,072              |   |  | -6.9   | % |  | $    | (85,198 | ) |                | $ | (91,751            | ) |  | $ | 6,553 |  | -7.1   | %
|                                                         |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |        |   |  |      |         |   |                |   |                    |   |  |   |       |  |        |  



|(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 our Annual Report on Form 10-K for the fiscal year ended September 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Total corporate expenses increased for the three months ended June 30, 2008 compared to the same period in the prior year primarily as a result of
increased expenditures related to governmental and certain administrative services provided by the Tribe in conjunction with the operation of Mohegan Sun and higher salary and wages costs as a result of certain reallocation of costs to Corporate
from Mohegan Sun. Total corporate expenses increased for the nine months ended June 30, 2008 compared to the same period in the prior year primarily as a result of an adjustment to the allowance on the future collection of reimbursable
development costs and expenses pertaining to the Menominee Project, as well as an impairment charge to reduce the carrying value of the development rights related to the Menominee Project to their estimated fair value. These adjustments were made as
a result of January 2008 guidance from the BIA relating to its policy on taking off-reservation land into trust for the development of gaming projects as discussed above under Overview-Other Diversification Projects-Menominee Project.
The resulting non-cash charge for this occurrence totaled approximately $3.5 million. The increase in total corporate expenses for the nine months ended June 30, 2008 is also due to the increased professional costs and consulting expenditures,
as well as increased expenditures related to governmental and certain administrative services provided by the Tribe and higher salary and wages costs as a result of certain reallocation of costs, both discussed above.



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Interest expense, net of capitalized interest, decreased for the three months and nine months ended
June 30, 2008 compared to the same periods in the prior year primarily due to the capitalization of approximately $2.3 million and $5.4 million in interest costs relating to Project Horizon and Project Sunrise for the three months and nine
months ended June 30, 2008, respectively, compared to $260,000 and $660,000 for the same periods in the prior year, respectively, relating to the Phase I slot facility at Pocono Downs. The weighted average outstanding debt was $1.41 billion and
$1.36 billion for the three months and nine months ended June 30, 2008, respectively, and $1.30 billion for each of the three months and nine months ended June 30, 2007. The increase in weighted average outstanding debt was due to
additional borrowings on the bank credit facility to fund Project Horizon and Project Sunrise. The weighted average interest rate for the three months and nine months ended June 30, 2008 was 7.1% and 7.2%, respectively, compared to 7.4% for
each of the three months and nine months ended June 30, 2007.

Seasonality

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

Liquidity, Capital Resources and Capital Spending

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



|                                                          |  |                                    |          |   |      |   |          |                |  |   |                    |   |  |        |  
|--------------------------------------------------------- |  | ---------------------------------- | -------- | - | ---- | - | -------- | -------------- |  | - | ------------------ | - |  | ------ | -
|                                                          |  | For the Nine Months Ended June 30, |         
|                                                          |  | 2008                               |          |   | 2007 |   |          | DollarVariance |  |   | PercentageVariance |  
|Net cash flows provided by operating activities           |  | $                                  | 134,769  |   |      | $ | 222,923  |                |  | $ | (88,154            | ) |  | -39.5  | %
|Net cash flows used in investing activities               |  |                                    | (245,499 | ) |      |   | (147,894 | )              |  |   | (97,605            | ) |  | 66.0   | %
|Net cash flows provided by (used in) financing activities |  |                                    | 83,112   |   |      |   | (32,742  | )              |  |   | 115,854            |   |  | -353.8 | %
|                                                          |  |                                    |          |   |      |   |          |                |  |   |                    |   |  |        |  
|Net (decrease) increase in cash and cash equivalents      |  | $                                  | (27,618  | ) |      | $ | 42,287   |                |  | $ | (69,905            | ) |  | -165.3 | %
|                                                          |  |                                    |          |   |      |   |          |                |  |   |                    |   |  |        |  

As of June 30, 2008 and September 30, 2007, we held cash and cash equivalents of $78.0
million and $105.6 million, respectively. As a result of the cash-based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and
amortization and relinquishment liability reassessments. The decrease in cash provided by operating activities for the nine months ended June 30, 2008 compared to the same period in the prior year is attributable primarily to the decrease in
operating income after adjustments for non-cash items and higher working capital requirements, partially offset by the receipt of $7.0 million pursuant to the amendment to the Pocono Downs purchase agreement, as discussed above under Overview-
Pocono Downs.

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 and a portion of our expansion capital expenditures, reduce our debt, provide distributions to the Tribe, provide payments under
the relinquishment agreement and, from time to time, make investments. There are numerous potential factors which may cause a substantial reduction in the amount of such cash flows, including, but not limited to, the following:



| |  |  | 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
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | two Category Two slot machine facilities, one of which opened in October 2007, in the immediate market of Pocono Downs), which may result in a substantial
decrease in revenue;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | continuing erosion of consumer confidence in the economy, which could 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 capital requirements. The increase in cash used in investing activities for the nine months ended
June 30, 2008 compared to the same period in the prior year is attributable primarily to a $133.2 million increase in capital expenditures due to the construction projects described below under Capital Expenditures-Capital Expenditures
Incurred and the payment of the one-time privilege fee of $25.0 million to the State of Kansas for the Legends Sun project described above under Overview-Other Diversification Projects-Other Projects-Kansas. By comparison, the nine
months ended June 30, 2007 included the payment of the one-time slot machine license fee of $50.0 million to the PGCB; the acquisition of the Menominee Project development rights and other related assets for $6.4 million; and the acquisition of
PCC for $4.7 million. The increase in cash provided by financing activities for the nine months ended June 30, 2008 compared to the same period in the prior year is primarily attributable to a $106.0 million increase in total net borrowings.
Borrowings during the nine months ended June 30, 2008 were used primarily to fund capital expenditures at Mohegan Sun and Pocono Downs. Borrowings during the nine months ended June 30, 2007 were used primarily to fund the payment of the
$50.0 million slot license fee for Pocono Downs.

External Sources of Liquidity

Notes. We financed the purchase of the Pocono Downs entities and much of the costs of
construction of Mohegan Sun and Pocono Downs with the net proceeds raised from the issuance of notes and borrowings under our bank credit facilities. As of June 30, 2008, we had $16.3 million outstanding in 83/8% senior subordinated notes due July 1, 2011 and first
callable July 1, 2006, or the 2001 senior subordinated notes; $250.0 million outstanding in 8% senior subordinated notes due April 1, 2012 and first callable April 1, 2007, or the 2002 senior subordinated notes; $330.0 million
outstanding in 63/8% senior subordinated notes due July 15, 2009, or the 2003 senior subordinated notes; $225.0 million
outstanding in 71/8% senior
subordinated notes due August 15, 2014 and first callable on August 15, 2009, or the 2004 senior subordinated notes; $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 4 to
our condensed consolidated financial statements in this Form 10-Q for a further discussion of these notes.

Prior Bank Credit Facility.In March 2007, we extinguished our $450.0 million prior bank credit facility.

Bank
Credit Facility. In March 2007, we entered into a 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 total commitment on this 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 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



55



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term loan and any revolving loans are payable. As of June 30, 2008, the amount under letters of credit totaled $7.7 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 bank credit facility, we had approximately $787.3 million of borrowing capacity under the bank credit
facility as of June 30, 2008, without taking into account covenants under the line of credit as described below.

At our option, each
advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on our Total Leverage Ratio, as
each term is defined in the bank credit facility, at the time each loan is made. We also pay commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for
commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is between 0.000% and 1.125%, 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 June 30, 2008, we had $205.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate
loans outstanding at June 30, 2008 were comprised of: (1) a $134.0 million loan based on a one-month Eurodollar rate of 2.47% plus an Applicable Rate of 1.63%; (2) $60.0 million in loans based on a one-month Eurodollar rate of 2.48%
plus an Applicable Rate of 1.63%; and (3) an $11.0 million loan based on a one-month Eurodollar rate of 2.45% plus an Applicable Rate of 1.63%. The Applicable Rate for commitment fees was 0.25% as of June 30, 2008.

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

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

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



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



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



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



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

Line of Credit. We have a $25.0 million revolving loan agreement with Bank of
America, or the line of credit. Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of our Leverage Ratio, as each term is defined in the line of credit. Borrowings under the
line of credit are uncollateralized obligations. The line of credit was amended in March 2008 to extend the maturity date from March 31, 2008 to March 31, 2009. As of June 30, 2008, we had $2.5 million in loans outstanding under the
line of credit, which were based on a one-month Eurodollar rate of 2.46% plus an Applicable Margin of 0.90%. The line of credit subjects us to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under
the bank credit facility. As of June 30, 2008, we were in compliance with all covenant requirements in the line of credit and had $22.5 million of borrowing capacity under the line of credit.

Letters of Credit.As of June 30, 2008, we maintained six uncollateralized letters of credit to satisfy potential workers compensation
liabilities, overdue pari-mutuel wagering tax liabilities at Pocono Downs that may arise, overdue amounts for purses due to horsemen at Pocono Downs that may arise, potential contractor and subcontractor liabilities relating to the Project Horizon
expansion at Mohegan Sun, and two letters of credit related to road work at Pocono Downs. The letters of credit expire on various dates from August 2008 through May 2009, subject to renewals. As of June 30, 2008, no amounts were drawn on the
letters of credit.

Salishan Credit Facility. Salishan-Mohegan has 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 an Applicable Rate, as defined in the Salishan Credit Facility, of 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.

As of June 30, 2008, Salishan-Mohegan had
$20.3 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at June 30, 2008 were based on a one-month Eurodollar rate of 2.48% plus an Applicable Rate of 2.25%. The Applicable Rate for
commitment fees was 0.50% as of June 30, 2008. As of June 30, 2008, Salishan-Mohegan had $4.7 million of borrowing capacity under the Salishan Credit Facility.

Mohegan Tribe Promissory Note.In June 2008, the Tribe lent MG&H $8.3 million, which was used for the funding of Leg Suns $25.0 million Privilege Fee payment to the State
of Kansas in connection with the Legends Sun project. The Mohegan Tribe Promissory Note provides for the accrual of interest at an annual rate of 12.0% and matures on October 15, 2008. As of June 30, 2008, the principal balance outstanding
on the Mohegan Tribe Promissory Note was $8.3 million.



57



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Capital Expenditures

Capital Expenditures Incurred

Capital expenditures totaled $272.3 million for the nine months ended June 30, 2008, compared to $96.6 million for the nine months ended June 30, 2007. These capital expenditures were comprised of the following:



| |  |  | Capital expenditures at Mohegan Sun totaled $136.4 million and $58.8 million for the nine months ended June 30, 2008 and 2007, respectively. For the nine
months ended June 30, 2008, these expenditures consisted primarily of $112.2 million in costs related to the Project Horizon expansion, including $2.7 million in capitalized interest, $18.8 million in maintenance capital expenditures and $5.4
million in property renovation expenditures. For the nine months ended June 30, 2007, these expenditures were principally related to maintenance capital expenditures, including the purchase of information system security technology, server
replacements, surveillance technology improvements, slot machines and back up power improvements; property renovation expenditures, including the addition of new gaming in floor space recaptured in the Casinos of the Earth and Sky as a result of the
elimination of redemption booths, conversion of the lounge area adjacent to the Cabaret into a semi- private gaming area, and for the renovation of all guest rooms in the Sky hotel; and costs related to the Project Horizon expansion.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital expenditures at Pocono Downs totaled $135.9 million and $37.8 million for the nine months ended June 30, 2008 and 2007, respectively. For the nine
months ended June 30, 2008, these expenditures consisted primarily of $134.3 million in costs related to the Project Sunrise expansion, including $2.7 million in capitalized interest and $1.6 million in maintenance capital expenditures. For the
nine months ended June 30, 2007, these expenditures were comprised primarily of construction costs for the Phase 1 slot facility and to begin construction on Project Sunrise.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital expenditures for the corporate division were minimal for the nine months ended June 30, 2008 and 2007.
| | - |  | --------------------------------------------------------------------------------------------------------------

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 forecasted to be $56.0 million, which are expected to be
comprised of the following:



| |  |  | Maintenance capital expenditures for fiscal year 2008 at Mohegan Sun are anticipated to be $36.3 million for the replacement and improvements of information
technology equipment, systems and software, Casino of the Earth renovations and the purchase of slot machines.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Property renovation expenditures are expected to be approximately $19.7 million for the replacement of coin redemption booths in the Casino of the Sky with slot
machines and new bars and to prepare space for the entrance to the Casino of the Wind from the Casino of the Sky.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Total
costs for Project Horizon are currently estimated to be approximately $925.0 million, exclusive of capitalized interest. As of June 30, 2008, costs incurred for Project Horizon, inclusive of costs incurred for Sunrise Square, the Casino of the Wind,
the Earth Expansion and Property Infrastructure, excluding capitalized interest, has totaled $156.9 million. Remaining project costs are estimated to be incurred as follows: fourth quarter of fiscal 2008, $53.2 million; fiscal year 2009, $166.2
million; fiscal year 2010, $373.5 million; and fiscal year 2011, $175.2 million.

Capital expenditures for 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 $203.2 million in total on the
development of Project Sunrise as discussed above under Overview- 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 a combination of our operating cash flows and bank credit facility.



58



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Interest Expense

For the three months and nine ended June 30, 2008 and 2007, we incurred the following in interest expense, net of capitalized interest (in
thousands):



|                                                                          |  |                                    |        |   |                                   |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------------------------- |  | ---------------------------------- | ------ | - | --------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                          |  | For the Three MonthsEnded June 30, |        |   | For the Nine MonthsEnded June 30, |  
|                                                                          |  | 2008                               |        |   | 2007                              |   |        | 2008 |  |   | 2007   |  
|Bank credit facility                                                      |  | $                                  | 2,178  |   |                                   | $ | 1,323  |      |  | $ | 5,311  |   |  | $ | 1,747  |  
|Prior Bank credit facility                                                |  |                                    |       |   |                                   |   |       |      |  |   |       |   |  |   | 2,755  |  
|2005 61/8% senior
notes                                                   |  |                                    | 3,828  |   |                                   |   | 3,828  |      |  |   | 11,484 |   |  |   | 11,484 |  
|2001 83/8%
senior subordinated notes                                      |  |                                    | 342    |   |                                   |   | 342    |      |  |   | 1,027  |   |  |   | 1,027  |  
|2002 8% senior subordinated notes                                         |  |                                    | 5,000  |   |                                   |   | 5,000  |      |  |   | 15,000 |   |  |   | 15,000 |  
|2003 63/8% senior
subordinated notes                                      |  |                                    | 5,259  |   |                                   |   | 5,259  |      |  |   | 15,778 |   |  |   | 15,778 |  
|2004 71/8% senior
subordinated notes                                      |  |                                    | 4,008  |   |                                   |   | 4,008  |      |  |   | 12,024 |   |  |   | 12,024 |  
|2005 67/8% senior
subordinated notes                                      |  |                                    | 2,578  |   |                                   |   | 2,578  |      |  |   | 7,734  |   |  |   | 7,734  |  
|WNBA note                                                                 |  |                                    | 35     |   |                                   |   | 69     |      |  |   | 148    |   |  |   | 231    |  
|Tribe note                                                                |  |                                    | 16     |   |                                   |   |       |      |  |   | 16     |   |  |   |       |  
|Line of credit                                                            |  |                                    | 89     |   |                                   |   | 162    |      |  |   | 290    |   |  |   | 524    |  
|Salishan Credit Facility                                                  |  |                                    | 251    |   |                                   |   | 316    |      |  |   | 897    |   |  |   | 841    |  
|Amortization of net deferred gain on settlement of derivative instruments |  |                                    | 114    |   |                                   |   | 114    |      |  |   | 342    |   |  |   | 342    |  
|Amortization of debt issuance costs                                       |  |                                    | 1,286  |   |                                   |   | 1,101  |      |  |   | 3,563  |   |  |   | 2,737  |  
|Capitalized interest                                                      |  |                                    | (2,287 | ) |                                   |   | (260   | )    |  |   | (5,399 | ) |  |   | (660   | )
|                                                                          |  |                                    |        |   |                                   |   |        |      |  |   |        |   |  |   |        |  
|Total interest expense, net of capitalized interest                       |  | $                                  | 22,697 |   |                                   | $ | 23,840 |      |  | $ | 68,215 |   |  | $ | 71,564 |  
|                                                                          |  |                                    |        |   |                                   |   |        |      |  |   |        |   |  |   |        |  

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, Project Horizon, Project Sunrise 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 the Project Horizon expansion and in Pocono Downs related to the Project Sunrise expansion are anticipated to be funded
through a combination of our operating cash flows and bank credit facility, as discussed above under Sources of Funding for Capital Expenditures. As of June 30, 2008, we had $787.3 million available for borrowing capacity under our
bank credit facility, without taking into account covenants under the line of credit.

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 than1 year (1)    |   | 1-3 years |  | 3-5 years |         | More than5 years
|Long-term debt (2)                      |  | $     | 1,461,044 |                        | $ | 2,516     |  | $         | 360,583 |                  | $ | 472,345 |  | $ | 625,600
|Interest payments on long-term debt (3) |  |       | 413,758   |                        |   | 35,059    |  |           | 170,408 |                  |   | 142,791 |  |   | 65,500 
|Construction obligations (4)            |  |       | 271,179   |                        |   | 120,413   |  |           | 150,766 |                  |   |        |  |   |       
|Procurement obligations (5)             |  |       | 26,450    |                        |   | 7,010     |  |           | 11,795  |                  |   | 5,945   |  |   | 1,700  
|                                        |  |       |           |                        |   |           |  |           |         |                  |   |         |  |   |        
|Total                                   |  | $     | 2,172,431 |                        | $ | 164,998   |  | $         | 693,552 |                  | $ | 621,081 |  | $ | 692,800
|                                        |  |       |           |                        |   |           |  |           |         |                  |   |         |  |   |        



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



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|(2) | Long-term debt includes maturities scheduled as of June 30, 2008 for our senior notes and senior subordinated notes, amounts required to be paid pursuant to the bank credit
facility, and our other debt agreements, including the Salishan Credit Facility, but excludes interest payments. Refer to Note 3 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes interest payments expected to be paid on long-term debt as of June 30, 2008, pursuant to respective debt agreements. Refer to Note 3 to our condensed consolidated
financial statements in this Quarterly Report on Form 10-Q.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



|                                                |  |                        |         |           |   |           |  |            |         |  |   |        
|----------------------------------------------- |  | ---------------------- | ------- | --------- | - | --------- |  | ---------- | ------- |  | - | -------
|                                                |  | Payments due by period
|Contractual Commitments (in thousands)          |  | Less than1 year (1)    |         | 1-3 years |   | 3-5 years |  | 5-10 years
|Minimum slot win contributions (2)              |  | $                      | 80,000  |           | $ | 160,000   |  | $          | 160,000 |  | $ | 400,000
|Relinquishment commitments (3)                  |  |                        | 78,034  |           |   | 149,044   |  |            | 168,725 |  |   | 203,197
|Priority distributions (4)                      |  |                        | 17,303  |           |   | 36,100    |  |            | 38,186  |  |   | 105,406
|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                                           |  | $                      | 187,393 |           | $ | 370,070   |  | $          | 392,557 |  | $ | 769,169
|                                                |  |                        |         |           |   |           |  |            |         |  |   |        



|(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. Assuming the slot machine operations at Mohegan Sun produce future results similar to the fiscal year 2007
results, the minimum annual amount to be paid to the State of Connecticut would be $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 6 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Priority distributions are monthly payments required to be made by us to the Tribe pursuant to the priority distribution agreement. Refer to Note 5 to our condensed consolidated
financial statements in this Quarterly Report on Form 10-Q. The payments are calculated based on net cash flows and are limited to a maximum amount of $17.4 million for calendar year 2008, pursuant to the priority distribution agreement, as adjusted
annually based on the Consumer Price Index, or CPI. For the purposes of calculating these amounts, we have assumed that we will pay the maximum amount in each of the years covered by the table, as adjusted by an annual CPI adjustment of 2.85%.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(6) | Pursuant to the Race Horse Development and Gaming Act of 2004, Downs Racing must pay, on an annual basis, to the PGCB amounts necessary to ensure the hosting
municipalities of Pocono Downs will receive an
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | 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 5 to
our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Pursuant to the Pennsylvania Property Tax Litigation settlement, Downs Racing will continue to make agreed upon annual payments with the Wilkes-Barre Area School District for each
tax year through 2015. Refer to Note 5 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 condensed consolidated financial statements. The preparation of our condensed 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 condensed
consolidated financial statements:

Revenue Recognition

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

Allowance for Doubtful Accounts

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



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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

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 condensed
consolidated statement of income.



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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 PCC 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 condensed consolidated balance sheets.

Impact of Inflation

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

New Accounting
Pronouncements

In September 2006, the FASB issued SFAS 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 non-financial assets and
liabilities that are recognized or disclosed at fair value in the financial statements on non-recurring basis. We do not believe the adoption of this standard will have a material impact on our financial position, results of operations or cash
flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (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)



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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 potential impact that FAS 160 may
have on our financial position, results of operations and cash flows.

In March 2008, the FASB issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities (FAS 161)an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133). FAS 161
requires enhanced disclosures for derivative instruments and hedging activities, including disclosures regarding how: (i) an entity uses derivative instruments; (ii) derivative instruments and related hedged items are accounted for under
FAS 133; and (iii) derivative instruments and related hedged items affect an entitys financial position, financial performance and cash flows. FAS 161 is effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008. We are currently evaluating the potential impact, if any, that FAS 161 may have on our financial position, results of operations and cash flows.

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



|Item 3. | 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 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 bank credit facility. As of June 30, 2008, we had $205.0 million drawn on the
bank credit facility. See Item 2. 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 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 June 30, 2008 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 June 30, 2008.



|                                            |  |                        |       |   |      |   |         |      |  |   |       |   |  |      |        |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|------------------------------------------- |  | ---------------------- | ----- | - | ---- | - | ------- | ---- |  | - | ----- | - |  | ---- | ------ | - | ---------- | - | ------- | ----- |  | - | ---------- | - |  | - | --------- | - |  | - | ---------
|                                            |  | Expected Maturity Date |       |   |     
|                                            |  | 2008                   |       |   | 2009 |   |         | 2010 |  |   | 2011  |   |  | 2012 |        |   | Thereafter |   |         | Total |  |   | Fair Value
|                                            |  | (in thousands)         |       |   |      |   |         |     
|Liabilities                                 |  |                        |       |   |      |   |         |      |  |   |      
|Long-Term Debt (including current portion): |  |                        |       |   |      |   |         |      |  |   |       |   |  |      |        |   |            |   |         |       |  |   |            |   |  |   |           |   |  |   |          
|Fixed Rate                                  |  | $                      |      |   |      | $ | 338,333 |      |  | $ |      |   |  | $    | 16,345 |   |            | $ | 250,000 |       |  | $ | 625,000    |   |  | $ | 1,229,678 |   |  | $ | 1,115,766
|Average interest rate                       |  |                        |      |   |      |   | 6.5     | %    |  |   |      |   |  |      | 8.4    | % |            |   | 8.0     | %     |  |   | 6.7        | % |  |   | 6.9       | % |  |   |          
|                                            |  |                        |       |   |      |   |         |     
|Variable Rate                               |  | $                      | 2,516 |   |      | $ | 21,250  |      |  | $ | 1,000 |   |  | $    | 1,000  |   |            | $ | 205,000 |       |  | $ | 600        |   |  | $ | 231,366   |   |  | $ | 231,366  
|Average interest rate                       |  |                        | 3.4   | % |      |   | 5.5     | %    |  |   | 5.0   | % |  |      | 5.6    | % |            |   | 5.6     | %     |  |   |           |   |  |   | 5.5       | % |  |   |          



|Item 4. | 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 June 30, 2008, 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 the quarterly period ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

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 condensed consolidated balance sheets.



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes
from the risk factors previously disclosed in the Authoritys Form 10-K for the fiscal year ended September 30, 2007.



|Item 6. | Exhibits
|------- | --------

The exhibits to this Form 10-Q 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 the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



|                      |  |  |  |     |  |                                                                                                                       |  | 
|--------------------- |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------- |  | 
|                      |  |  |  |     |  | MOHEGAN TRIBAL GAMING AUTHORITY                                                                                      
|                      |  |  | 
|Date: August 14, 2008 |  |  |  | By: |  | /s/    BRUCE S. BOZSUM                                                                                               
|                      |  |  |  |     |  | Bruce S. Bozsum Chairman and Member, Management Board                                                                
|                      |  |  | 
|Date: August 14, 2008 |  |  |  | By: |  | /s/    MITCHELL GROSSINGER
ETESS                                                                                     
|                      |  |  |  |     |  | Mitchell Grossinger Etess Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive Officer)     
|                      |  |  | 
|Date: August 14, 2008 |  |  |  | By: |  | /s/    LEO M. CHUPASKA                                                                                               
|                      |  |  |  |     |  | Leo M. Chupaska Chief Financial Officer, Mohegan Tribal Gaming Authority (Principal Financial and Accounting Officer)



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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).                                                                                           



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|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).                                                                                                                                                                                                                                                                  
|            | 
|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        |  | Articles of Amendment of Mohegan Golf, LLC, dated as of April 8, 2008 (filed as Exhibit 3.18 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2008,
filed with the SEC on May 15, 2008 (the March 2008 10-Q), and incorporated by reference herein).                                                                                                                                                                                          
|            | 
|3.19        |  | 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).                                                                                                                                                                        
|            | 
|3.20        |  | 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).                                                                                                                                                                         
|            | 
|3.21        |  | Certificate of Formation of MTGA Gaming, LLC, dated as of July 27, 2007 (filed as Exhibit 3.20 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007,
filed with the SEC on December 21, 2007, and incorporated by reference herein).                                                                                                                                                                                                               
|            | 
|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-K 405 for the fiscal year ended September 30, 1998, filed with the SEC on December 29, 1998, and incorporated by reference herein).                                                                                                                       
|            | 
|4.2         |  | Indenture, dated as of July 26, 2001, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the
83/8% Senior Subordinated
Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.9 to the Authoritys Registration Statement on Form S-4, File No. 333-69472, filed with the SEC on September 14, 2001 (the 2001 Form S-4), and incorporated by
reference herein).
|            | 
|4.3         |  | Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture)
and the State Street Bank and Trust Company, as Trustee, relating to the 83/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the June 2003 10-Q, and incorporated by reference herein).                                            
|            | 
|4.4         |  | Second Supplemental Indenture, dated as of July 28, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to
State Street Bank and Trust Company), as Trustee, relating to the 83/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as exhibit
4.9 to the June 2004 10-Q and incorporated by reference herein).                                                            



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|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).                                                                                                                                                         
|            | 
|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).



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|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 as Exhibit 4.14 to
the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).                                                                      
|            | 
|4.15        |  | Form of Global 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.12 to the 2002 Form S-4, and incorporated by reference
herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|4.16        |  | Indenture, dated as of July 9, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as
Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                  
|            | 
|4.17        |  | Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the
63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                    
|            | 
|4.18        |  | Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National
Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.21 to the December 2004 10-Q, and
incorporated by reference herein).                                                                                                                                                                                                                                                                                       
|            | 
|4.19        |  | Supplemental Indenture No. 3, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior
Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                                                                          
|            | 
|4.20        |  | Supplemental Indenture No. 4, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due
2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.18 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference
herein).                                                                                                                      



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.21        |  | Supplemental Indenture No. 5, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the
SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).
|            | 
|4.22        |  | Supplemental Indenture No. 6, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 63/8% Senior Subordinated Notes Due 2009 of
the Mohegan Tribal Gaming Authority (filed as Exhibit 4.22 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference
herein).                                                                      
|            | 
|4.23        |  | Form of Global 63/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit
4.20 to the June 2003 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|4.24        |  | Indenture, dated as of August 3, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as
Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 to the June 2004 10-Q, and
incorporated by reference herein).                                                                                                                                                                                                                                             
|            | 
|4.25        |  | Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National
Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.25 to the December 2004 10-Q, and
incorporated by reference herein).                                                                                                                                                                                                                                    
|            | 
|4.26        |  | Supplemental Indenture No. 2, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior
Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.27        |  | Supplemental Indenture No. 3, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due
2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference
herein).                                                                   
|            | 
|4.28        |  | Supplemental Indenture No. 4, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the
SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4.29        |  | Supplemental Indenture No. 5, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 71/8% Senior Subordinated Notes Due 2014 of
the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference
herein).                                                                      
|            | 
|4.30        |  | Form of Global 71/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit
4.20 to the June 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|4.31        |  | Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and U.S.
Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 (filed as Exhibit 4.28 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                  
|            | 
|4.32        |  | Supplemental Indenture No. 1, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior
Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the June 2006 10-Q and incorporated by reference herein).                                                                                                                                                                       
|            | 
|4.33        |  | Supplemental Indenture No. 2, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due
2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.27 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference
herein).                                                                   
|            | 
|4.34        |  | Supplemental Indenture No. 3, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with
the SEC on May 15, 2007 (the March 2007 10-Q), and incorporated by reference herein).
|            | 
|4.35        |  | Supplemental Indenture No. 4, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined
in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 67/8% Senior Subordinated Notes Due 2015 of
the Mohegan Tribal Gaming Authority (filed as Exhibit 4.35 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference
herein).                                                                      
|            | 
|4.36        |  | Form of Global 67/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit
4.29 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|4.37        |  | Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and
Wachovia Bank, National Association, as Trustee, relating to the 61/8% Senior Notes Due 2013 (filed as Exhibit 4.31 to the December 2004 10-Q, and incorporated by
reference herein).                                                                                                                                                                                                                                                          



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|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 as Exhibit 4.41 to the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).                                                                                                                                
|            | 
|4.42        |  | Form of Global 61/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.32 to the
December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            | 
|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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