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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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

For the quarterly period ended June 30, 2007

OR



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

For the transition period from              to

Commission file number 033-80655



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MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)



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

(860) 862-8000

(Registrants telephone number, including area code)



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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

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, 2007 and September 30, 2006 (unaudited)                                          |  | 3         
|            |  |                                                                                                                                      
|            |  | Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended June 30, 2007 and 2006 (unaudited)             |  | 4         
|            |  |                                                                                                                                      
|            |  | Condensed Consolidated Statements of Changes in Capital for the Three Months and Nine Months Ended June 30, 2007 and 2006 (unaudited) |  | 5         
|            |  |                                                                                                                                      
|            |  | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2007 and 2006 (unaudited)                          |  | 6         
|            |  |                                                                                                                                      
|            |  | Notes to the Condensed Consolidated Financial Statements (unaudited)                                                                  |  | 7         
|            |  |                                                                                                                                      
|            |  | Report of Independent Registered Public Accounting Firm                                                                               |  | 27        
|            |  |                                                                                                                                      
|Item 2.     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                 |  | 28        
|            |  |                                                                                                                                      
|Item 3.     |  | Quantitative and Qualitative Disclosures About Market Risk                                                                            |  | 59        
|            |  |                                                                                                                                      
|Item 4.     |  | Controls and Procedures                                                                                                               |  | 60        
|            |  |                                                                                                                                      
|PART II.    |  | OTHER INFORMATION                                                                                                                     |  |           
|            |  |                                                                                                                                      
|Item 1.     |  | Legal Proceedings                                                                                                                     |  | 61        
|            |  |                                                                                                                                      
|Item 1A.    |  | Risk Factors                                                                                                                          |  | 61        
|            |  |                                                                                                                                      
|Item 6.     |  | Exhibits                                                                                                                              |  | 61        
|            |  |                                                                                                                                      
|Signatures. |  | Mohegan Tribal Gaming Authority                                                                                                       |  | 62        



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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 30,2007 |           | September 30,2006 |  
|ASSETS                                                          |  |              |           |                   |   |           |  
|Current assets:                                                 |  |              |           |                   |   |           |  
|Cash and cash equivalents                                       |  | $            | 117,533   |                   | $ | 75,246    |  
|Receivables, net                                                |  |              | 28,326    |                   |   | 27,142    |  
|Inventories                                                     |  |              | 16,795    |                   |   | 15,353    |  
|Other current assets                                            |  |              | 18,609    |                   |   | 19,967    |  
|                                                                |  |              |           |                   |   |           |  
|Total current assets                                            |  |              | 181,263   |                   |   | 137,708   |  
|Non-current assets:                                             |  |              |           |                   |   |           |  
|Property and equipment, net                                     |  |              | 1,366,173 |                   |   | 1,339,823 |  
|Goodwill                                                        |  |              | 39,459    |                   |   | 39,459    |  
|Other intangible assets, net                                    |  |              | 394,651   |                   |   | 339,649   |  
|Other assets, net                                               |  |              | 78,183    |                   |   | 57,718    |  
|                                                                |  |              |           |                   |   |           |  
|Total assets                                                    |  | $            | 2,059,729 |                   | $ | 1,914,357 |  
|                                                                |  |              |           |                   |   |           |  
|LIABILITIES AND CAPITAL                                         |  |              |           |                   |   |           |  
|Current liabilities:                                            |  |              |           |                   |   |           |  
|Current portion of long-term debt, including capitalized leases |  | $            | 20,780    |                   | $ | 3,550     |  
|Current portion of relinquishment liability                     |  |              | 106,762   |                   |   | 96,936    |  
|Trade payables                                                  |  |              | 22,264    |                   |   | 21,812    |  
|Accrued interest payable                                        |  |              | 31,204    |                   |   | 21,011    |  
|Other current liabilities                                       |  |              | 158,200   |                   |   | 129,039   |  
|                                                                |  |              |           |                   |   |           |  
|Total current liabilities                                       |  |              | 339,210   |                   |   | 272,348   |  
|Non-current liabilities:                                        |  |              |           |                   |   |           |  
|Long-term debt, net of current portion                          |  |              | 1,269,246 |                   |   | 1,225,804 |  
|Relinquishment liability, net of current portion                |  |              | 414,581   |                   |   | 451,038   |  
|Other long-term liabilities                                     |  |              | 790       |                   |   | 542       |  
|                                                                |  |              |           |                   |   |           |  
|Total liabilities                                               |  |              | 2,023,827 |                   |   | 1,949,732 |  
|Minority interests                                              |  |              | 4,084     |                   |   | 3,480     |  
|                                                                |  |             
|Commitments and contingencies                                   |  |              |           |                   |   |           |  
|Capital:                                                        |  |              |           |                   |   |           |  
|Retained earnings (accumulated deficit)                         |  |              | 31,818    |                   |   | (38,855   | )
|                                                                |  |              |           |                   |   |           |  
|Total capital                                                   |  |              | 31,818    |                   |   | (38,855   | )
|                                                                |  |              |           |                   |   |           |  
|Total liabilities and capital                                   |  | $            | 2,059,729 |                   | $ | 1,914,357 |  
|                                                                |  |              |           |                   |   |           |  



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 INCOME

(in thousands)

(unaudited)



|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|----------------------------------------------------------- |  | --------------------------------------- | ------- | - | -------------------------------------- | - | ------- | ------------------------------------- |  | - | ------------------------------------- | - |  | - | --------- | -
|                                                            |  | For the Three Months EndedJune 30, 2007 |         |   | For theThree Months EndedJune 30, 2006 |   |         | For the Nine Months EndedJune 30,2007 |  |   | For the Nine Months EndedJune 30,2006 |  
|Revenues:                                                   |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Gaming                                                      |  | $                                       | 371,140 |   |                                        | $ | 320,318 |                                       |  | $ | 1,074,310                             |   |  | $ | 938,304   |  
|Food and beverage                                           |  |                                         | 24,757  |   |                                        |   | 23,150  |                                       |  |   | 73,525                                |   |  |   | 70,196    |  
|Hotel                                                       |  |                                         | 11,120  |   |                                        |   | 12,820  |                                       |  |   | 35,283                                |   |  |   | 37,062    |  
|Retail, entertainment and other                             |  |                                         | 32,621  |   |                                        |   | 27,557  |                                       |  |   | 91,182                                |   |  |   | 86,930    |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Gross revenues                                              |  |                                         | 439,638 |   |                                        |   | 383,845 |                                       |  |   | 1,274,300                             |   |  |   | 1,132,492 |  
|Less-Promotional allowances                                 |  |                                         | (32,521 | ) |                                        |   | (30,492 | )                                     |  |   | (92,576                               | ) |  |   | (91,299   | )
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Net revenues                                                |  |                                         | 407,117 |   |                                        |   | 353,353 |                                       |  |   | 1,181,724                             |   |  |   | 1,041,193 |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Operating costs and expenses:                               |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Gaming                                                      |  |                                         | 216,401 |   |                                        |   | 178,174 |                                       |  |   | 625,180                               |   |  |   | 530,479   |  
|Food and beverage                                           |  |                                         | 12,807  |   |                                        |   | 11,773  |                                       |  |   | 38,386                                |   |  |   | 36,983    |  
|Hotel                                                       |  |                                         | 4,504   |   |                                        |   | 4,886   |                                       |  |   | 12,585                                |   |  |   | 12,788    |  
|Retail, entertainment and other                             |  |                                         | 11,295  |   |                                        |   | 8,710   |                                       |  |   | 32,711                                |   |  |   | 29,133    |  
|Advertising, general and administrative                     |  |                                         | 59,401  |   |                                        |   | 51,680  |                                       |  |   | 173,748                               |   |  |   | 149,733   |  
|Corporate expenses                                          |  |                                         | 3,222   |   |                                        |   | 1,352   |                                       |  |   | 8,406                                 |   |  |   | 7,418     |  
|Pre-opening costs and expenses                              |  |                                         | 84      |   |                                        |   | 1,361   |                                       |  |   | 3,829                                 |   |  |   | 3,409     |  
|Depreciation and amortization                               |  |                                         | 23,740  |   |                                        |   | 22,405  |                                       |  |   | 69,851                                |   |  |   | 65,674    |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Total operating costs and expenses                          |  |                                         | 331,454 |   |                                        |   | 280,341 |                                       |  |   | 964,696                               |   |  |   | 835,617   |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Income from operations                                      |  |                                         | 75,663  |   |                                        |   | 73,012  |                                       |  |   | 217,028                               |   |  |   | 205,576   |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Other income (expense):                                     |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Accretion of discount to the relinquishment liability       |  |                                         | (7,449  | ) |                                        |   | (7,677  | )                                     |  |   | (22,346                               | ) |  |   | (23,030   | )
|Interest income                                             |  |                                         | 1,148   |   |                                        |   | 652     |                                       |  |   | 2,688                                 |   |  |   | 1,466     |  
|Interest expense, net of capitalized interest               |  |                                         | (23,840 | ) |                                        |   | (22,664 | )                                     |  |   | (71,564                               | ) |  |   | (68,306   | )
|Write-off of debt issuance costs                            |  |                                         |        |   |                                        |   |        |                                       |  |   | (71                                   | ) |  |   |          |  
|Other expense, net                                          |  |                                         | (96     | ) |                                        |   | (85     | )                                     |  |   | (458                                  | ) |  |   | (77       | )
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Total other expense                                         |  |                                         | (30,237 | ) |                                        |   | (29,774 | )                                     |  |   | (91,751                               | ) |  |   | (89,947   | )
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Income from continuing operations before minority interests |  |                                         | 45,426  |   |                                        |   | 43,238  |                                       |  |   | 125,277                               |   |  |   | 115,629   |  
|Minority interests                                          |  |                                         | 169     |   |                                        |   | (413    | )                                     |  |   | 497                                   |   |  |   | 333       |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Income from continuing operations                           |  |                                         | 45,595  |   |                                        |   | 42,825  |                                       |  |   | 125,774                               |   |  |   | 115,962   |  
|Income from discontinued operations (Note 8)                |  |                                         | 59      |   |                                        |   | 52      |                                       |  |   | 90                                    |   |  |   | 51        |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  
|Net income                                                  |  | $                                       | 45,654  |   |                                        | $ | 42,877  |                                       |  | $ | 125,864                               |   |  | $ | 116,013   |  
|                                                            |  |                                         |         |   |                                        |   |         |                                       |  |   |                                       |   |  |   |           |  



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, 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   |  
|                                                              |  |               |          |  
|                                                              | 
|                                                              |  | Total Capital |         
|Balance, March 31, 2006                                       |  | $             | (67,778  | )
|Net income                                                    |  |               | 42,877   |  
|Distributions to Tribe                                        |  |               | (18,229  | )
|                                                              |  |               |          |  
|Balance, June 30, 2006                                        |  | $             | (43,130  | )
|                                                              |  |               |          |  
|Balance, September 30, 2005                                   |  | $             | (104,872 | )
|Net income                                                    |  |               | 116,013  |  
|Distributions to Tribe                                        |  |               | (54,271  | )
|                                                              |  |               |          |  
|Balance, June 30, 2006                                        |  | $             | (43,130  | )
|                                                              |  |               |          |  



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 the Nine Months Ended |         
|                                                                                                                  |  | June 30, 2007             |          |   | June 30, 2006 |  
|Cash flows provided by (used in) operating activities:                                                            |  |                           |          |   |               |   |          |  
|Net income                                                                                                        |  | $                         | 125,864  |   |               | $ | 116,013  |  
|Adjustments to reconcile net income to net cash flows provided by operating activities:                           |  |                           |          |   |               |   |          |  
|Depreciation and amortization                                                                                     |  |                           | 69,948   |   |               |   | 65,799   |  
|Accretion of discount to the relinquishment liability                                                             |  |                           | 22,346   |   |               |   | 23,030   |  
|Cash paid for accretion of discount to the relinquishment liability                                               |  |                           | (18,850  | ) |               |   | (18,382  | )
|Accretion of discount to the gain on Pocono Downs purchase settlement                                             |  |                           | (1,205   | ) |               |   |         |  
|Net loss on disposition of assets                                                                                 |  |                           | 1,649    |   |               |   | 70       |  
|Provision for losses on receivables                                                                               |  |                           | 2,281    |   |               |   | 2,050    |  
|Amortization of debt issuance costs                                                                               |  |                           | 2,737    |   |               |   | 2,230    |  
|Write-off of debt issuance costs                                                                                  |  |                           | 71       |   |               |   |         |  
|Amortization of net deferred gain on settlement of derivative instruments                                         |  |                           | 342      |   |               |   | 330      |  
|Minority interests                                                                                                |  |                           | (497     | ) |               |   | (333     | )
|Changes in operating assets and liabilities, net of effects of acquisitions:                                      |  |                           |          |   |               |   |          |  
|Increase in receivables                                                                                           |  |                           | (1,643   | ) |               |   | (965     | )
|(Increase) decrease in inventories                                                                                |  |                           | (1,279   | ) |               |   | 949      |  
|Increase in other assets                                                                                          |  |                           | (8,014   | ) |               |   | (7,482   | )
|Increase (decrease) in trade payables                                                                             |  |                           | 452      |   |               |   | (5,042   | )
|Increase in other liabilities                                                                                     |  |                           | 29,161   |   |               |   | 12,895   |  
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Net cash flows provided by operating activities                                                                   |  |                           | 223,363  |   |               |   | 191,162  |  
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Cash flows provided by (used in) investing activities:                                                            |  |                           |          |   |               |   |          |  
|Purchases of property and equipment, net of increase in construction payables of $10,160 and $5,391, respectively |  |                           | (86,489  | ) |               |   | (80,417  | )
|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                                                                                         |  |                           | 249      |   |               |   | 293      |  
|Issuance of third party loans and advances                                                                        |  |                           | (3,516   | ) |               |   | (2,558   | )
|Payments received on third-party loans                                                                            |  |                           | 454      |   |               |   | 464      |  
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Net cash flows used in investing activities                                                                       |  |                           | (148,334 | ) |               |   | (82,218  | )
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Cash flows provided by (used in) financing activities:                                                            |  |                           |          |   |               |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan                                                              |  |                           | 278,000  |   |               |   | 207,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan                                                              |  |                           | (278,000 | ) |               |   | (207,000 | )
|New Bank Credit Facility borrowingsrevolving loan                                                                |  |                           | 160,000  |   |               |   |         |  
|New Bank Credit Facility repaymentsrevolving loan                                                                |  |                           | (133,000 | ) |               |   |         |  
|Salishan Credit Facility borrowingsrevolving loan                                                                |  |                           | 16,500   |   |               |   |         |  
|Line of credit borrowings                                                                                         |  |                           | 426,480  |   |               |   | 352,623  |  
|Line of credit repayments                                                                                         |  |                           | (406,734 | ) |               |   | (352,623 | )
|Payments on long-term debt                                                                                        |  |                           | (3,550   | ) |               |   | (14,970  | )
|Minority interest contributions and advances                                                                      |  |                           |         |   |               |   | 1,097    |  
|Principal portion of relinquishment liability payments                                                            |  |                           | (30,127  | ) |               |   | (28,605  | )
|Distributions to Tribe                                                                                            |  |                           | (55,230  | ) |               |   | (54,271  | )
|Capitalized debt issuance costs                                                                                   |  |                           | (7,081   | ) |               |   |         |  
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Net cash flows used in financing activities                                                                       |  |                           | (32,742  | ) |               |   | (96,749  | )
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Net increase in cash and cash equivalents                                                                         |  |                           | 42,287   |   |               |   | 12,195   |  
|Cash and cash equivalents at beginning of period                                                                  |  |                           | 75,246   |   |               |   | 72,425   |  
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Cash and cash equivalents at end of period                                                                        |  | $                         | 117,533  |   |               | $ | 84,620   |  
|                                                                                                                  |  |                           |          |   |               |   |          |  
|Supplemental disclosure:                                                                                          |  |                           |          |   |               |   |          |  
|Cash paid during the period for interest                                                                          |  | $                         | 59,160   |   |               | $ | 59,101   |  



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. On October 12, 1996, the Authority opened a gaming and
entertainment complex known as Mohegan Sun. The Authority is governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in the composition of the Tribal Council
results in a corresponding change in the Authoritys Management Board.

The Authority has the following wholly owned subsidiaries:
Mohegan Basketball Club, LLC (MBC), Mohegan Ventures-Northwest, LLC (Mohegan Ventures-NW), Mohegan Commercial Ventures PA, LLC (MCV-PA), Mohegan Golf, LLC (Mohegan Golf) and Mohegan Ventures Wisconsin,
LLC (MVW). Mohegan Golf owns and operates the Mohegan Sun Country Club at Pautipaug (Mohegan Sun Country Club) golf course in southeastern Connecticut. Refer to Note 3 for further information on Mohegan Golf. MBC owns and
operates a professional basketball team in the Womens National Basketball Association (WNBA), the Connecticut Sun, and owns approximately 3.9% of the membership interests in WNBA, LLC.

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. 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 development and management of a casino to be owned by the federally recognized Cowlitz Indian Tribe and located in Clark County, Washington
(the Cowlitz Project).

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

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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 the nine months ended June 30, 2007 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2007.

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, 2006.

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, as it is deemed to be the primary beneficiary. In consolidation, all intercompany balances and transactions are
eliminated.

New Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements. This standard does not require any new fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. The Authority does not believe the adoption of this standard will have a material impact on its financial position, results of operations or cash flows.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108 (SAB 108), which provides guidance on
the consideration of the effects of prior year financial statement misstatements in quantifying current year financial statement misstatements for the purpose of a materiality assessment. SAB 108 is effective for annual financial statements issued
for fiscal years ending after November 15, 2006. The Authority does not believe the application of this guidance 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.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



NOTE 3MOHEGAN GOLF, LLC:

In November 2006, the Authority formed a wholly owned subsidiary, Mohegan Golf, to purchase and operate a golf course in southeastern Connecticut. The Authority has designated Mohegan Golf as a restricted subsidiary,
and it is therefore a guarantor of the Authoritys debt obligations under the New Bank Credit Facility, the 2005 Senior Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the
2005 Senior Subordinated Notes (see Note 5).

On May 17, 2007, Mohegan Golf completed the acquisition of substantially all of the
assets of Pautipaug Country Club Inc. (PCC) located in Sprague and Franklin, Connecticut, which was renamed Mohegan Sun Country Club at Pautipaug. Mohegan Golf incurred acquisition costs of $4.7 million for the property and other items
acquired from PCC, which was allocated among the following assets and liabilities: (1) property and equipment valued at $3.1 million; (2) a membership intangible asset resulting from the contractual agreement with PCCs members
established at the time of acquisition, valued at $1.7 million; (3) current assets of $207,000; (4) environmental obligations of $300,000; and (5) capital lease obligations of $34,000. The membership intangible asset will be amortized
on a straight line basis over its estimated useful life of fifteen years and will be periodically reviewed for impairment in accordance with SFAS No. 142, Goodwill and Other Intangible Assets (FAS 142). The results of
operations for Mohegan Sun Country Club are included in the accompanying condensed consolidated financial statements from date of acquisition (May 17, 2007) through June 30, 2007. Pro forma operating results for the 2007 acquisition are not
presented because the results would not be significantly different from historical results.

NOTE 4MOHEGAN VENTURES WISCONSIN, LLC (MENOMINEE
PROJECT):

In March 2007, the Authority formed a wholly owned subsidiary, MVW, one of two members in WTG. WTG is a majority-owned
subsidiary of the Authority also formed in March 2007, whose other member is MV, a wholly owned subsidiary of the Tribe. The Authority has designated MVW and WTG as restricted subsidiaries, and they are therefore guarantors of the Authoritys
debt obligations under the New Bank Credit Facility, the 2005 Senior Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes (see Note 5).

In March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed certain liabilities from
Kenesah Gaming Development, LLC (KGD). As a result of the purchase, the Authority and the Mohegan Tribe, through MVW and MV, respectively, will receive development fees payable to WTG of 13.4% of Available Revenue Flow, as defined in the
development agreement with the Menominee Tribe and the Menominee Kenosha Gaming Authority (MKGA), which approximates net income from the Menominee Project over a period of seven years following the opening of the casino. This agreement
is currently being amended to reflect that WTG will be the developer of the planned casino. The Authority also currently holds the rights to manage, operate and maintain the planned casino for a period of seven years commencing with the opening of
the casino, in consideration of a management fee of 13.4% of Net Revenues, as defined in the management agreement with the Menominee Tribe and MKGA, which also approximates net income from the Menominee Project. The management agreement is subject
to approval by the National Indian Gaming Commission.

WTG paid $6.4 million in cash for the casino development rights and other items
acquired from KGD, which was allocated among the following assets and liabilities: (1) receivables at fair value from MKGA of $4.4 million for project advances; (2) a development rights intangible asset valued at $3.7 million;
(3) a note payable to MV of $1.1 million; and (4) a note payable to MKGA of $600,000. The purchase amount was



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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



contributed by MVW in return for its initial membership interest in WTG, and MV converted the $1.1 million receivable from WTG to capital in return for its
initial membership interest in WTG. The development rights intangible asset will be amortized on a straight line basis over its estimated useful life of seven years, which will commence upon the opening of the proposed casino, and will be
periodically reviewed for impairment in accordance with FAS 142. Pursuant to the development agreement, the receivables from MKGA, and related accrued interest, generally are reimbursable to WTG upon the receipt of necessary financing for the
development of the proposed casino.

NOTE 5FINANCING FACILITIES:

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



|                                                 |  |              |           |                   |   |          
|------------------------------------------------ |  | ------------ | --------- | ----------------- | - | ---------
|                                                 |  | June 30,2007 |           | September 30,2006
|New Bank Credit Facility                         |  | $            | 27,000    |                   | $ |         
|2005 61/8% Senior Notes                          |  |              | 250,000   |                   |   | 250,000  
|2001 83/8% Senior Subordinated Notes             |  |              | 16,345    |                   |   | 16,345   
|2002 8% Senior Subordinated Notes                |  |              | 250,000   |                   |   | 250,000  
|2003 63/8% Senior Subordinated Notes             |  |              | 330,000   |                   |   | 330,000  
|2004 71/8% Senior Subordinated Notes             |  |              | 225,000   |                   |   | 225,000  
|2005 67/8% Senior Subordinated Notes             |  |              | 150,000   |                   |   | 150,000  
|WNBA Promissory Note                             |  |              | 4,000     |                   |   | 5,000    
|Line of Credit                                   |  |              | 19,747    |                   |   |         
|Salishan Credit Facility                         |  |              | 16,500    |                   |   |         
|MortgageSalishan-Mohegan                        |  |              |          |                   |   | 2,550    
|MKGA Note Payable (Note 4)                       |  |              | 600       |                   |   |         
|                                                 |  |              |           |                   |   |          
|Subtotal                                         |  |              | 1,289,192 |                   |   | 1,228,895
|Net deferred gain on derivative instruments sold |  |              | 800       |                   |   | 459      
|                                                 |  |              |           |                   |   |          
|Total debt                                       |  |              | 1,289,992 |                   |   | 1,229,354
|Capital lease obligations                        |  |              | 34        |                   |   |         
|                                                 |  |              |           |                   |   |          
|Total debt, including capital lease obligations  |  | $            | 1,290,026 |                   | $ | 1,229,354
|                                                 |  |              |           |                   |   |          

Prior Bank Credit Facility

On March 9, 2007, the Authority repaid the entire outstanding $55.0 million of indebtedness under its Amended and Restated Loan Agreement dated
March 25, 2003, as amended (the Prior Bank Credit Facility), for up to $450.0 million from a syndicate of financial institutions and commercial banks. As of March 9, 2007, the Prior Bank Credit Facility was extinguished and
certain unamortized debt issuance costs of $71,000 were charged as a write-off of debt issuance costs in the accompanying condensed consolidated statements of income.

New Bank Credit Facility

On March 9, 2007, the Authority entered into a Second Amended and
Restated Loan Agreement (the New Bank Credit Facility) providing for up to $1.0 billion in borrowing capacity from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent.
The New Bank Credit Facility replaces the Authoritys Prior Bank Credit Facility. The total commitment on the new facility may



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



be increased to $1.25 billion at the option of the Authority. The five-year senior secured revolving credit facility includes a $300.0 million term loan
conversion provision which is triggered upon the initial accumulation of $300.0 million in total borrowings on the New Bank Credit Facility. The term loan requires principal payments in quarterly installments of $750,000 after the conversion date
until the maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. As of June 30, 2007, the amount under letters of credit totaled $659,000, of which no amount was
drawn (refer to Letters of Credit below). Inclusive of letters of credit, which reduce borrowing availability under the New Bank Credit Facility, the Authority had approximately $972.3 million of available borrowing under the New Bank
Credit Facility as of June 30, 2007 (without taking into account covenants under the Line of Credit described below).

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



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



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



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

As of June 30, 2007, the
Authority and the Tribe were in compliance with all of their respective covenant requirements in the New Bank Credit Facility.

At the
Authoritys option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on
the Authoritys Total Leverage Ratio, as each term is defined in the New Bank Credit Facility, at the time each loan is made. The Authority also pays commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the
product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is between 0.000% and 1.125%, and the Applicable Rate for Eurodollar
rate advances is between 1.250% and 2.375%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of Americas announced prime rate or the federal funds rate plus 0.50%. Interest on Eurodollar
loans is payable at the end of each applicable interest period or quarterly in arrears,



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



if earlier. Interest on base rate advances is payable quarterly in arrears. As of June 30, 2007, the Authority had $27.0 million in Eurodollar rate
loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at June 30, 2007 were based on a one-month Eurodollar rate of 5.32% plus an Applicable Rate of 1.25%. The Applicable Rate for commitment fees was 0.20% as of
June 30, 2007. Accrued interest, including commitment fees, on the New Bank Credit Facility was $73,000 as of June 30, 2007.

The
initial advances under the New Bank Credit Facility totaled $62.0 million in base rate advances under the revolving loan. The proceeds from these advances were used to refinance the Authoritys Prior Bank Credit Facility, pay costs related to
entering into the New Bank Credit Facility and fund certain operating costs.

2005 61/8% Senior Notes

On February 8, 2005, the Authority issued $250.0 million Senior Notes with fixed interest payable at a rate of 6.125% per annum (the 2005
Senior Notes). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Notes mature on February 15, 2013.
The first call date for the 2005 Senior Notes is February 15, 2009. Interest on the 2005 Senior Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Notes are uncollateralized general obligations of the
Authority, which are effectively subordinated to all of the existing and future senior secured indebtedness of the Authority, including the New Bank Credit Facility. The 2005 Senior Notes rank equally in right of payment with 50% of the
Authoritys payment obligations under the Relinquishment Agreement that are then due and owing and rank senior to the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing, the
2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan
Golf, MVW and WTG are guarantors of the 2005 Senior Notes. Refer to Note 11 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of June 30, 2007 and
September 30, 2006, 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 New Bank Credit Facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment
obligations under the Relinquishment Agreement that are then due and owing. The 2001 Senior Subordinated Notes rank equally with the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005
Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC is a guarantor of the 2001 Senior Subordinated Notes. Refer to Note 11 for condensed
consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary.

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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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, 2007. As of June 30, 2007 and September 30, 2006, accrued interest on the 2001 Senior Subordinated Notes was $684,000 and $342,000, respectively.

2002 8% Senior Subordinated Notes

In February 2002, the Authority issued $250.0 million Senior
Subordinated Notes with fixed interest payable at a rate of 8.0% per annum (the 2002 Senior Subordinated Notes). The proceeds from this financing were used to pay transaction costs and pay down $243.0 million on the then existing
bank credit facility. Interest on the 2002 Senior Subordinated Notes is payable semi-annually on April 1 and October 1. The 2002 Senior Subordinated Notes mature on April 1, 2012. The first call date for the 2002 Senior Subordinated
Notes was April 1, 2007. The 2002 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar
proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2002 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2003 Senior Subordinated Notes,
the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono
Downs entities, Mohegan Golf, MVW and WTG are guarantors of the 2002 Senior Subordinated Notes. Refer to Note 11 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of
June 30, 2007 and September 30, 2006, 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 New Bank Credit Facility, the 2005 Senior Notes and, in a
liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2003 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes,
the 2002 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan
Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW and WTG are guarantors of the 2003 Senior Subordinated Notes. Refer to Note 11 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its
non-guarantor subsidiary. As of June 30, 2007 and September 30, 2006, accrued interest on the 2003 Senior Subordinated Notes was $9.6 million and $4.4 million, respectively.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 $200.0 million 8.125% Senior Notes issued
in March 1999 and to pay fees and expenses associated with the issuance. The 2004 Senior Subordinated Notes mature on August 15, 2014. The first call date for the 2004 Senior Subordinated Notes is August 15, 2009. Interest on the 2004
Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2004 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank Credit Facility, the 2005
Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2004 Senior Subordinated Notes rank equally with the 2001
Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then
due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW and WTG are guarantors of the 2004 Senior Subordinated Notes. Refer to Note 11 for condensed consolidating financial information of the Authority, its
guarantor subsidiaries and its non-guarantor subsidiary. As of June 30, 2007 and September 30, 2006, accrued interest on the 2004 Senior Subordinated Notes was $6.0 million and $2.0 million, respectively.

2005 67/8% Senior Subordinated Notes

On February 8, 2005, the
Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the 2005 Senior Subordinated Notes). The net proceeds from this financing were used to repay amounts outstanding
under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15,
2010. Interest on the 2005 Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the New Bank
Credit Facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authoritys payment obligations under the Relinquishment Agreement that are then due and owing. The 2005 Senior Subordinated Notes rank
equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the remaining 50% of the Authoritys payment obligations under the Relinquishment
Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW and WTG are guarantors of the 2005 Senior Subordinated Notes. Refer to Note 11 for condensed consolidating financial information of
the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of June 30, 2007 and September 30, 2006, 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, 2007, both the Authority and the Tribe were in compliance with all of their respective covenant requirements in the senior and senior subordinated note indentures.



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



WNBA Promissory Note

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

In consideration for this acquisition, MBC paid $2.0 million (with funds advanced from the Authority) and issued a promissory note to the WNBA (the
WNBA Note) for $8.0 million that accrues interest at an annual rate equal to a three-month Eurodollar rate plus 1.5%. The Authority guaranteed the obligations of MBC under the WNBA Note. Pursuant to the WNBA Note, principal payments of
$1.0 million, subject to adjustment for certain revenue thresholds, and interest payments are required to be paid to the WNBA on each anniversary of the WNBA Note. The WNBA Note is scheduled to mature in January 2011, but will mature no later than
January 2013. As of June 30, 2007 and September 30, 2006, accrued interest on the WNBA Note was $117,000 and $224,000, respectively.

Line of Credit

The Authority has a $25.0 million revolving loan agreement with Bank of America (the Line of
Credit). Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of the Authoritys Leverage Ratio, as each term is defined in the Line of Credit. Borrowings under the
Line of Credit are uncollateralized obligations of the Authority. The Line of Credit matures on March 31, 2008 and subjects the Authority to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing
under the New Bank Credit Facility. As of June 30, 2007, the Authority had $19.7 million in loans outstanding under the line of credit, which were based on a one-month Eurodollar rate of 5.32% plus an Applicable Margin of 0.90%. As of
June 30, 2007, the Authority was in compliance with all covenant requirements in the Line of Credit and had $5.3 million available for borrowing under the Line of Credit. As of June 30, 2007 and September 30, 2006, accrued interest on
the Line of Credit was $21,000 and $9,000, respectively.

Salishan-Mohegan Bank Credit Facility

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

Immediately following the execution of the loan agreement, $10.0 million in loan proceeds were used by Salishan-Mohegan to provide a
partial repayment of its outstanding loan balance with Mohegan Ventures-NW. Another $2.6 million in loan proceeds were used to pay off a mortgage payable. As of June 30, 2007, Salishan-Mohegan had $8.5 million of available borrowings under the
Salishan Credit Facility. As of June 30, 2007,



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



Salishan-Mohegan had $16.5 million in Eurodollar rate loans outstanding, which were based on a one-month Eurodollar rate of 5.32 % plus a spread of
2.25%. The rate for commitment fees was 0.50% as of June 30, 2007. Accrued interest on the Salishan Credit Facility was $45,000 as of June 30, 2007.

Derivative Instruments

The Authority is considered an end user of derivative instruments
and engages in derivative transactions from time to time for risk management purposes only. There were no derivative instruments held by the Authority as of June 30, 2007.

Interest rate swap agreements hedging currently outstanding debt instruments of the Authority which qualified for hedge accounting in accordance with
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and were designated as fair value hedges were sold in prior fiscal years for a net aggregate gain of $1.7 million. The $1.7 million net aggregate gain was
deferred and added to the carrying value of the respective notes being hedged and is being amortized and recorded to interest expense over the remaining term of the respective notes. For the three months ended June 30, 2007 and 2006, the
Authority recorded amortization of $114,000, and for the nine months ended June 30, 2007 and 2006, the Authority recorded amortization of $342,000 and $330,000, respectively, to reduce interest expense related to the sale of these derivative
instruments. The Authority expects to record $456,000 to offset interest expense over the next twelve months.

Letters of Credit

The Authority maintains three uncollateralized letters of credit to satisfy potential workers compensation liabilities, overdue
pari-mutuel wagering tax liabilities of the Pocono Downs entities that may arise and overdue amounts for purses due to horsemen at Pocono Downs that may arise. The letters of credit expire on August 31, 2007, January 25, 2008 and
November 17, 2007, respectively, subject to renewals. As of June 30, 2007, no amounts were drawn on the letters of credit.

NOTE
6RELATED PARTY TRANSACTIONS:

The Tribe provides governmental and certain administrative and miscellaneous services to the
Authority in conjunction with the operation of Mohegan Sun. During the three months ended June 30, 2007 and 2006, the Authority incurred $5.2 million, and for the nine months ended June 30, 2007 and 2006, the Authority incurred $16.3
million and $15.6 million, respectively, of expenses for such services.

The Tribe, through one of its limited liability companies, has
entered into various land lease agreements with the Authority for access, parking and related purposes for Mohegan Sun. The Authority expensed $65,000 and $195,000 relating to these land lease agreements for each of the three months and nine months
ended June 30, 2007 and 2006, respectively.

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, 2007 and 2006, the Authority incurred costs of $5.7 million and $4.6 million, respectively, for such
utilities. During the nine months ended June 30, 2007 and 2006, the Authority incurred costs of $17.5 million and $14.8 million, respectively, for such utilities.

The Tribe previously provided services through its Development Department for projects related to Mohegan Sun. The Development Department of the Tribe,
including personnel assigned to the department, was



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



transferred to the Authority during the three months ended December 31, 2006. The Authority recorded $664,000 of capital expenditures associated with
the Tribes Development Department for the three months ended June 30, 2006. The Authority recorded $53,000 and $1.9 million of capital expenditures associated with the Tribes Development Department for the nine months ended
June 30, 2007 and 2006, respectively.

NOTE 7COMMITMENTS AND CONTINGENCIES:

The Mohegan Compact

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

The Authority
reflected expenses associated with the Slot Win Contribution totaling $55.9 million and $56.9 million for the three months ended June 30, 2007 and 2006, respectively. For the nine months ended June 30, 2007 and 2006, the expenses
associated with the Slot Win Contribution totaled $168.0 million and $165.2 million, respectively. As of June 30, 2007 and September 30, 2006, outstanding Slot Win Contribution payments to the State of Connecticut totaled $18.6 million and
$19.5 million, respectively.

Category One Slot Machine License

Conditional and permanent Category One slot machine licenses were granted to and approved for Downs Racing, L.P. by the Pennsylvania Gaming Control Board
(the PGCB) on September 27, 2006 and December 20, 2006, respectively, for the operation of slot machines at Mohegan Sun at Pocono Downs. After the satisfaction of certain regulatory conditions and the payment of a one-time slot
machine license fee of $50.0 million to the PGCB, the Phase I slot machine facility at Mohegan Sun at Pocono Downs was opened to the public on November 14, 2006. The slot machine license fee of $50.0 million was added to the existing slot
machine license intangible asset of $214.0 million referred to in the consolidated financial statements in the Authoritys Annual Report on Form 10-K for the fiscal year ended September 30, 2006. The total slot machine license intangible
asset of $264.0 million, with an indefinite useful life, is included in the accompanying condensed consolidated balance sheet as of June 30, 2007.

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



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



The Authority reflected expenses associated with the PGCB slot machine tax assessments totaling
$26.3 million and $63.1 million for the three and nine months ended June 30, 2007, respectively. As of June 30, 2007, a liability for slot machine tax payments owed to the PGCB of $3.3 million was recorded in the accompanying
condensed consolidated balance sheet.

Priority Distribution Agreement

On August 1, 2001, the Authority and the Tribe entered into an agreement (the Priority Distribution Agreement), which obligates the
Authority to make monthly payments to the Tribe to the extent of the Authoritys net cash flow, as defined in the Priority Distribution Agreement. The Priority Distribution Agreement, which has a perpetual term, limits the maximum aggregate
payments by the Authority to the Tribe in each calendar year to $14.0 million, as adjusted annually in accordance with the formula specified in the Priority Distribution Agreement to reflect the effects of inflation. However, payments pursuant to
the Priority Distribution Agreement do not reduce the Authoritys obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other agreements with the Tribe. The monthly
payments under the Priority Distribution Agreement are limited obligations of the Authority payable only to the extent of its net cash flow, as defined in the Priority Distribution Agreement, and are not secured by a lien or encumbrance on any
assets or property of the Authority. The Authoritys condensed consolidated financial statements reflect payments associated with the Priority Distribution Agreement of $4.3 million and $4.1 million for the three months ended June 30, 2007
and 2006, respectively. For the nine months ended June 30, 2007 and 2006, these payments totaled $12.6 million and $12.2 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 five
percent.

The Authority also entered into a co-investment and escrow agreement with the Mashantucket Pequot Tribal Nation
(MPTN) and ACLS. Under the terms of those agreements, the Authority and MPTN may, under certain circumstances, become the joint owners of the laundry facility and be jointly and severally obligated to repay a term loan which is secured
by a mortgage on the laundry facility. The term of the agreements is for ten years and, if the Authority and MPTN become obligated to repay the term loan, the maximum potential future principal payments (undiscounted) the Authority and MPTN could be
required to make are approximately $3.8 million.

Pennsylvania Property Tax Litigation

As the successor owner of Downs Racing, L.P., the Authority was involved in a dispute with the Wilkes-Barre Area School District, which had filed an
appeal in November 2001 against Downs Racing, L.P.s predecessor company, Pocono Downs, Inc., and the Luzerne County Board of Assessment Appeals relating to certain property tax assessments. The school district challenged the certified
assessment for the tax year 2002, and sought an increase to the assessed value of that property for 2002 and subsequent tax years, including additional assessments for tax year 2007. A final settlement was reached in June 2007 between the various



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



parties in the litigation and the settlement was subsequently approved by the Luzerne County Court. Based on the settlement, the Authoritys liability
for this litigation covering tax periods through June 30, 2007 was approximately $3.5 million, which is recorded in the Authoritys income from operations for the nine months ended June 30, 2007.

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 8DISCONTINUED OPERATIONS:

Prior to the Authoritys acquisition of the Pocono Downs entities, Penn National Gaming Inc., 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. (MTR) and Presque Isle Downs Inc. (PID), and collectively with MTR (Presque
Isle), for $7.0 million. Penn National Gaming Inc. assigned its rights to proceeds under this agreement to the Authoritys subsidiary, Downs Racing, L.P., upon the Authoritys acquisition of the Pocono Downs entities. Accordingly,
Presque Isle was required to make the $7.0 million payment to Downs Racing, L.P. upon the occurrence of either of the following two conditions: (1) the commencement by any of the Presque Isle entities of pari-mutuel wagering in Erie,
Pennsylvania or (2) the receipt by any Presque Isle entity of revenue from slot machine operations in Erie, Pennsylvania.

In October
2006, the PGCB granted Presque Isle a conditional license to operate slot machines at Presque Isle Downs in Erie County, Pennsylvania. In February 2007, Presque Isle opened slot machine gaming operations at the Erie property. Pursuant to the terms
of the agreement, receipt of the $7.0 million payment could be no later than the commencement of pari-mutuel wagering at Presque Isle Downs, which is scheduled to open in September 2007 (refer to Note 12). The Authority has accordingly reported the
results of its Erie OTW facility from its Pocono Downs operating segment 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 $889,000 for the three months ended June 30, 2007 and 2006, respectively, and $2.4 million and $2.5 million for the nine months ended June 30, 2007 and 2006, respectively. As of June 30, 2007 and September 30, 2006, assets
held for sale totaled $7.1 million, which were comprised of the property and equipment of the Erie OTW operations, net of accumulated depreciation. The Authority estimates that the fair value of the assets held for sale less cost to sell
approximates the carrying value, and as a result a loss from discontinued operations was not recorded for the nine months ended June 30, 2007.

NOTE 9RELINQUISHMENT AGREEMENT:

In February 1998, the Authority and Trading Cove Associates (TCA) entered
into an agreement (the Relinquishment Agreement). Effective January 1, 2000 (the Relinquishment Date), the Relinquishment Agreement superseded a then existing management agreement with TCA. The Relinquishment Agreement
provides, among other things, that the Authority will make certain payments to TCA out of, and determined as a percentage of, Revenues (as defined in the Relinquishment Agreement) generated by Mohegan Sun over a 15-year period commencing on the
Relinquishment Date. The payments (Senior Relinquishment Payments and Junior Relinquishment Payments) have separate schedules and priority. Senior Relinquishment Payments commenced on April 25, 2000, twenty-five days
following the end of the first three-month period after the Relinquishment Date and continue at the end of each three-month period thereafter until January 25, 2015. Junior Relinquishment



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



Payments commenced on July 25, 2000, twenty-five days following the end of the first six-month period after the Relinquishment Date and continue at the
end of each six-month period thereafter until January 25, 2015. Each Senior Relinquishment Payment and Junior Relinquishment Payment is an amount equal to 2.5% of the Revenues generated by Mohegan Sun over the immediately preceding three-month
or six-month payment period, as the case may be. Revenues are defined in the Relinquishment Agreement as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues (including, without limitation, hotel
revenues, room service, food and beverage sales, ticket revenues, fees or receipts from convention/events center and all rental or other receipts from lessees and concessionaires but not the gross receipts of such lessees, licenses and
concessionaires).

In the event of any bankruptcy, liquidation or reorganization or similar proceeding relating to the Authority, the
Relinquishment Agreement provides that each of the Senior and Junior Relinquishment Payments then due and owing are subordinated in right to payment of senior secured obligations, which include the New Bank Credit Facility and capital lease
obligations, and that the Junior Relinquishment Payments then due and owing are further subordinated to payment of all other senior obligations, including the Authoritys 2005 Senior Notes. The Relinquishment Agreement also provides that all
relinquishment payments are subordinated in right of payment to the minimum priority distribution payments, which are monthly payments required to be made by the Authority to the Tribe, to the extent then due. The Authority, in accordance with SFAS
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, 2007, the carrying amount of the relinquishment liability was $521.3 million as compared to $548.0 million at September 30, 2006. The decrease in the
relinquishment liability during the nine months ended June 30, 2007 is due to $49.0 million in relinquishment payments, offset by $22.3 million representing the accretion of discount to the relinquishment liability. Of the $49.0 million in
relinquishment payments, $30.1 million represents payment of principal and $18.9 million represents payment of the accretion of discount to the relinquishment liability. During the nine months ended June 30, 2006, the Authority paid $47.0
million in relinquishment payments, consisting of $28.6 million in principal amounts and $18.4 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, 2007 and September 30, 2006, relinquishment payments earned but unpaid were $28.4 million
and $20.4 million, respectively.

NOTE 10SEGMENT REPORTING:

As of June 30, 2007, the Authority owns and operates the Mohegan Sun and Mohegan Sun Country Club properties in Connecticut and, through the Pocono Downs entities, operates a gaming and entertainment facility
offering slot machines and harness racing and several OTW facilities in Pennsylvania (of which one referred to in Notes 8 and 12 has been sold to a third party and is not reported in the below segment information). All of the Authoritys
revenues are derived from these operations. The Authoritys executive officers review and assess the performance of the operating results and determine the proper allocation of resources to the Mohegan Sun entities in Connecticut, which also
include MBCs ownership of the Connecticut Sun WNBA franchise, and the Pocono Downs entities in Pennsylvania on a separate basis. The Authority, therefore, believes that it has two operating segments, one comprised solely of Mohegan Sun, which
includes the Connecticut entities, and another, referred to as Pocono Downs herein, comprised of the operations of the Pocono Downs entities. The two



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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



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 Months EndedJune 30, |           |   | For the Nine Months EndedJune 30, |  
|                                                            |  | 2007 (1)                           |           |   | 2006                              |   |           | 2007 (2) |  |   | 2006      |  
|Net revenues:                                               |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  | $                                  | 352,947   |   |                                   | $ | 344,614   |          |  | $ | 1,051,072 |   |  | $ | 1,018,973 |  
|Pocono Downs                                                |  |                                    | 54,170    |   |                                   |   | 8,739     |          |  |   | 130,652   |   |  |   | 22,220    |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Total                                                       |  |                                    | 407,117   |   |                                   |   | 353,353   |          |  |   | 1,181,724 |   |  |   | 1,041,193 |  
|Income (loss) from operations:                              |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  |                                    | 72,364    |   |                                   |   | 76,281    |          |  |   | 218,562   |   |  |   | 218,836   |  
|Pocono Downs                                                |  |                                    | 6,543     |   |                                   |   | (1,896    | )        |  |   | 6,932     |   |  |   | (5,785    | )
|Corporate                                                   |  |                                    | (3,244    | ) |                                   |   | (1,373    | )        |  |   | (8,466    | ) |  |   | (7,475    | )
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Total                                                       |  |                                    | 75,663    |   |                                   |   | 73,012    |          |  |   | 217,028   |   |  |   | 205,576   |  
|Accretion of discount to the relinquishment liability       |  |                                    | (7,449    | ) |                                   |   | (7,677    | )        |  |   | (22,346   | ) |  |   | (23,030   | )
|Interest income                                             |  |                                    | 1,148     |   |                                   |   | 652       |          |  |   | 2,688     |   |  |   | 1,466     |  
|Interest expense, net of capitalized interest               |  |                                    | (23,840   | ) |                                   |   | (22,664   | )        |  |   | (71,564   | ) |  |   | (68,306   | )
|Write-off of debt issuance costs                            |  |                                    |          |   |                                   |   |          |          |  |   | (71       | ) |  |   |          |  
|Other expense, net                                          |  |                                    | (96       | ) |                                   |   | (85       | )        |  |   | (458      | ) |  |   | (77       | )
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Income from continuing operations before minority interests |  |                                    | 45,426    |   |                                   |   | 43,238    |          |  |   | 125,277   |   |  |   | 115,629   |  
|Minority interests                                          |  |                                    | 169       |   |                                   |   | (413      | )        |  |   | 497       |   |  |   | 333       |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Income from continuing operations                           |  |                                    | 45,595    |   |                                   |   | 42,825    |          |  |   | 125,774   |   |  |   | 115,962   |  
|Income from discontinued operations                         |  |                                    | 59        |   |                                   |   | 52        |          |  |   | 90        |   |  |   | 51        |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Net income                                                  |  | $                                  | 45,654    |   |                                   | $ | 42,877    |          |  | $ | 125,864   |   |  | $ | 116,013   |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|                                                            |  |                                    |          
|                                                            |  | For the Nine Months EndedJune 30,  |           |   |                                   |   |           |          | 
|                                                            |  | 2007                               |           |   | 2006                              |   |           |          |  |   |           |  
|Capital expenditures:                                       |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  | $                                  | 58,840    |   |                                   | $ | 36,888    |          |  |   |           |   |  |   |           |  
|Pocono Downs                                                |  |                                    | 37,805    |   |                                   |   | 35,823    |          |  |   |           |   |  |   |           |  
|Corporate                                                   |  |                                    | 4         |   |                                   |   | 13,097    |          |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Total                                                       |  | $                                  | 96,649    |   |                                   | $ | 85,808    |          |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |  
|                                                            |  | June 30,2007                       |           |   | September 30, 2006                |   |           |          |  |   |           |  
|Total assets:                                               |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Mohegan Sun                                                 |  | $                                  | 1,529,272 |   |                                   | $ | 1,505,258 |          |  |   |           |   |  |   |           |  
|Pocono Downs (including goodwill of $39,459)                |  |                                    | 434,439   |   |                                   |   | 333,820   |          |  |   |           |   |  |   |           |  
|Corporate                                                   |  |                                    | 96,018    |   |                                   |   | 75,279    |          |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  
|Total                                                       |  | $                                  | 2,059,729 |   |                                   | $ | 1,914,357 |          |  |   |           |   |  |   |           |  
|                                                            |  |                                    |           |   |                                   |   |           |          |  |   |           |   |  |   |           |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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 11CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:

As of June 30, 2007, substantially all of the Authoritys outstanding public debt, including its 2005 Senior Notes, 2002 Senior Subordinated
Notes, 2003 Senior Subordinated Notes, 2004 Senior Subordinated Notes and 2005 Senior Subordinated Notes, is fully and unconditionally guaranteed by the following subsidiaries of the Authority: MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs
entities, Mohegan Golf, MVW and WTG. 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 and WTG are not presented below because the Authority believes that the detailed financial information provided below and in Note 10 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 and the non-guarantor subsidiary, Salishan-Mohegan, as of June 30, 2007 and September 30,
2006 and for the three months and nine months ended June 30, 2007 and 2006 is as follows (in thousands):

CONDENSED CONSOLIDATING
BALANCE SHEETS



|                                                 |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|------------------------------------------------ |  | ------------------- | --------- | --------------------- | - | ----------------------- |  | ------------------------------------ | ------ |  | ----------------- | -------- | - |  | - | ---------
|                                                 |  | As of June 30, 2007
|                                                 |  | Authority           |           | GuarantorSubsidiaries |   | Non-GuarantorSubsidiary |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal
|ASSETS                                           |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Property and equipment, net                      |  | $                   | 1,235,789 |                       | $ | 110,433                 |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,366,173
|Intercompany receivables                         |  |                     | 218,182   |                       |   | 10,102                  |  |                                      |       |  |                   | (228,284 | ) |  |   |         
|Investment in subsidiaries                       |  |                     | 213,461   |                       |   | 2,917                   |  |                                      |       |  |                   | (216,378 | ) |  |   |         
|Other intangible assets, net                     |  |                     | 119,828   |                       |   | 274,823                 |  |                                      |       |  |                   |         |   |  |   | 394,651  
|Other assets, net                                |  |                     | 215,618   |                       |   | 70,002                  |  |                                      | 13,285 |  |                   |         |   |  |   | 298,905  
|                                                 |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total assets                                     |  | $                   | 2,002,878 |                       | $ | 468,277                 |  | $                                    | 33,236 |  | $                 | (444,662 | ) |  | $ | 2,059,729
|                                                 |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|LIABILITIES AND CAPITAL                          |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total current liabilities                        |  | $                   | 306,227   |                       | $ | 32,289                  |  | $                                    | 694    |  | $                 |         |   |  | $ | 339,210  
|Long-term debt, net of current portion           |  |                     | 1,249,146 |                       |   | 3,600                   |  |                                      | 16,500 |  |                   |         |   |  |   | 1,269,246
|Relinquishment liability, net of current portion |  |                     | 414,581   |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 414,581  
|Intercompany payables                            |  |                     |          |                       |   | 218,182                 |  |                                      | 10,102 |  |                   | (228,284 | ) |  |   |         
|Other long-term liabilities                      |  |                     | 790       |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 790      
|                                                 |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities                                |  |                     | 1,970,744 |                       |   | 254,071                 |  |                                      | 27,296 |  |                   | (228,284 | ) |  |   | 2,023,827
|Minority interests in subsidiaries               |  |                     |          |                       |   | 1,061                   |  |                                      |       |  |                   | 3,023    |   |  |   | 4,084    
|Total capital                                    |  |                     | 32,134    |                       |   | 213,145                 |  |                                      | 5,940  |  |                   | (219,401 | ) |  |   | 31,818   
|                                                 |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          
|Total liabilities and capital                    |  | $                   | 2,002,878 |                       | $ | 468,277                 |  | $                                    | 33,236 |  | $                 | (444,662 | ) |  | $ | 2,059,729
|                                                 |  |                     |           |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |          



|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|------------------------------------------------ |  | ------------------------ | --------- | - | --------------------- | - | ----------------------- |  | ------------------------------------ | ------ |  | ----------------- | -------- | - |  | - | --------- | -
|                                                 |  | As of September 30, 2006 |          
|                                                 |  | Authority                |           |   | GuarantorSubsidiaries |   | Non-GuarantorSubsidiary |  | Consolidating/EliminatingAdjustments |        |  | ConsolidatedTotal |         
|ASSETS                                           |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Property and equipment, net                      |  | $                        | 1,243,150 |   |                       | $ | 76,722                  |  | $                                    | 19,951 |  | $                 |         |   |  | $ | 1,339,823 |  
|Intercompany receivables                         |  |                          | 118,415   |   |                       |   | 19,148                  |  |                                      |       |  |                   | (137,563 | ) |  |   |          |  
|Investment in subsidiaries                       |  |                          | 233,174   |   |                       |   | 3,358                   |  |                                      |       |  |                   | (236,532 | ) |  |   |          |  
|Other intangible assets, net                     |  |                          | 119,826   |   |                       |   | 219,823                 |  |                                      |       |  |                   |         |   |  |   | 339,649   |  
|Other assets, net                                |  |                          | 181,415   |   |                       |   | 44,079                  |  |                                      | 9,391  |  |                   |         |   |  |   | 234,885   |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total assets                                     |  | $                        | 1,895,980 |   |                       | $ | 363,130                 |  | $                                    | 29,342 |  | $                 | (374,095 | ) |  | $ | 1,914,357 |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|LIABILITIES AND CAPITAL                          |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total current liabilities                        |  | $                        | 261,135   |   |                       | $ | 7,858                   |  | $                                    | 3,355  |  | $                 |         |   |  | $ | 272,348   |  
|Long-term debt, net of current portion           |  |                          | 1,221,804 |   |                       |   | 4,000                   |  |                                      |       |  |                   |         |   |  |   | 1,225,804 |  
|Relinquishment liability, net of current portion |  |                          | 451,038   |   |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 451,038   |  
|Intercompany payables                            |  |                          |          |   |                       |   | 118,415                 |  |                                      | 19,148 |  |                   | (137,563 | ) |  |   |          |  
|Other long-term liabilities                      |  |                          | 542       |   |                       |   |                        |  |                                      |       |  |                   |         |   |  |   | 542       |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total liabilities                                |  |                          | 1,934,519 |   |                       |   | 130,273                 |  |                                      | 22,503 |  |                   | (137,563 | ) |  |   | 1,949,732 |  
|Minority interest in subsidiary                  |  |                          |          |   |                       |   |                        |  |                                      |       |  |                   | 3,480    |   |  |   | 3,480     |  
|Total capital                                    |  |                          | (38,539   | ) |                       |   | 232,857                 |  |                                      | 6,839  |  |                   | (240,012 | ) |  |   | (38,855   | )
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  
|Total liabilities and capital                    |  | $                        | 1,895,980 |   |                       | $ | 363,130                 |  | $                                    | 29,342 |  | $                 | (374,095 | ) |  | $ | 1,914,357 |  
|                                                 |  |                          |           |   |                       |   |                         |  |                                      |        |  |                   |          |   |  |   |           |  



22



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



CONDENSED CONSOLIDATING STATEMENTS OF INCOME



|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|------------------------------------------------------------------ |  | ---------------------------------------- | ------- | - | --------------------- | - | ------ | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ----- | - |  | - | ------- | -
|                                                                   |  | For the Three Months Ended June 30, 2007 |        
|                                                                   |  | Authority                                |         |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiary |  |   | 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, 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  |  
|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|                                                                   | 
|                                                                   |  | For the Three Months Ended June 30, 2006 |        
|                                                                   |  | Authority                                |         |   | GuarantorSubsidiaries |   |        | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |      
|Net revenues                                                       |  | $                                        | 343,215 |   |                       | $ | 10,618 |                         |  | $ |                                     |   |  | $                 | (480  | ) |  | $ | 353,353 |  
|Operating costs and expenses:                                      |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Gaming and other operations                                        |  |                                          | 196,038 |   |                       |   | 7,985  |                         |  |   |                                     |   |  |                   | (480  | ) |  |   | 203,543 |  
|Advertising, general and administrative                            |  |                                          | 50,737  |   |                       |   | 2,987  |                         |  |   | (692                                 | ) |  |                   |      |   |  |   | 53,032  |  
|Pre-opening costs and expenses                                     |  |                                          |        |   |                       |   | 1,361  |                         |  |   |                                     |   |  |                   |      |   |  |   | 1,361   |  
|Depreciation and amortization                                      |  |                                          | 21,461  |   |                       |   | 944    |                         |  |   |                                     |   |  |                   |      |   |  |   | 22,405  |  
|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Total operating costs and expenses                                 |  |                                          | 268,236 |   |                       |   | 13,277 |                         |  |   | (692                                 | ) |  |                   | (480  | ) |  |   | 280,341 |  
|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from operations                                      |  |                                          | 74,979  |   |                       |   | (2,659 | )                       |  |   | 692                                  |   |  |                   |      |   |  |   | 73,012  |  
|Accretion of discount to the relinquishment liability              |  |                                          | (7,677  | ) |                       |   |       |                         |  |   |                                     |   |  |                   |      |   |  |   | (7,677  | )
|Interest expense, net of capitalized interest                      |  |                                          | (16,014 | ) |                       |   | (6,650 | )                       |  |   | (409                                 | ) |  |                   | 409   |   |  |   | (22,664 | )
|Gain (loss) on interests in subsidiaries                           |  |                                          | (8,346  | ) |                       |   | 487    |                         |  |   |                                     |   |  |                   | 7,859 |   |  |   |        |  
|Other income (expense), net                                        |  |                                          | (65     | ) |                       |   | 424    |                         |  |   | 617                                  |   |  |                   | (409  | ) |  |   | 567     |  
|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from continuing operations before minority interest  |  |                                          | 42,877  |   |                       |   | (8,398 | )                       |  |   | 900                                  |   |  |                   | 7,859 |   |  |   | 43,238  |  
|Minority interest                                                  |  |                                          |        |   |                       |   |       |                         |  |   |                                     |   |  |                   | (413  | ) |  |   | (413    | )
|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Income (loss) from continuing operations                           |  |                                          | 42,877  |   |                       |   | (8,398 | )                       |  |   | 900                                  |   |  |                   | 7,446 |   |  |   | 42,825  |  
|Income from discontinued operations                                |  |                                          |        |   |                       |   | 52     |                         |  |   |                                     |   |  |                   |      |   |  |   | 52      |  
|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  
|Net income (loss)                                                  |  | $                                        | 42,877  |   |                       | $ | (8,346 | )                       |  | $ | 900                                  |   |  | $                 | 7,446 |   |  | $ | 42,877  |  
|                                                                   |  |                                          |         |   |                       |   |        |                         |  |   |                                      |   |  |                   |       |   |  |   |         |  



23



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##### Table of Contents

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|------------------------------------------------------------------ |  | --------------------------------------- | --------- | - | --------------------- | - | ------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------ | - |  | - | --------- | -
|                                                                   |  | For the Nine Months Ended June 30, 2007 |          
|                                                                   |  | Authority                               |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | 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, 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   |  
|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|                                                                   | 
|                                                                   |  | For the Nine Months Ended June 30, 2006 |          
|                                                                   |  | Authority                               |           |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |       
|Net revenues                                                       |  | $                                       | 1,017,578 |   |                       | $ | 24,107  |                         |  | $ |                                     |   |  | $                 | (492   | ) |  | $ | 1,041,193 |  
|Operating costs and expenses:                                      |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Gaming and other operations                                        |  |                                         | 591,351   |   |                       |   | 18,524  |                         |  |   |                                     |   |  |                   | (492   | ) |  |   | 609,383   |  
|Advertising, general and administrative                            |  |                                         | 147,533   |   |                       |   | 8,258   |                         |  |   | 1,360                                |   |  |                   |       |   |  |   | 157,151   |  
|Pre-opening costs and expenses                                     |  |                                         |          |   |                       |   | 3,409   |                         |  |   |                                     |   |  |                   |       |   |  |   | 3,409     |  
|Depreciation and amortization                                      |  |                                         | 62,971    |   |                       |   | 2,703   |                         |  |   |                                     |   |  |                   |       |   |  |   | 65,674    |  
|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Total operating costs and expenses                                 |  |                                         | 801,855   |   |                       |   | 32,894  |                         |  |   | 1,360                                |   |  |                   | (492   | ) |  |   | 835,617   |  
|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from operations                                      |  |                                         | 215,723   |   |                       |   | (8,787  | )                       |  |   | (1,360                               | ) |  |                   |       |   |  |   | 205,576   |  
|Accretion of discount to the relinquishment liability              |  |                                         | (23,030   | ) |                       |   |        |                         |  |   |                                     |   |  |                   |       |   |  |   | (23,030   | )
|Interest expense, net of capitalized interest                      |  |                                         | (49,611   | ) |                       |   | (18,695 | )                       |  |   | (737                                 | ) |  |                   | 737    |   |  |   | (68,306   | )
|Loss on interests in subsidiaries                                  |  |                                         | (27,047   | ) |                       |   | (394    | )                       |  |   |                                     |   |  |                   | 27,441 |   |  |   |          |  
|Other income (expense), net                                        |  |                                         | (22       | ) |                       |   | 778     |                         |  |   | 1,370                                |   |  |                   | (737   | ) |  |   | 1,389     |  
|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations before minority interest  |  |                                         | 116,013   |   |                       |   | (27,098 | )                       |  |   | (727                                 | ) |  |                   | 27,441 |   |  |   | 115,629   |  
|Minority interest                                                  |  |                                         |          |   |                       |   |        |                         |  |   |                                     |   |  |                   | 333    |   |  |   | 333       |  
|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Income (loss) from continuing operations                           |  |                                         | 116,013   |   |                       |   | (27,098 | )                       |  |   | (727                                 | ) |  |                   | 27,774 |   |  |   | 115,962   |  
|Income from discontinued operations                                |  |                                         |          |   |                       |   | 51      |                         |  |   |                                     |   |  |                   |       |   |  |   | 51        |  
|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  
|Net income (loss)                                                  |  | $                                       | 116,013   |   |                       | $ | (27,047 | )                       |  | $ | (727                                 | ) |  | $                 | 27,774 |   |  | $ | 116,013   |  
|                                                                   |  |                                         |           |   |                       |   |         |                         |  |   |                                      |   |  |                   |        |   |  |   |           |  



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##### Table of Contents

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, 2007 |         
|                                                            |  | Authority                               |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |        
|Net cash flows provided by (used in) operating activities   |  | $                                       | 198,387  |   |                       | $ | 25,770  |                         |  | $ | (794                                 | ) |  | $                 |        |   |  | $ | 223,363  |  
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Purchases of property and equipment                         |  |                                         | (52,629  | ) |                       |   | (33,860 | )                       |  |   |                                     |   |  |                   |        |   |  |   | (86,489  | )
|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                 |  |                                         | (129,072 | ) |                       |   | (85,666 | )                       |  |   | (2,916                               | ) |  |                   | 69,320  |   |  |   | (148,334 | )
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan        |  |                                         | 278,000  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 278,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan        |  |                                         | (278,000 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (278,000 | )
|New Bank Credit Facility borrowingsrevolving loan          |  |                                         | 160,000  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 160,000  |  
|New 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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MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(unaudited)



|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|----------------------------------------------------------- |  | --------------------------------------- | -------- | - | --------------------- | - | ------- | ----------------------- |  | - | ------------------------------------ | - |  | ----------------- | ------- | - |  | - | -------- | -
|                                                            |  | For the Nine Months Ended June 30, 2006 |         
|                                                            |  | Authority                               |          |   | GuarantorSubsidiaries |   |         | Non-GuarantorSubsidiary |  |   | Consolidating/EliminatingAdjustments |   |  | ConsolidatedTotal |        
|Net cash flows provided by (used in) operating activities   |  | $                                       | 197,367  |   |                       | $ | (6,207  | )                       |  | $ | 2                                    |   |  | $                 |        |   |  | $ | 191,162  |  
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows used in investing activities:                    |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Purchases of property and equipment                         |  |                                         | (34,551  | ) |                       |   | (32,784 | )                       |  |   | (13,082                              | ) |  |                   |        |   |  |   | (80,417  | )
|Other cash flows used in investing activities               |  |                                         | (51,860  | ) |                       |   | (14,540 | )                       |  |   | (2,558                               | ) |  |                   | 67,157  |   |  |   | (1,801   | )
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows used in investing activities                 |  |                                         | (86,411  | ) |                       |   | (47,324 | )                       |  |   | (15,640                              | ) |  |                   | 67,157  |   |  |   | (82,218  | )
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash flows provided by (used in) financing activities:      |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Prior Bank Credit Facility borrowingsrevolving loan        |  |                                         | 207,000  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 207,000  |  
|Prior Bank Credit Facility repaymentsrevolving loan        |  |                                         | (207,000 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (207,000 | )
|Salishan Credit Facility borrowingsrevolving loan          |  |                                         |         |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   |         |  
|Line of credit borrowings                                   |  |                                         | 352,623  |   |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | 352,623  |  
|Line of credit repayments                                   |  |                                         | (352,623 | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (352,623 | )
|Principal portion of relinquishment liability payments      |  |                                         | (28,605  | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (28,605  | )
|Distributions to Tribe                                      |  |                                         | (54,271  | ) |                       |   |        |                         |  |   |                                     |   |  |                   |        |   |  |   | (54,271  | )
|Other cash flows provided by (used in) financing activities |  |                                         | (13,971  | ) |                       |   | 51,617  |                         |  |   | 15,638                               |   |  |                   | (67,157 | ) |  |   | (13,873  | )
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net cash flows provided by (used in) financing activities   |  |                                         | (96,847  | ) |                       |   | 51,617  |                         |  |   | 15,638                               |   |  |                   | (67,157 | ) |  |   | (96,749  | )
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Net increase (decrease) in cash and cash equivalents        |  |                                         | 14,109   |   |                       |   | (1,914  | )                       |  |   |                                     |   |  |                   |        |   |  |   | 12,195   |  
|Cash and cash equivalents at beginning of period            |  |                                         | 71,504   |   |                       |   | 921     |                         |  |   |                                     |   |  |                   |        |   |  |   | 72,425   |  
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  
|Cash and cash equivalents at end of period                  |  | $                                       | 85,613   |   |                       | $ | (993    | )                       |  | $ |                                     |   |  | $                 |        |   |  | $ | 84,620   |  
|                                                            |  |                                         |          |   |                       |   |         |                         |  |   |                                      |   |  |                   |         |   |  |   |          |  

NOTE 12SUBSEQUENT EVENTS:

In July 2007, Presque Isle paid $7.0 million in return for the conveyance of the OTW facility in Erie, Pennsylvania. The effect of this transaction on the
consolidated financial statements of the Authority will be accounted for during the three months ended September 30, 2007.



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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, 2007, 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, 2007 and 2006 and the condensed consolidated statements of cash flows for the nine-month periods ended June 30,
2007 and 2006. 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, 2006, 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 19, 2006 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the accompanying consolidated balance sheet information as of September 30, 2006, 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 10, 2007



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##### Table of Contents

|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 behalf of us. 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 (OTWs),
dependence on existing management, potential adverse changes in local, regional, national or global economic climates, 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), and the continued availability of financing. 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, 2006, 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 can not
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 Mohegan Sun at Pocono Downs, or Pocono
Downs, a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania, and several off-track wagering, or OTW, facilities located elsewhere in Pennsylvania, of which one referred to in Notes 8 and 12
to our condensed consolidated financial statements has been sold to a third party. We are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in the
composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

Mohegan Sun

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



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##### Table of Contents

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

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

Casino of the Earth

As of
June 30, 2007, the Casino of the Earth had approximately 179,500 square feet of gaming space and offered:



| |  |  | approximately 3,510 slot machines and 160 table games (including blackjack, roulette, craps and baccarat), which were both less than normal capacity due to ongoing
casino floor renovations;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | food and beverage amenities, including the Uncas American Indian Grill, a 285-seat full-service restaurant and bar, three full-service themed fine dining
restaurants, with a fourth area featuring cuisine from all three adjacent restaurant themes, a 610-seat buffet, a ten-station food court featuring international and domestic cuisine and multiple service bars, all operated by us, for a current total
of approximately 1,700 restaurant seats;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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

Casino of the Sky

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



| |  |  | approximately 2,395 slot machines and 115 table games (including blackjack, roulette, craps and baccarat);
| | - |  | ----------------------------------------------------------------------------------------------------------



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



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



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



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



| |  |  | the Shops at Mohegan Sun containing 31 different retail shops, eight of which we own;
| | - |  | -------------------------------------------------------------------------------------



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



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



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



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

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



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##### Table of Contents

Project Horizon

Project Horizon consists of three major components (Sunrise Square, Casino of the Wind and the Earth Expansion). The plans for Project Horizon contemplate
adding more than 1.4 million square feet of hotel rooms, gaming space and other new non-gaming amenities to Mohegan Sun. The total number of slot machines at Mohegan Sun is projected to increase to approximately 7,200 units, complemented by
approximately 400 table games (including poker tables) after the expansion.

Groundbreaking occurred in November 2006 with the commencement
of construction for Sunrise Square, a new Asian themed gaming area, which will include a new 5,000 square-foot bus lobby, a 4,000 square-foot Hong Kong Street food outlet and 8,500 square feet of gaming space offering 46 table games such
as Mini-Baccarat, Sic Bo and Pai Gow Poker. The gaming component of Sunrise Square opened in late July 2007, and the remainder of the new facility opened on August 10, 2007.

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

Project Horizon also is expected to include the Earth Expansion, which features a new 1,000-room Earth hotel with 300 House of Blues-themed hotel rooms, which will be owned and operated by Mohegan Sun, and a House of
Blues Foundation Room. In addition, the schematic design includes a Spirit of the Sea themed connector between the new Earth hotel and the existing Sky hotel, which would add approximately 115,000 square feet to Mohegan Sun,
including retail and dining space for three new fine dining and four quick serve restaurants. The Earth Expansion also is planned to include new House of Blues-themed dining and entertainment amenities, including a 2,500-seat music hall.

Preliminary results of a review by our construction managers of the initial cost estimates for the Casino of the Wind and the Earth Expansion indicate
that the total costs for Project Horizon are likely to be higher than the initial projection of $740.0 million. At the time of this filing, we continue to refine the plans, scope and elements of Project Horizon in order to arrive at a final
estimated cost for the project.

Connecticut Sun

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

Mohegan Golf

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



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##### Table of Contents

Mohegan Sun at Pocono Downs

In January 2005, we and our wholly owned subsidiary, Mohegan Commercial Ventures PA, LLC, or MCV-PA, acquired all of the partnership interests in Downs
Racing, L.P., or Downs Racing, Mill Creek Land, L.P., Backside, L.P. and Northeast Concessions, L.P., or the Pocono Downs entities, from subsidiaries of Penn National Gaming, Inc. Downs Racing owns the slot machine and harness racing facility known
as Mohegan Sun at Pocono Downs located on approximately 400 acres in Plains Township, Pennsylvania, as well as five Pennsylvania OTWs located in Carbondale, East Stroudsburg, Erie, 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. The Erie OTW was sold to a third party in July 2007 for consideration of $7.0
million in cash, pursuant to an agreement we assumed in connection with our purchase of the Pocono Downs entities.

Downs Racing continues
its harness racing activities into the 2007 racing season, which began on March 31, 2007. Year round simulcast pari-mutuel wagering activities also are conducted at Mohegan Sun at Pocono Downs and the OTW facilities. A new state of the art,
pari-mutuel simulcast facility at Mohegan Sun at Pocono Downs opened in March 2006.

On September 27, 2006, a Conditional Category One
Slot Machine License was granted to Downs Racing by the Pennsylvania Gaming Control Board, or the PGCB, for the operation of slot machines at Mohegan Sun at Pocono Downs. 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. A minimum of 1,500 slot machines are required to be in operation within 12 months of the issuance
of the conditional slot machine license, unless otherwise extended by the PGCB for an additional period not to exceed 24 months. Under certain circumstances, Downs Racing may be permitted to install up to a total of 5,000 slot machines at Pocono
Downs.

After the satisfaction of certain regulatory conditions and the payment of a one-time slot machine license fee of $50.0 million to
the PGCB in October 2006, Downs Racing was the first to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of its gaming and entertainment facility opened to the public on November 14, 2006. The total cost for
development of the Phase I facility is expected to be approximately $72.0 million, exclusive of the $50.0 million one-time slot machine license fee paid to the PGCB. The two-level casino includes 90,000 square feet of gaming space, operates 24
hours a day, seven days a week and houses approximately 1,100 new slot machines with denominations ranging from one cent to $25. The facility also offers two casino bars, a food court and a retail shop. Renovations to a portion of the current food
court seating area to accommodate the installation of approximately 80 additional slot machine gaming positions were completed in June 2007. Approximately 40 of these new positions are comprised of video blackjack units approved by the PGCB.

A Phase II gaming and entertainment facility, Project Sunrise, at Mohegan Sun at Pocono Downs is being developed on land
adjacent to the existing gaming facility. When completed, the combined facility is anticipated to include approximately 2,500 slot machines, three fine dining restaurants, a 300-seat buffet, an expanded food court, retail shopping, nightlife venues,
additional parking and bus amenities. Construction commenced in May 2007 with a grand opening planned in the summer of 2008. Development of Project Sunrise is anticipated to cost approximately $180.0 million.

Other Diversification Projects

The Tribe has determined that it is in its long-term best interest to pursue diversification of its business interests, both directly and through us. As a result, from time to time, we and the Tribe receive and evaluate various business
opportunities. These opportunities primarily include the management or ownership of, or investment in, other gaming enterprises through direct investments, acquisitions, joint venture arrangements and



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loan transactions. In addition to the developments described below, we and the Tribe are currently exploring other opportunities, although there is no
assurance that we or the Tribe will continue to pursue any of these other opportunities or that any of them will be consummated.

Cowlitz Project

In July 2004, we formed Mohegan Ventures-Northwest, LLC, or Mohegan Ventures-NW, one of three members in
Salishan-Mohegan LLC, or Salishan-Mohegan. Salishan-Mohegan was formed to participate in the development and management of a casino to be located in Clark County, Washington, or the Cowlitz Project. The proposed casino would be owned by the Cowlitz
Indian Tribe. The Mohegan Tribe is also a member of Salishan-Mohegan. 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 payable to Mohegan VenturesNW and the Mohegan Tribe through Salishan-Mohegan pursuant to the operating agreement. As of April 2006, Salishan-Mohegan purchased the land to be
used as the site for the planned casino, which will be assigned to the Cowlitz Indian Tribe 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.

Menominee Project

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

In March 2007, Wisconsin Tribal Gaming, LLC, or WTG, was formed to participate in the
development of the proposed casino to be owned by the Menominee Tribe. WTG consists of two members, one of which is Mohegan Ventures Wisconsin, LLC (a wholly owned subsidiary of the Authority also formed in March 2007), or MVW, which holds an 85.4%
membership interest in WTG, and the other is Mohegan Ventures, LLC (a wholly owned subsidiary of the Mohegan Tribe), or MV, which holds a 14.6% membership interest in WTG. Following formation in March 2007, WTG purchased the development rights for
the Menominee Project, along with certain other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC for consideration of $6.4 million. As a result of the purchase, the Authority and the Mohegan Tribe, through MVW and
MV, respectively, will receive development fees payable to WTG of 13.4% of Available Revenue Flow, as defined in



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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. This agreement is currently being amended to reflect that WTG will be the developer of the planned casino.

Capital Play

In July 2007, we agreed to a letter of intent with Capital Play, Inc., or Capital Play,
under the terms of which, we would develop and operate proposed Video Lottery Terminal, or VLT, facilities at Belmont Park and Aqueduct racetracks in New York, subject to the satisfaction of customary conditions, the acceptance of Capital
Plays bid for New York States thoroughbred racing franchise and other necessary approvals. The installation of up to 4,500 VLTs at the Aqueduct racetrack is authorized under existing New York law. However, the addition of VLTs at Belmont
would require new legislation.

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, or Foxwoods. We also currently face competition from several casinos and gaming facilities located on Indian tribal lands in the state of New
York and racinos in the states of New York and Rhode Island, as well as potential competition from planned casino projects announced by other Indian tribes and non-Indians 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, 2006 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, 2006.

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

In February 2005, the Mashantucket Pequot Tribe announced its plans to undertake a three-year, $700.0 million expansion at Foxwoods, which is
expected to add over two million square feet to the facility, including an 825-room hotel tower, a 21,000 square-foot spa, a 4,000-seat theater, a 50,000 square-foot ballroom, a 2,900-car parking garage, 145,000 square feet of meeting and convention
space, four retail stores, two nightclubs, three lounges, four restaurants and additional business meeting and reception space. In addition, the expansion is expected to include 50,000 square feet of gaming space and will accommodate an additional
1,500 slot machines and 45 table games. Groundbreaking activities occurred in November 2005, and the facility is scheduled to open in the spring of 2008. On December 8, 2006, the Mashantucket Pequot Tribe and MGM Mirage announced that they
completed agreements to develop the new hotel and casino described above, which will be adjacent to the existing Foxwoods Resort Casino. The new hotel and casino will be known as the MGM Grand at Foxwoods and will be owned and operated
by the Mashantucket Pequot Tribe.

In 2004, the Bureau of Indian Affairs, or BIA, made a final determination denying federal recognition to
another Connecticut tribe, the Golden Hill Paugussett Tribe located in Colchester and Trumbull, Connecticut. The tribe appealed the final determination to the Interior Board of Indian Appeals, or IBIA, in September 2004.



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In October 2004, the IBIA rejected the tribes request to consider the denial of its federal recognition. On November 29, 2006, as a result of the
denial of federal recognition of the Golden Hill Paugussetts, a Connecticut federal district court rejected all remaining land claims filed by the tribe. In January 2007, the Golden Hill Paugussett Tribe filed an appeal of the 2006 federal court
ruling rejecting the tribes land claims in Connecticut with the Second U.S. Circuit Court of Appeals.

Rhode Island

In July 2005, BLB Investors, LLC, or BLB, completed its acquisition of Lincoln Park in Lincoln, Rhode Island. BLB announced an $125.0
million expansion, which included themed bars, upscale restaurants, a 350-seat buffet, a 2,000-seat entertainment venue and approximately 160,000 square feet to increase the number of VLTs at the site from 3,000 to 4,750, which was approved by the
Rhode Island legislature. In March 2007, BLB changed the name of Lincoln Park to Twin River and opened the gaming space housing all additional VLTs. The full expansion is scheduled for completion in 2008.

In addition to approving the increase in VLTs at Twin River, the Rhode Island legislature approved the addition of 800 VLTs at Newport Grand. In order to
gain the approval for the additional VLTs, among other things, Newport Grand must complete a $20.0 million project for improvements and expansion to the current facilities, including a 90-room hotel. To accommodate the project, Newport Grand sought
local zoning changes in July 2006 to allow for the expansion. In February 2007, a Rhode Island court overturned local zoning variance denials and ordered the Newport City Council to issue the necessary building permits for the expansion.

The Narragansett Indian Tribe of Rhode Island, with a reservation in Charlestown, is the only federally recognized Indian tribe in Rhode Island.
However, under specific terms of the Narragansett Land Claims Settlement Act with the federal government, the Narragansett Tribe is prohibited from opening a gaming facility under IGRA. Accordingly, the Narragansett Tribe may only open a gaming
facility approved under state law. The Narragansett Tribe and an affiliate of Harrahs Entertainment have pursued a license to operate a casino in West Warwick, Rhode Island, and proposed the development of a 12-story, 500-room hotel and
140,000 square-foot casino with 3,500 slot machines, 50 poker tables and 100 other gaming tables on 86 acres of non-tribal land. On June 1, 2006, the Rhode Island state legislature approved a joint resolution requiring a statewide referendum to
amend the Rhode Island Constitution to allow a casino privately operated by Harrahs Entertainment and the Narragansett Tribe. On November 7, 2006, the proposed amendment to the Constitution was rejected by approximately a two to one
margin. The Narragansett Tribe has indicated in published reports that it would continue to pursue the development of a $50.0 million to $100.0 million casino on its tribal lands in Charlestown. On July 20, 2007, the U.S. Court of Appeals ruled
that the federal government could take 31 acres of land in Charlestown into trust for the Narragansett Tribe. The tribe has stated the purpose of the land is for housing of elderly tribal members, however published reports indicate that the
Narragansett Tribe may attempt to use this land or future parcels for gaming.

New York

St. Regis Mohawk Tribe. On November 2, 2005, in a letter to the BIA, the St. Regis Mohawk Tribe formally abandoned plans for a $500.0 million
casino at Kutshers Resort and Country Club in the Catskills (withdrawing its fee to trust application) and resumed its earlier plans for a casino at Monticello Raceway, also located in the Catskills, to be managed by Empire Resorts, Inc. In
March 2006, Empire Resorts, Inc. announced an agreement with the St. Regis Mohawk Tribe to develop the casino resort. Prior agreements for municipal and county assistance and payments in lieu of taxes also have been extended to apply to the St.
Regis Mohawk Tribes ownership of the approximately 29-acre site in Monticello. Plans for the project include 160,000 square feet of gaming space for 3,500 slot machines and 125 table games, with sufficient space to accommodate an additional
500 slot machines, and a variety of food and beverage offerings and entertainment venues.

In connection with the St. Regis Mohawk
Tribes application to acquire the Monticello site, the tribe submitted a new environmental assessment for the project, which received final approval by the BIA in



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December 2006. In February 2007, the Governor of New York and the St. Regis Mohawk Tribe executed a new tribal-state compact and revenue sharing agreement.
The United States Department of the Interior must still approve the taking of the 29-acre planned casino site adjacent to Monticello Raceway into trust. Also in February 2007, several New York farm and conservation groups filed suit against the
Department of the Interior, challenging the approved environmental assessment. In April 2007, the federal government agreed that a decision must first be reached on the adequacy of the Interior Departments assessment of the casino
projects environmental impact on the community before the requested land could be taken into trust. Based upon these recent proceedings, the approval of the land being taken into trust, and accordingly, plans for a groundbreaking for the
casino project, are expected to be delayed.

Shinnecock Tribe. The Shinnecock Tribe has announced that it intends to construct an
approximately 65,000 square-foot commercial casino gaming facility adjacent to its reservation in Long Island, New York. The Shinnecock Tribe is recognized by the State of New York, but its petition for federal recognition is still pending. In
November 2005, a federal district court in New York found that the Shinnecock Tribe met all the legal requirements to be considered a federally recognized tribe and remanded the case for consideration of other issues, including the Shinnecocks
land claims. In January 2006, the BIA declared that it is not bound by the November 2005 federal district court ruling that the Shinnecock Tribe is a federally recognized Indian tribe. Accordingly, the Shinnecock Tribe is continuing to pursue the
federal recognition process before the BIA, which published reports indicate could take several years, and may not pursue a casino under IGRA in the absence of such federal recognition. On November 28, 2006, a New York federal district court
rejected the Shinnecock Tribes claim to 3,600 acres in Long Island. However, the tribe has indicated that it will continue to seek the legal right to build a casino on a smaller parcel it already owns on Long Island.

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

Aqueduct. In June 2005, MGM Mirage announced a definitive agreement to develop and manage a VLT facility at the Aqueduct horse racing track in
Queens, New York, one of three thoroughbred tracks owned and operated by the New York Racing Authority, or NYRA. In March 2006, the New York racing oversight board approved a construction contract for an $182.0 million improvement to the Aqueduct
race track facility and the installation of 4,500 VLTs. The NYRA subsequently filed for Chapter 11 bankruptcy protection in November 2006, and MGM Mirage withdrew from its contract with the NYRA to develop and manage the VLT facility at Aqueduct.
The thoroughbred racing contract between the NYRA and the State of New York expires on December 31, 2007. A State of New York panel is currently reviewing recommendations for new operators of the NYRA facilities, including Aqueduct, Belmont and
Saratoga racetracks (refer to Overview-Other Diversification Projects-Capital Play above). No additional VLTs at the Saratoga thoroughbred racetrack are being considered due to the existence of VLTs at the Saratoga harness
racetrack. News reports indicate that New York Governor Eliot Spitzer plans to make a recommendation to the state legislature regarding the disposition of the NYRA franchises at Aqueduct, Belmont and Saratoga by September 4, 2007.

Massachusetts

News reports
indicate that Massachusetts Governor Deval Patrick is willing to consider permitting commercial casino gambling in the Commonwealth, including locating slot machine parlors at each of the states four pari-mutuel tracks, among other options.
Reports indicate that the Governor will announce his decision on expanding gaming in the state before September 4, 2007.

Reports also
indicate that the Mashpee Wampanoag Tribe, which received federal recognition in February 2007, secured a group of financial backers to pay for a 125-acre tract of land in Middleboro, which is located in



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southeastern Massachusetts, in April 2007 as a potential site for a resort casino. The tribes financial backer also purchased an option to buy an
additional 200 acres adjacent to the site. Reports indicate the tribe expects to work with the Governor to negotiate a tribal-state compact within the coming year. On July 28, 2007, voters in the town of Middleboro ratified a host community,
intergovernmental agreement with the Mashpee Wampanoag Tribe to allow for the tribes planned $1.0 billion casino and 1,500-room hotel, in exchange for funding of infrastructure improvements and annual payments to the town. The Mashpee
Wampanoag Tribe has also expressed interest in opening a Class II gaming facility under appropriate IGRA provisions should the state legislature and the Governor decide not to expand the scope of legalized gambling in the state to include slot
machines or do not enter into a compact with the tribe.

Published reports indicate that the Wampanoag Tribe of Gay Head (Aquinnah), the
states other federally-recognized tribe, also remains interested in developing a casino away from the tribes reservation on Marthas Vineyard.

Mohegan Sun at Pocono Downs

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

On December 20, 2006, the PGCB approved conditional Category
Two slot machine licenses for five stand-alone slot facilities. Two of the facilities are located in Philadelphia, one is located in Pittsburgh and the remaining two are located in Mount Pocono and Bethlehem, which are closer to Pocono Downs and are
more likely to have an impact on Pocono Downs.



| |  |  | Mount Pocono.Mount Airy, LLC was approved for a conditional Category Two slot machine license to operate a slot machine parlor at the former Mount Airy
Lodge in Mount Pocono, which is approximately 40 miles from Pocono Downs. According to news reports, Mount Airy, LLC plans to open the $412.0 million Mount Airy Resort and Casino on October 15, 2007, which is expected to include 2,300 slot
machines and some restaurants, with a 200-room hotel, meeting rooms and retail shops opening a month later. Reports further indicate that by the end of 2008, the facility is anticipated to have been expanded to have 3,000 slot machines, 400 hotel
rooms, four restaurants, a night club, conference rooms, a spa, indoor and outdoor pools, retail shops and additional parking.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

In March 2007, Pocono Manor Investors LLP filed an appeal with the Pennsylvania Supreme Court of the PGCBs denial of its application for a Category
Two license to operate slot machines at the Pocono Manor Inn & Golf Resort in Mount Pocono. In July 2007, the Pennsylvania Supreme Court rejected the appeal and affirmed the decision by the PGCB to award the Category Two slot machine
license to Mount Airy, LLC.

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 (including pari-mutuel wagering
revenues from our racebook at Mohegan Sun and our Pennsylvania OTW facilities);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



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

Our largest component of revenues is gaming revenues, which is recognized as gaming wins less gaming losses, and is comprised primarily of revenues
from our slot machines and table games at Mohegan Sun, as well as our slot machines at Mohegan Sun at Pocono Downs. Revenues from slot machines are the largest component of our gaming revenues. Gross slot revenues, also referred to as gross slot
win, represent all amounts played in the slot machines reduced by both (1) the winnings paid out and (2) all amounts we deposit into the slot machines to ensure sufficient coins in each machine to pay out the winnings. 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 States of Connecticut and Pennsylvania. On a monthly
basis, we also post this information on our website at www.mtga.com.

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

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

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

Promotional allowances

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



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

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

Gaming expenses

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

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

Income from operations

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

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



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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 9 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, 2007, we own and operate the Mohegan Sun and Mohegan Sun Country Club properties in Connecticut and, through the Pocono Downs entities, operate a gaming and entertainment facility offering slot machines and harness racing in Plains
Township, Pennsylvania, and several OTW facilities located elsewhere in Pennsylvania (one of which has been sold to a third party as described in Notes 8 and 12 to our condensed consolidated financial statements and is not reported in the below
segment information related to Pocono Downs). All of our revenues are derived from these operations. Our executive officers review and assess the performance of the operating results and determine the proper allocation of resources to the Mohegan
Sun entities in Connecticut, which also include MBCs ownership of the Connecticut Sun WNBA franchise, and the Pocono Downs entities in Pennsylvania on a separate basis. We therefore believe that we have two operating segments, one comprised
solely of Mohegan Sun, which includes the operations of the Connecticut entities, and another, referred to as Pocono Downs, comprised of the operations of the Pocono Downs entities. The two operating segments are also separate reportable
segments due to the differing nature of their operations. See Note 10 to the condensed consolidated financial statements for financial information about the segments.

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



|                               |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |          |   |  |      |           |   |                |   |           |                    |  |   |         |   |  |       |  
|------------------------------ |  | ----------------------------------- | ------- | - | ---------------------------------- | - | ------- | -------------- |  | - | ------------------ | - |  | -------- | - |  | ---- | --------- | - | -------------- | - | --------- | ------------------ |  | - | ------- | - |  | ----- | -
|                               |  | For the Three Months Ended June 30, |         |   | For the Nine Months Ended June 30, |  
|                               |  | 2007 (1)                            |         |   | 2006                               |   |         | DollarVariance |  |   | PercentageVariance |   |  | 2007 (2) |   |  | 2006 |           |   | DollarVariance |   |           | PercentageVariance | 
|Net revenues:                  |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |          |   |  |      |           |   |                |   |           |                    |  |   |         |   |  |       |  
|Mohegan Sun                    |  | $                                   | 352,947 |   |                                    | $ | 344,614 |                |  | $ | 8,333              |   |  | 2.4      | % |  | $    | 1,051,072 |   |                | $ | 1,018,973 |                    |  | $ | 32,099  |   |  | 3.2   | %
|Pocono Downs                   |  |                                     | 54,170  |   |                                    |   | 8,739   |                |  |   | 45,431             |   |  | 519.9    | % |  |      | 130,652   |   |                |   | 22,220    |                    |  |   | 108,432 |   |  | 488.0 | %
|                               |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |          |   |  |      |           |   |                |   |           |                    |  |   |         |   |  |       |  
|Total                          |  | $                                   | 407,117 |   |                                    | $ | 353,353 |                |  | $ | 53,764             |   |  | 15.2     | % |  | $    | 1,181,724 |   |                | $ | 1,041,193 |                    |  | $ | 140,531 |   |  | 13.5  | %
|Income (loss) from operations: |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |          |   |  |      |           |   |                |   |           |                    |  |   |         |   |  |       |  
|Mohegan Sun                    |  | $                                   | 72,364  |   |                                    | $ | 76,281  |                |  | $ | (3,917             | ) |  | -5.1     | % |  | $    | 218,562   |   |                | $ | 218,836   |                    |  | $ | (274    | ) |  | -0.1  | %
|Pocono Downs                   |  |                                     | 6,543   |   |                                    |   | (1,896  | )              |  |   | 8,439              |   |  | 445.1    | % |  |      | 6,932     |   |                |   | (5,785    | )                  |  |   | 12,717  |   |  | 219.8 | %
|Corporate expenses             |  |                                     | (3,244  | ) |                                    |   | (1,373  | )              |  |   | (1,871             | ) |  | -136.3   | % |  |      | (8,466    | ) |                |   | (7,475    | )                  |  |   | (991    | ) |  | -13.3 | %
|                               |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |          |   |  |      |           |   |                |   |           |                    |  |   |         |   |  |       |  
|Total                          |  | $                                   | 75,663  |   |                                    | $ | 73,012  |                |  | $ | 2,651              |   |  | 3.6      | % |  | $    | 217,028   |   |                | $ | 205,576   |                    |  | $ | 11,452  |   |  | 5.6   | %
|Net income                     |  | $                                   | 45,654  |   |                                    | $ | 42,877  |                |  | $ | 2,777              |   |  | 6.5      | % |  | $    | 125,864   |   |                | $ | 116,013   |                    |  | $ | 9,851   |   |  | 8.5   | %

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



39



---

##### Table of Contents

The important factors and trends that most contributed to our financial performance for the three months
and nine months ended June 30, 2007 and 2006 are as follows:



| |  |  | the opening of the Phase I slot facility at Mohegan Sun at Pocono Downs in November 2006, which generated gross slot revenues of $44.8 million and $107.1 million
during the three months and nine months ended June 30, 2007;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the strengthening of the Mohegan Sun brand awareness in the Northeast gaming market, which is reflected above in the Mohegan Sun net revenue growth rates for the
three months and nine months ended June 30, 2007;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | higher table games hold percentage at Mohegan Sun in the three months and nine months ended June 30, 2007, which can fluctuate considerably over interim
financial periods;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased competition in the Northeast gaming market from newly opened VLT facilities at Yonkers Raceway in Yonkers, New York and Twin River in Lincoln, Rhode
Island, which contributed to the decrease in gross slot revenues at Mohegan Sun for the three months ended June 30, 2007;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a reduction in the number of slot machines in the Casino of the Earth at Mohegan Sun during the quarter ended June 30, 2007, due to the construction of Sunrise
Square;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | a $3.5 million charge recorded in the nine months ended June 30, 2007 in connection with a settlement of litigation related to the assessment of property taxes
at the Pocono Downs facility.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net revenues for the three months and nine months ended June 30, 2007 increased
primarily as a result of the addition of slot revenues at Mohegan Sun at Pocono Downs during the nine months ended June 30, 2007, and the increase in table games revenues at Mohegan Sun.

Income from operations for the three months and nine months ended June 30, 2007 increased as a result of the growth in net revenues, offset by
increases in operating costs and expenses of 18.2% and 15.4%, respectively. Our operating margin, or income from operations as a percentage of net revenues, for the three months and nine months ended June 30, 2007 decreased to 18.6% and 18.4%,
respectively, from 20.7% and 19.7%, respectively, for the same periods in the prior year. This decrease was primarily attributable to the opening of the Phase I slot facility at Mohegan Sun at Pocono Downs, which has a significantly lower operating
margin than Mohegan Sun due to higher gaming tax rates assessed by the Commonwealth of Pennsylvania, the $3.5 million charge recorded in connection with the litigation settlement discussed above and an increase in promotional programs at Mohegan Sun
to offset the impact of the new slot product being added to our market as discussed above.

Net income for the three months and nine months
ended June 30, 2007 increased primarily due to the operating results at Mohegan Sun at Pocono Downs after the opening of the slot facility in November 2006, partially offset by higher interest costs as discussed below under Corporate
Expenses and Other Income (Expense).



40



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##### Table of Contents

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, |               
|                                |  | 2007                                |         | 2006 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2007  |   | 2006 |   | DollarVariance |  |   | PercentageVariance | 
|Gaming.                         |  | $                                   | 318,967 |      | $                                  | 312,589        |  | $ | 6,378              |   |  | 2.0   | % |      | $ | 948,814        |  | $ | 918,445            |  | $ | 30,369 |   |  | 3.3  | %
|Food and beverage               |  |                                     | 22,615  |      |                                    | 22,492         |  |   | 123                |   |  | 0.5   | % |      |   | 68,762         |  |   | 68,653             |  |   | 109    |   |  | 0.2  | %
|Hotel                           |  |                                     | 11,120  |      |                                    | 12,820         |  |   | (1,700             | ) |  | -13.3 | % |      |   | 35,283         |  |   | 37,062             |  |   | (1,779 | ) |  | -4.8 | %
|Retail, entertainment and other |  |                                     | 31,617  |      |                                    | 27,205         |  |   | 4,412              |   |  | 16.2  | % |      |   | 88,846         |  |   | 86,112             |  |   | 2,734  |   |  | 3.2  | %
|                                |  |                                     |         |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |      |  
|Total                           |  | $                                   | 384,319 |      | $                                  | 375,106        |  | $ | 9,213              |   |  | 2.5   | % |      | $ | 1,141,705      |  | $ | 1,110,272          |  | $ | 31,433 |   |  | 2.8  | %
|                                |  |                                     |         |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |      |  

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



|                                |  |                                    |   |  |                                   |   |  |       |   |  |       |  
|------------------------------- |  | ---------------------------------- | - |  | --------------------------------- | - |  | ----- | - |  | ----- | -
|                                |  | For the Three MonthsEnded June 30, |   |  | For the Nine MonthsEnded June 30, |  
|                                |  | 2007                               |   |  | 2006                              |   |  | 2007  |   |  | 2006  |  
|Gaming                          |  | 83.0                               | % |  | 83.3                              | % |  | 83.1  | % |  | 82.7  | %
|Food and beverage               |  | 5.9                                | % |  | 6.0                               | % |  | 6.0   | % |  | 6.2   | %
|Hotel                           |  | 2.9                                | % |  | 3.4                               | % |  | 3.1   | % |  | 3.3   | %
|Retail, entertainment and other |  | 8.2                                | % |  | 7.3                               | % |  | 7.8   | % |  | 7.8   | %
|                                |  |                                    |   |  |                                   |   |  |       |   |  |       |  
|Total                           |  | 100.0                              | % |  | 100.0                             | % |  | 100.0 | % |  | 100.0 | %
|                                |  |                                    |   |  |                                   |   |  |       |   |  |       |  

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



|                                                     |  |                                     |       |   |                                    |   |       |          |  |   |                    |   |  |      |   |  |      |       |   |          |   |       |                    |  |   |      |   |  |      |  
|---------------------------------------------------- |  | ----------------------------------- | ----- | - | ---------------------------------- | - | ----- | -------- |  | - | ------------------ | - |  | ---- | - |  | ---- | ----- | - | -------- | - | ----- | ------------------ |  | - | ---- | - |  | ---- | -
|                                                     |  | For the Three Months Ended June 30, |       |   | For the Nine Months Ended June 30, |  
|                                                     |  | 2007                                |       |   | 2006                               |   |       | Variance |  |   | PercentageVariance |   |  | 2007 |   |  | 2006 |       |   | Variance |   |       | PercentageVariance | 
|Slot handle.                                         |  | $                                   | 2,585 |   |                                    | $ | 2,649 |          |  | $ | (64                | ) |  | -2.4 | % |  | $    | 7,777 |   |          | $ | 7,701 |                    |  | $ | 76   |   |  | 1.0  | %
|Gross slot revenues                                  |  | $                                   | 223   |   |                                    | $ | 228   |          |  | $ | (5                 | ) |  | -2.2 | % |  | $    | 672   |   |          | $ | 661   |                    |  | $ | 11   |   |  | 1.7  | %
|Net slot revenues                                    |  | $                                   | 215   |   |                                    | $ | 220   |          |  | $ | (5                 | ) |  | -2.3 | % |  | $    | 649   |   |          | $ | 640   |                    |  | $ | 9    |   |  | 1.4  | %
|Weighted average number of slot machines (in units). |  |                                     | 5,939 |   |                                    |   | 6,201 |          |  |   | (262               | ) |  | -4.2 | % |  |      | 6,076 |   |          |   | 6,202 |                    |  |   | (126 | ) |  | -2.0 | %
|Gross slot hold percentage                           |  |                                     | 8.6   | % |                                    |   | 8.6   | %        |  |   |                   |   |  |     |   |  |      | 8.6   | % |          |   | 8.6   | %                  |  |   |     |   |  |     |  
|Gross slot win per unit per day (in dollars)         |  | $                                   | 413   |   |                                    | $ | 404   |          |  | $ | 9                  |   |  | 2.2  | % |  | $    | 405   |   |          | $ | 390   |                    |  | $ | 15   |   |  | 3.8  | %
|Table games drop                                     |  | $                                   | 611   |   |                                    | $ | 590   |          |  | $ | 21                 |   |  | 3.6  | % |  | $    | 1,820 |   |          | $ | 1,717 |                    |  | $ | 103  |   |  | 6.0  | %
|Table games revenues                                 |  | $                                   | 101   |   |                                    | $ | 90    |          |  | $ | 11                 |   |  | 12.2 | % |  | $    | 292   |   |          | $ | 270   |                    |  | $ | 22   |   |  | 8.1  | %
|Weighted average number of table games (in units)    |  |                                     | 278   |   |                                    |   | 299   |          |  |   | (21                | ) |  | -7.0 | % |  |      | 296   |   |          |   | 299   |                    |  |   | (3   | ) |  | -1.0 | %
|Table games hold percentage (1)                      |  |                                     | 16.5  | % |                                    |   | 15.2  | %        |  |   | 1.3                | % |  | 8.6  | % |  |      | 16.0  | % |          |   | 15.7  | %                  |  |   | 0.3  | % |  | 1.9  | %
|Table games revenue per unit per day (in dollars)    |  | $                                   | 3,990 |   |                                    | $ | 3,308 |          |  | $ | 682                |   |  | 20.6 | % |  | $    | 3,609 |   |          | $ | 3,311 |                    |  | $ | 298  |   |  | 9.0  | %

---

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



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##### Table of Contents

Gaming revenues for the three months and nine months ended June 30, 2007 compared to the same
periods in the prior year increased primarily due to continued growth in table games revenues. The increase in table games revenues for the three months and nine months ended June 30, 2007 was principally attributable to the strengthened
awareness of the Mohegan Sun brand in the northeastern United States gaming market due to enhancements in our targeted direct marketing programs, including successful marketing efforts towards our high limit table games players with the introduction
of new private and semi-private gaming space as discussed above under Summary Operating Results. The increase in table games revenues for the three months ended June 30, 2007 was partially offset by a decrease in net slot
revenues due to lower than expected slot handle from patrons residing in New York, particularly Westchester, Bronx and Queens counties, and Rhode Island as a result of the recently expanded VLT facilities in those regions and a reduction in slot
machines at the Casino of the Earth due to the construction of Sunrise Square. The State of Connecticut reported slot revenues of $425.8 million and $435.4 million for the three months ended June 30, 2007 and 2006, respectively, and
$1.26 billion for the nine months ended June 30, 2007 and 2006, representing a decrease of 2.2% and an increase of 0.4% in the Connecticut market for the three months and nine months ended June 30, 2007, respectively. However, Mohegan
Sun increased its market share to 52.5% and 53.3% for the three months and nine months ended June 30, 2007, respectively, from 52.3% and 52.6% for the same periods in the prior year, respectively.

Food and beverage revenues for the three months and nine months ended June 30, 2007 compared to food and beverage revenues for the same periods in
the prior year were stable. The average price per meal was $13.57 and $13.24 for the three months ended June 30, 2007 and 2006, respectively, and $13.86 and $13.11 for the nine months ended June 30, 2007 and 2006, respectively. The
increase in average price per meal was offset by a decrease in the number of food covers of 2.7% and 5.3% for the three months and nine months ended June 30, 2007, respectively, compared to the same periods in the prior year due to a shift in
patron visitation from Authority-owned outlets to third party outlets at Mohegan Sun.

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



|                                    |  |                                     |         |   |                                    |   |         |          |  |   |                    |   |  |       |   |  |      |         |   |          |   |         |                    |  |   |        |   |  |      |  
|----------------------------------- |  | ----------------------------------- | ------- | - | ---------------------------------- | - | ------- | -------- |  | - | ------------------ | - |  | ----- | - |  | ---- | ------- | - | -------- | - | ------- | ------------------ |  | - | ------ | - |  | ---- | -
|                                    |  | For the Three Months Ended June 30, |         |   | For the Nine Months Ended June 30, |  
|                                    |  | 2007                                |         |   | 2006                               |   |         | Variance |  |   | PercentageVariance |   |  | 2007  |   |  | 2006 |         |   | Variance |   |         | PercentageVariance | 
|Rooms occupied                      |  |                                     | 100,918 |   |                                    |   | 101,751 |          |  |   | (833               | ) |  | -0.8  | % |  |      | 294,058 |   |          |   | 296,082 |                    |  |   | (2,024 | ) |  | -0.7 | %
|Average daily room rate (ADR)       |  | $                                   | 104     |   |                                    | $ | 118     |          |  | $ | (14                | ) |  | -11.9 | % |  | $    | 114     |   |          | $ | 118     |                    |  | $ | (4     | ) |  | -3.4 | %
|Occupancy rate                      |  |                                     | 94.4    | % |                                    |   | 95.1    | %        |  |   | -0.7               | % |  | -0.7  | % |  |      | 91.7    | % |          |   | 92.2    | %                  |  |   | -0.5   | % |  | -0.5 | %
|Revenue per available room (REVPAR) |  | $                                   | 98      |   |                                    | $ | 112     |          |  | $ | (14                | ) |  | -12.5 | % |  | $    | 104     |   |          | $ | 109     |                    |  | $ | (5     | ) |  | -4.6 | %

Hotel revenues for the three months and nine months ended June 30, 2007 compared to the same
periods in the prior year decreased primarily as a result of a decrease in ADR. The decrease in ADR is the result of a reduction in room rates offered to casino hotel guests designed to increase gaming and other revenues. The decrease in hotel
revenues was also partially due to a decrease in hotel occupancy as a result of rooms being out of service due to the $10.0 million hotel room renovation program, which began in January 2007 and was completed in June 2007.

Retail, entertainment and other revenues for the three months ended June 30, 2007 compared to the same period in the prior year increased partially
as a result of a $2.6 million, or 29.4%, increase in entertainment revenues due to a significant increase in the number of shows at the Mohegan Sun Arena, and a 31.8% increase in Arena ticket sales. The increase in retail, entertainment and other
revenues is also due to a $0.5 million, or 23.4%, increase in rental revenues from tenants in the Shops at Mohegan Sun due to higher collection of rent from new tenants, particularly the Coach outlet, and a $0.7 million, or 25.8%, increase in other
revenues from miscellaneous amenities available to our patrons at Mohegan Sun.



42



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##### Table of Contents

Retail, entertainment and other revenues for the nine months ended June 30, 2007 compared to the
same period in the prior year increased as a result of a $0.9 million, or 15.0%, increase in rental revenues from tenants in the Shops at Mohegan Sun due to higher collection of rent from new tenants, particularly the Coach outlet. The increase in
retail, entertainment and other revenues is also due to a $0.8 million, or 4.5%, increase in gasoline revenues at the Mohegan Sun gasoline and convenience center related to free coupon promotional programs during the period, which do not have an
effect on net revenues, and a $1.1 million, or 12.7%, increase in other revenues from miscellaneous amenities available to our patrons at Mohegan Sun.

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, |               
|                                |  | 2007                                |        | 2006 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2007  |   | 2006 |   | DollarVariance |  |   | PercentageVariance | 
|Food and beverage               |  | $                                   | 10,879 |      | $                                  | 12,780         |  | $ | (1,901             | ) |  | -14.9 | % |      | $ | 32,077         |  | $ | 34,254             |  | $ | (2,177 | ) |  | -6.4 | %
|Hotel                           |  |                                     | 3,801  |      |                                    | 4,122          |  |   | (321               | ) |  | -7.8  | % |      |   | 12,018         |  |   | 12,582             |  |   | (564   | ) |  | -4.5 | %
|Retail, entertainment and other |  |                                     | 16,692 |      |                                    | 13,590         |  |   | 3,102              |   |  | 22.8  | % |      |   | 46,538         |  |   | 44,463             |  |   | 2,075  |   |  | 4.7  | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |      |  
|Total                           |  | $                                   | 31,372 |      | $                                  | 30,492         |  | $ | 880                |   |  | 2.9   | % |      | $ | 90,633         |  | $ | 91,299             |  | $ | (666   | ) |  | -0.7 | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |      |  

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, |               
|                                |  | 2007                                |        | 2006 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2007  |   | 2006 |   | DollarVariance |  |   | PercentageVariance | 
|Food and beverage               |  | $                                   | 11,574 |      | $                                  | 13,000         |  | $ | (1,426             | ) |  | -11.0 | % |      | $ | 33,221         |  | $ | 35,814             |  | $ | (2,593 | ) |  | -7.2 | %
|Hotel                           |  |                                     | 2,211  |      |                                    | 2,321          |  |   | (110               | ) |  | -4.7  | % |      |   | 6,353          |  |   | 6,542              |  |   | (189   | ) |  | -2.9 | %
|Retail, entertainment and other |  |                                     | 13,355 |      |                                    | 11,087         |  |   | 2,268              |   |  | 20.5  | % |      |   | 37,853         |  |   | 35,800             |  |   | 2,053  |   |  | 5.7  | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |      |  
|Total                           |  | $                                   | 27,140 |      | $                                  | 26,408         |  | $ | 732                |   |  | 2.8   | % |      | $ | 77,427         |  | $ | 78,156             |  | $ | (729   | ) |  | -0.9 | %
|                                |  |                                     |        |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |      |  

Promotional allowances increased for the three months ended June 30, 2007 compared to the
same period in the prior year due primarily to an increase in promotional programs targeting customers in the vicinity of the recently expanded slot facilities in New York and Rhode Island, as discussed above under Gross Revenues,
partially offset by a decrease in food and beverage complimentaries resulting from an increase in utilization by casino patrons of Mohegan Sun Players Club points and promotional coupons at the propertys third party restaurants during
the period. Promotional allowances decreased for the nine months ended June 30, 2007 compared to the same period in the prior year due primarily to the net shift in the utilization of patron complimentaries from Authority-owned outlets to third
party outlets.



43



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##### Table of Contents

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, |               
|                                        |  | 2007                                |         | 2006 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2007  |   | 2006 |   | DollarVariance |  |   | PercentageVariance | 
|Gaming.                                 |  | $                                   | 178,302 |      | $                                  | 172,432        |  | $ | 5,870              |   |  | 3.4   | % |      | $ | 532,777        |  | $ | 516,200            |  | $ | 16,577 |   |  | 3.2   | %
|Food and beverage                       |  |                                     | 11,444  |      |                                    | 11,121         |  |   | 323                |   |  | 2.9   | % |      |   | 34,423         |  |   | 35,357             |  |   | (934   | ) |  | -2.6  | %
|Hotel                                   |  |                                     | 4,504   |      |                                    | 4,886          |  |   | (382               | ) |  | -7.8  | % |      |   | 12,585         |  |   | 12,788             |  |   | (203   | ) |  | -1.6  | %
|Retail, entertainment and other         |  |                                     | 10,976  |      |                                    | 8,503          |  |   | 2,473              |   |  | 29.1  | % |      |   | 31,857         |  |   | 28,611             |  |   | 3,246  |   |  | 11.3  | %
|Advertising, general and administrative |  |                                     | 54,666  |      |                                    | 49,662         |  |   | 5,004              |   |  | 10.1  | % |      |   | 158,478        |  |   | 143,417            |  |   | 15,061 |   |  | 10.5  | %
|Pre-opening costs and expenses          |  |                                     | 84      |      |                                    |               |  |   | 84                 |   |  | 100.0 | % |      |   | 392            |  |   |                   |  |   | 392    |   |  | 100.0 | %
|Depreciation and amortization           |  |                                     | 20,610  |      |                                    | 21,732         |  |   | (1,122             | ) |  | -5.2  | % |      |   | 61,999         |  |   | 63,766             |  |   | (1,767 | ) |  | -2.8  | %
|                                        |  |                                     |         |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |       |  
|Total                                   |  | $                                   | 280,586 |      | $                                  | 268,336        |  | $ | 12,250             |   |  | 4.6   | % |      | $ | 832,511        |  | $ | 800,139            |  | $ | 32,372 |   |  | 4.0   | %
|                                        |  |                                     |         |      |                                    |                |  |   |                    |   |  |       |   |      |   |                |  |   |                    |  |   |        |   |  |       |  

Gaming costs and expenses increased for the three months and nine months ended June 30, 2007
compared to the same periods in the prior year primarily as a result of higher redemption costs due to an increase in utilization of Players Club points and promotional coupons at third party outlets; increased direct labor and medical
insurance costs; and higher casino marketing, advertising and promotional expenses. The increase in gaming costs and expenses for the three months ended June 30, 2007 was partially offset by lower slot win contribution to the State of
Connecticut commensurate with the decline in gross slot revenues for the period. The increase in gaming costs and expenses for the nine months ended June 30, 2007 was also due to higher slot win contribution to the State of Connecticut
commensurate with the growth in gross slot revenues during the period, partially offset by a lower amount of costs being allocated to gaming costs and expenses for non-gaming complimentaries redeemed by casino patrons at Authority-owned outlets.
Slot win contribution payments totaled $55.9 million and $168.0 million for the three months and nine months ended June 30, 2007, respectively, and $56.9 million and $165.2 million for the three months and nine months ended June 30, 2006,
respectively. As a result of the cost increases and the decrease in slot revenues mentioned above, gaming costs and expenses as a percentage of gaming revenues increased to 55.9% from 55.2% for the three months ended June 30, 2006. Gaming costs
and expenses as a percentage of gaming revenues was 56.2% for the nine months ended June 30, 2007 and 2006.

Food and beverage costs
and expenses increased for the three months ended June 30, 2007 compared to the same period in the prior year primarily as a result of higher direct labor and medical insurance costs. Food and beverage costs and expenses decreased for the nine
months ended June 30, 2007 compared to the same period in the prior year primarily as a result of a decrease in cost of goods sold and other operating costs, partially offset by higher medical insurance costs and a lower amount of food and
beverage complimentaries resulting in a decreased amount of food and beverage costs being allocated to gaming costs and expenses.

Hotel
costs and expenses decreased for the three months and nine months ended June 30, 2007 compared to the same periods in the prior year. The decrease is attributable primarily to a $1.0 million charge in the prior year for inventory obsolescence
which did not reoccur in the same periods for 2007 and a lower amount of hotel complimentaries, resulting in a lower amount of hotel costs and expenses being allocated to gaming costs and expenses which was partially offset by higher direct labor
and medical insurance costs.

Retail, entertainment and other costs and expenses increased for the three and nine months ended
June 30, 2007 compared to the same periods in the prior year due to a substantial increase in direct entertainment costs



44



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##### Table of Contents

related to the higher number of shows at the Arena as discussed above. The increase was also a result of increased cost of goods sold for the gas coupon
promotion, partially offset by increased retail and entertainment complimentaries, resulting in a higher amount of retail, entertainment and other costs and expenses being allocated to gaming costs and expenses.

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

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

Mohegan Sun at 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, |               
|                  |  | 2007 (1)                            |        | 2006 |                                    | DollarVariance |  | PercentageVariance |        |  | 2007 (2) |   | 2006 |   | DollarVariance |  | PercentageVariance |       
|Gaming            |  | $                                   | 52,173 |      | $                                  | 7,729          |  | $                  | 44,444 |  | 575.0    | % |      | $ | 125,496        |  | $                  | 19,859 |  | $ | 105,637 |  | 531.9 | %
|Food and beverage |  |                                     | 2,142  |      |                                    | 658            |  |                    | 1,484  |  | 225.5    | % |      |   | 4,763          |  |                    | 1,543  |  |   | 3,220   |  | 208.7 | %
|Retail and other  |  |                                     | 1,004  |      |                                    | 352            |  |                    | 652    |  | 185.2    | % |      |   | 2,336          |  |                    | 818    |  |   | 1,518   |  | 185.6 | %
|                  |  |                                     |        |      |                                    |                |  |                    |        |  |          |   |      |   |                |  |                    |        |  |   |         |  |       |  
|Total             |  | $                                   | 55,319 |      | $                                  | 8,739          |  | $                  | 46,580 |  | 533.0    | % |      | $ | 132,595        |  | $                  | 22,220 |  | $ | 110,375 |  | 496.7 | %
|                  |  |                                     |        |      |                                    |                |  |                    |        |  |          |   |      |   |                |  |                    |        |  |   |         |  |       |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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 at Mohegan Sun at Pocono Downs:



|                  |  |                                    |   |  |                                   |   |  |          |   |  |       |  
|----------------- |  | ---------------------------------- | - |  | --------------------------------- | - |  | -------- | - |  | ----- | -
|                  |  | For the Three MonthsEnded June 30, |   |  | For the Nine MonthsEnded June 30, |  
|                  |  | 2007 (1)                           |   |  | 2006                              |   |  | 2007 (2) |   |  | 2006  |  
|Gaming            |  | 94.3                               | % |  | 88.5                              | % |  | 94.6     | % |  | 89.4  | %
|Food and beverage |  | 3.9                                | % |  | 7.5                               | % |  | 3.6      | % |  | 6.9   | %
|Retail and other  |  | 1.8                                | % |  | 4.0                               | % |  | 1.8      | % |  | 3.7   | %
|                  |  |                                    |   |  |                                   |   |  |          |   |  |       |  
|Total             |  | 100.0                              | % |  | 100.0                             | % |  | 100.0    | % |  | 100.0 | %
|                  |  |                                    |   |  |                                   |   |  |          |   |  |       |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------



45



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##### Table of Contents

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



|                                                    |  |                                     |         |   |                                    |   |          |  |   |                    |   |  |          |   |  |      |           |          |  |   |                    |  |   |           |   |  |       |  
|--------------------------------------------------- |  | ----------------------------------- | ------- | - | ---------------------------------- | - | -------- |  | - | ------------------ | - |  | -------- | - |  | ---- | --------- | -------- |  | - | ------------------ |  | - | --------- | - |  | ----- | -
|                                                    |  | For the Three Months Ended June 30, |         |   | For the Nine Months Ended June 30, |  
|                                                    |  | 2007 (1)                            |         |   | 2006                               |   | Variance |  |   | PercentageVariance |   |  | 2007 (2) |   |  | 2006 |           | Variance |  |   | PercentageVariance | 
|Slot handle                                         |  | $                                   | 486,467 |   |                                    | $ |         |  | $ | 486,467            |   |  | 100.0    | % |  | $    | 1,122,577 |          |  | $ |                   |  | $ | 1,122,577 |   |  | 100.0 | %
|Gross slot revenues                                 |  | $                                   | 44,836  |   |                                    | $ |         |  | $ | 44,836             |   |  | 100.0    | % |  | $    | 107,146   |          |  | $ |                   |  | $ | 107,146   |   |  | 100.0 | %
|Net slot revenues                                   |  | $                                   | 44,671  |   |                                    | $ |         |  | $ | 44,671             |   |  | 100.0    | % |  | $    | 106,153   |          |  | $ |                   |  | $ | 106,153   |   |  | 100.0 | %
|Weighted average number of slot machines (in units) |  |                                     | 1,143   |   |                                    |   |         |  |   | 1,143              |   |  | 100.0    | % |  |      | 1,119     |          |  |   |                   |  |   | 1,119     |   |  | 100.0 | %
|Gross slot hold percentage                          |  |                                     | 9.2     | % |                                    |   |         |  |   | 9.2                | % |  | 100.0    | % |  |      | 9.5       | %        |  |   |                   |  |   | 9.5       | % |  | 100.0 | %
|Gross slot win per unit per day (in dollars)        |  | $                                   | 431     |   |                                    | $ |         |  | $ | 431                |   |  | 100.0    | % |  | $    | 418       |          |  | $ |                   |  | $ | 418       |   |  | 100.0 | %

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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 and nine months ended June 30, 2007 compared to the same periods in the prior year increased as a result of the
addition of $44.7 million and $106.2 million in net slot revenues, respectively, due to the opening of the Phase I slot facility. The increase in food and beverage revenues and retail and other revenues for the three months and nine months ended
June 30, 2007 compared to the same periods in the prior year is also attributable to the opening of the Phase I slot operation, which resulted in increased patron visitation to food and beverage and retail outlets at the facility.

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, |               
|                  |  | 2007 (1)                            |       | 2006 |                                    | DollarVariance |  | PercentageVariance |       |  | 2007 (2) |   | 2006 |   | DollarVariance |  | PercentageVariance |  
|Food and beverage |  | $                                   | 809   |      | $                                  |               |  | $                  | 809   |  | 100.0    | % |      | $ | 1,333          |  | $                  |  |  | $ | 1,333 |  | 100.0 | %
|Retail            |  |                                     | 340   |      |                                    |               |  |                    | 340   |  | 100.0    | % |      |   | 610            |  |                    |  |  |   | 610   |  | 100.0 | %
|                  |  |                                     |       |      |                                    |                |  |                    |       |  |          |   |      |   |                |  |                    |   |  |   |       |  |       |  
|Total             |  | $                                   | 1,149 |      | $                                  |               |  | $                  | 1,149 |  | 100.0    | % |      | $ | 1,943          |  | $                  |  |  | $ | 1,943 |  | 100.0 | %
|                  |  |                                     |       |      |                                    |                |  |                    |       |  |          |   |      |   |                |  |                    |   |  |   |       |  |       |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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, |               
|                  |  | 2007 (1)                            |       | 2006 |                                    | DollarVariance |  | PercentageVariance |       |  | 2007 (2) |   | 2006 |   | DollarVariance |  | PercentageVariance |  
|Food and beverage |  | $                                   | 893   |      | $                                  |               |  | $                  | 893   |  | 100.0    | % |      | $ | 1,542          |  | $                  |  |  | $ | 1,542 |  | 100.0 | %
|Retail            |  |                                     | 302   |      |                                    |               |  |                    | 302   |  | 100.0    | % |      |   | 613            |  |                    |  |  |   | 613   |  | 100.0 | %
|                  |  |                                     |       |      |                                    |                |  |                    |       |  |          |   |      |   |                |  |                    |   |  |   |       |  |       |  
|Total             |  | $                                   | 1,195 |      | $                                  |               |  | $                  | 1,195 |  | 100.0    | % |      | $ | 2,155          |  | $                  |  |  | $ | 2,155 |  | 100.0 | %
|                  |  |                                     |       |      |                                    |                |  |                    |       |  |          |   |      |   |                |  |                    |   |  |   |       |  |       |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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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##### Table of Contents

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

Operating Costs and Expenses

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



|                                        |  |                                     |        |      |                                    |                |  |   |                    |   |  |          |   |      |   |                |  |                    |        |  |   |        |  |       |  
|--------------------------------------- |  | ----------------------------------- | ------ | ---- | ---------------------------------- | -------------- |  | - | ------------------ | - |  | -------- | - | ---- | - | -------------- |  | ------------------ | ------ |  | - | ------ |  | ----- | -
|                                        |  | For the Three Months Ended June 30, |        |      | For the Nine Months Ended June 30, |               
|                                        |  | 2007 (1)                            |        | 2006 |                                    | DollarVariance |  |   | PercentageVariance |   |  | 2007 (2) |   | 2006 |   | DollarVariance |  | PercentageVariance |       
|Gaming                                  |  | $                                   | 38,099 |      | $                                  | 5,742          |  | $ | 32,357             |   |  | 563.5    | % |      | $ | 92,403         |  | $                  | 14,279 |  | $ | 78,124 |  | 547.1 | %
|Food and beverage                       |  |                                     | 1,363  |      |                                    | 652            |  |   | 711                |   |  | 109.0    | % |      |   | 3,963          |  |                    | 1,626  |  |   | 2,337  |  | 143.7 | %
|Retail and other                        |  |                                     | 319    |      |                                    | 207            |  |   | 112                |   |  | 54.1     | % |      |   | 854            |  |                    | 522    |  |   | 332    |  | 63.6  | %
|Advertising, general and administrative |  |                                     | 4,735  |      |                                    | 2,018          |  |   | 2,717              |   |  | 134.6    | % |      |   | 15,270         |  |                    | 6,316  |  |   | 8,954  |  | 141.8 | %
|Pre-opening costs and expenses          |  |                                     |       |      |                                    | 1,361          |  |   | (1,361             | ) |  | -100.0   | % |      |   | 3,437          |  |                    | 3,409  |  |   | 28     |  | 0.8   | %
|Depreciation and amortization.          |  |                                     | 3,111  |      |                                    | 654            |  |   | 2,457              |   |  | 375.7    | % |      |   | 7,793          |  |                    | 1,851  |  |   | 5,942  |  | 321.0 | %
|                                        |  |                                     |        |      |                                    |                |  |   |                    |   |  |          |   |      |   |                |  |                    |        |  |   |        |  |       |  
|Total.                                  |  | $                                   | 47,627 |      | $                                  | 10,634         |  | $ | 36,993             |   |  | 347.9    | % |      | $ | 123,720        |  | $                  | 28,003 |  | $ | 95,717 |  | 341.8 | %
|                                        |  |                                     |        |      |                                    |                |  |   |                    |   |  |          |   |      |   |                |  |                    |        |  |   |        |  |       |  

---

|(1) | Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs for the three months ended June 30, 2007.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(2) | 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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

Operating costs and expenses increased for the three months and nine months ended June 30, 2007 compared to the same periods in the prior year
primarily as a result of higher operating costs and expenses necessary to support the slot operations, including slot machine tax assessment payments to the PGCB. The increase for the nine months ended June 30, 2007 is also due to the $3.5
million charge recorded in advertising, general and administrative expenses in connection with the litigation settlement, as described above under Summary Operating Results. Slot machine tax assessment payments to the PGCB totaled
$26.3 million and $63.1 million for the three months and nine months ended June 30, 2007, respectively. The increase in depreciation and amortization expenses for the three months and nine months ended June 30, 2007 was principally due to
the commencement of depreciation on the new Phase I facility and related slot machines and equipment.



47



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##### Table of Contents

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, |  
|                                                          |  | 2007                                |         |   | 2006                               |   |         | DollarVariance |  |   | PercentageVariance |   |  | 2007  |   |  | 2006 |         |   | DollarVariance |   |         | PercentageVariance | 
|Corporate expenses:                                       |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |      |         |   |                |   |         |                    |  |   |        |   |  |       |  
|Depreciation                                              |  | $                                   | 19      |   |                                    | $ | 19      |                |  | $ |                   |   |  |      |   |  | $    | 59      |   |                | $ | 57      |                    |  | $ | 2      |   |  | 3.5   | %
|Corporate expenses                                        |  |                                     | 3,222   |   |                                    |   | 1,352   |                |  |   | 1,870              |   |  | 138.3 | % |  |      | 8,406   |   |                |   | 7,418   |                    |  |   | 988    |   |  | 13.3  | %
|                                                          |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |      |         |   |                |   |         |                    |  |   |        |   |  |       |  
|Total corporate expenses                                  |  | $                                   | 3,241   |   |                                    | $ | 1,371   |                |  | $ | 1,870              |   |  | 136.4 | % |  | $    | 8,465   |   |                | $ | 7,475   |                    |  | $ | 990    |   |  | 13.2  | %
|                                                          |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |      |         |   |                |   |         |                    |  |   |        |   |  |       |  
|Other income (expense):                                   |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |      |         |   |                |   |         |                    |  |   |        |   |  |       |  
|Accretion of discount to the relinquishment liability (1) |  | $                                   | (7,449  | ) |                                    | $ | (7,677  | )              |  | $ | 228                |   |  | -3.0  | % |  | $    | (22,346 | ) |                | $ | (23,030 | )                  |  | $ | 684    |   |  | -3.0  | %
|Interest income (2)                                       |  |                                     | 1,148   |   |                                    |   | 652     |                |  |   | 496                |   |  | 76.1  | % |  |      | 2,688   |   |                |   | 1,466   |                    |  |   | 1,222  |   |  | 83.4  | %
|Interest expense, net of capitalized interest             |  |                                     | (23,840 | ) |                                    |   | (22,664 | )              |  |   | (1,176             | ) |  | 5.2   | % |  |      | (71,564 | ) |                |   | (68,306 | )                  |  |   | (3,258 | ) |  | 4.8   | %
|Write-off of debt issuance costs (3)                      |  |                                     |        |   |                                    |   |        |                |  |   |                   |   |  |      |   |  |      | (71     | ) |                |   |        |                    |  |   | (71    | ) |  | 100.0 | %
|Other expense, net                                        |  |                                     | (96     | ) |                                    |   | (85     | )              |  |   | (11                | ) |  | 12.9  | % |  |      | (458    | ) |                |   | (77     | )                  |  |   | (381   | ) |  | 494.8 | %
|                                                          |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |      |         |   |                |   |         |                    |  |   |        |   |  |       |  
|Total other expense, net                                  |  | $                                   | (30,237 | ) |                                    | $ | (29,774 | )              |  | $ | (463               | ) |  | 1.6   | % |  | $    | (91,751 | ) |                | $ | (89,947 | )                  |  | $ | (1,804 | ) |  | 2.0   | %
|                                                          |  |                                     |         |   |                                    |   |         |                |  |   |                    |   |  |       |   |  |      |         |   |                |   |         |                    |  |   |        |   |  |       |  

---

|(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 Cowlitz Indian Tribe related to the Cowlitz Project, as more fully described in Note 15 to our consolidated
financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2006.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

Corporate expenses increased for the three months and nine months ended June 30, 2007 compared to the same periods in the prior year primarily as a
result of increased labor, professional costs related to diversification efforts, as well as increased provisions related to allowances on the future collection of reimbursable development costs and expenses pertaining to the Cowlitz and Menominee
Projects (refer to Critical Accounting Policies and EstimatesAllowance for Doubtful Accounts).

Interest expense,
net of capitalized interest, increased for the three months and nine months ended June 30, 2007 compared to the same periods in the prior year primarily due to increases in the weighted average outstanding debt for both periods. The weighted
average outstanding debt was $1.30 billion for the three months and nine months ended June 30, 2007, and $1.25 billion for the three months and nine months ended June 30, 2006. The increase in weighted average outstanding debt was the
result of additional borrowing for the payment of the $50.0 million slot license fee at Pocono Downs and capital expenditures at Mohegan Sun and Pocono Downs, all described below under Liquidity, Capital Resources and Capital
SpendingCapital Expenditures. The weighted average interest rate was 7.4% for the three months and nine months ended June 30, 2007 and 2006.



48



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Seasonality

The gaming industry in Connecticut is seasonal in nature, with the heaviest gaming activity often occurring at Mohegan Sun between May and August. Additionally, live harness racing activity at Pocono Downs is seasonal, with the racing
season commencing on March 31st and ending in November. The overall gaming industry in Pennsylvania is also expected to be seasonal in nature. Accordingly, the results of operations for the three months and nine months ended June 30, 2007
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, 2007 |         
|                                                |  | 2007                                    |          |   | 2006 |   |         | DollarVariance |  |   | PercentageVariance |  
|Net cash flows provided by operating activities |  | $                                       | 223,363  |   |      | $ | 191,162 |                |  | $ | 32,201             |   |  | 16.8  | %
|Net cash flows used in investing activities     |  |                                         | (148,334 | ) |      |   | (82,218 | )              |  |   | (66,116            | ) |  | 80.4  | %
|Net cash flows used in financing activities     |  |                                         | (32,742  | ) |      |   | (96,749 | )              |  |   | 64,007             |   |  | -66.2 | %
|                                                |  |                                         |          |   |      |   |         |                |  |   |                    |   |  |       |  
|Net increase in cash and cash equivalents       |  | $                                       | 42,287   |   |      | $ | 12,195  |                |  | $ | 30,092             |   |  | 246.8 | %
|                                                |  |                                         |          |   |      |   |         |                |  |   |                    |   |  |       |  

As of June 30, 2007 and September 30, 2006, we held cash and cash equivalents of $117.5
million and $75.2 million, respectively. As a result of the cash-based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and amortization
and relinquishment liability reassessments. The increase in cash provided by operating activities for the nine months ended June 30, 2007 is attributable primarily to the increase in operating income after adjustments for non-cash items and
lower working capital requirements as compared to the prior year.

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



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



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



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



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



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

In addition to cash generated by operating activities, we have relied on external sources of liquidity to meet our investing requirements. The increase in cash used in investing activities for the nine months ended
June 30,



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2007 is attributable primarily to the payment of the one-time slot machine license fee of $50.0 million to the PGCB, as discussed above under
Overview-Mohegan Sun at Pocono Downs; the acquisition of the Menominee Project development rights and other related assets for $6.4 million, as discussed above under Overview-Other Diversification Projects-Menominee
Project; the acquisition of substantially all of the assets of Pautipaug Country Club Inc. for $4.7 million in total costs, as discussed above under Overview-Other Diversification Projects-Mohegan Golf LLC; and a $6.1 million
increase in capital expenditures due to the construction projects described below under Capital Expenditures-Capital Expenditures Incurred. The decrease in cash used in financing activities for the nine months ended June 30,
2007 is attributable primarily to a $74.7 million increase in total net borrowings to facilitate the payment of the $50.0 million slot license fee at Pocono Downs and capital expenditures at Mohegan Sun and Pocono Downs, partially offset by $6.8
million in debt issuance costs paid for the $1.0 billion bank credit facility, discussed below under External Sources of Liquidity-New Bank Credit Facility.

External Sources of Liquidity

Notes. We financed the purchase of the Pocono Downs entities and much of the costs of
construction of Mohegan Sun and Pocono Downs with the net proceeds raised from the issuance of notes and borrowings under our bank credit facilities. As of June 30, 2007, we had $16.3 million outstanding in 83/8% senior subordinated notes due July 1, 2011 and first callable July 1, 2006, or the 2001 senior subordinated notes; $250.0 million outstanding in 8% senior
subordinated notes due April 1, 2012 and first callable April 1, 2007, or the 2002 senior subordinated notes; $330.0 million outstanding in 63/8% senior subordinated notes due July 15, 2009, or the 2003 senior subordinated notes; $225.0 million outstanding in 71/8% senior
subordinated notes due August 15, 2014 and first callable on August 15, 2009, or the 2004 senior subordinated notes; $250.0 million outstanding in 61/8% senior notes due February 15, 2013 and first callable February 15, 2009, or the 2005 senior notes; and $150.0 million outstanding in 67/8% senior subordinated notes due February 15, 2015 and first callable February 15, 2010, or the 2005 senior subordinated notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW and WTG are guarantors
of each of these notes, except for the 2001 senior subordinated notes, which are guaranteed solely by MBC. Refer to Note 5 to our condensed consolidated financial statements in this Form 10-Q for a further discussion of these notes.

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

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

New Bank Credit Facility. On March 9, 2007,
we entered into a new bank credit facility providing for up to $1.0 billion in borrowing capacity from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. The new bank
credit facility replaces our prior bank credit facility. The total commitment on the new facility may be increased to $1.25 billion at our option. The five-year senior secured revolving credit facility includes a $300.0 million term loan conversion
provision which is triggered upon the initial accumulation of $300.0 million in total borrowings on the new bank credit facility. The term loan requires principal payments in quarterly installments of $750,000 after the conversion date until the
maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. As of June 30, 2007, the amount under letters of credit totaled $659,000, of which no amount was drawn
(refer to Letters of Credit below). Inclusive of letters of credit, which reduce borrowing availability under the new bank credit facility, we had approximately $972.3 million of available borrowing



50



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under the new bank credit facility as of June 30, 2007 (without taking into account covenants under the line of credit described below).

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



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



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



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

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

At our option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month,
three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on our Total Leverage Ratio, as each term is defined in the new bank credit facility, at the time each loan is made. We also pay commitment fees
for the unused portion of the revolving loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base
rate advances is between 0.000% and 1.125%, and the Applicable Rate for Eurodollar rate advances is between 1.250% and 2.375%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of
Americas announced prime rate or the federal funds rate plus 0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly
in arrears. As of June 30, 2007, we had $27.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at June 30, 2007 were based on a one-month Eurodollar rate of 5.32% plus an Applicable
Rate of 1.25%. The Applicable Rate for commitment fees was 0.20% as of June 30, 2007.

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

Line of Credit. We have a $25.0 million revolving loan agreement with Bank of America, or the line of
credit. Each advance accrues interest on the basis of a one-month Eurodollar rate, plus the Applicable Margin determined on the basis of our Leverage Ratio, as each term is defined in the line of credit. Borrowings under the line of credit are our
uncollateralized obligations. The line of credit matures on March 31, 2008 and subjects us



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to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under the new bank credit facility. As of June 30,
2007, we had $19.7 million in loans outstanding under the line of credit, which were based on a one-month Eurodollar rate of 5.32% plus an Applicable Margin of 0.90%. As of June 30, 2007, we were in compliance with all covenant requirements in
the line of credit and had $5.3 million available for borrowing under the line of credit.

Letters of Credit. We maintain three
uncollateralized letters of credit to satisfy potential workers compensation liabilities, overdue pari-mutuel wagering tax liabilities of the Pocono Downs entities that may arise and overdue amounts for purses due to horsemen at Pocono Downs
that may arise. The letters of credit expire on August 31, 2007, January 25, 2008 and November 17, 2007, respectively, subject to renewals. As of June 30, 2007, no amounts were drawn on the letters of credit.

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

Immediately following the execution of the loan agreement, $10.0 million in loan proceeds were used by Salishan-Mohegan to
provide a partial repayment of its outstanding loan balance owed to Mohegan Ventures-NW. Another $2.6 million in loan proceeds were used to pay off a mortgage payable. As of June 30, 2007, Salishan-Mohegan had $8.5 million of available
borrowings under the Salishan Credit Facility. As of June 30, 2007, Salishan-Mohegan had $16.5 million in Eurodollar rate loans outstanding, which were based on a one-month Eurodollar rate of 5.32 % plus a spread of 2.25%. The rate for
commitment fees was 0.50% as of June 30, 2007.

Capital Expenditures

Capital Expenditures Incurred

Capital expenditures totaled $96.6 million for the nine months ended June 30, 2007, compared to $85.8 million for the nine months ended June 30, 2006. These capital expenditures were comprised of the following:



| |  |  | Capital expenditures at Mohegan Sun totaled $58.8 million and $36.9 million for the nine months ended June 30, 2007 and 2006, respectively. For the nine months
ended June 30, 2007, these expenditures included $23.2 million in maintenance capital expenditures (refer to Expected Future Capital Expenditures below), $19.4 million in costs related to the Project Horizon expansion and
$16.2 million in property renovation expenditures. For the nine months ended June 30, 2006, these expenditures were principally related to the purchase of new carpeting in the Casino of the Earth and Sky, customer relationship management
software and related hardware, slot machine replacements, information systems enhancements and upgrades and for other general maintenance of the Mohegan Sun facility.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Capital expenditures at Mohegan Sun at Pocono Downs totaled $37.8 million and $35.8 million for the nine months ended June 30, 2007 and 2006, respectively. For
the nine months ended June 30, 2007, these expenditures were comprised primarily of Pocono Downs construction expenditures of $36.2 million, including $468,000 in capitalized interest. For the nine months ended June 30, 2006,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | these expenditures were comprised primarily of construction costs for the renovation and expansion of the existing grandstand and infrastructure related
improvements for the Phase I facility, including $912,000 in capitalized interest.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Expected Future Capital Expenditures

Capital expenditures for fiscal year 2007 at Mohegan Sun, exclusive of the Project Horizon expansion described above under Overview-Mohegan
Sun-Project Horizon, are budgeted to be $75.0 million, which are expected to be comprised of the following:



| |  |  | Maintenance capital expenditures at Mohegan Sun are anticipated to be approximately $45.0 million for the purchase of information system security technology, server
replacements, surveillance technology improvements, slot machines and back up power improvements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Property renovation expenditures are expected to be approximately $30.0 million for 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 completed in February 2007; and for the renovation of all guest rooms in the Sky hotel completed in
June 2007.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We anticipate that we will spend approximately $45.0 million in fiscal year 2007 on Project Horizon.

Capital expenditures for Mohegan Sun at Pocono Downs are anticipated to be approximately $68.0 million for the 2007 fiscal year, comprised
primarily of the approximately $28.0 million of construction costs already incurred to complete the Phase I slot facility; $38.0 million to begin construction on Project Sunrise discussed above under Overview-Mohegan Sun at Pocono
Downs; and approximately $1.0 million for a small expansion of the current slot facility to add more slot machines and other amenities.

We anticipate the development of the Phase I facility at Mohegan Sun at Pocono Downs will cost approximately $72.0 million in total, excluding the $50.0 million one-time slot machine license fee, and we plan to spend approximately $180.0
million on the development of Project Sunrise at Mohegan Sun at Pocono Downs.

Sources of Funding for Capital Expenditures

We will rely primarily on cash generated from operations to finance maintenance capital expenditures at Mohegan Sun and Pocono Downs. We
plan to finance capital expenditures for Project Horizon at Mohegan Sun and for Project Sunrise at Pocono Downs through the new $1.0 billion revolving bank credit facility from a syndicate of financial institutions and commercial banks.



53



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Interest Expense

For the three months and nine months ended June 30, 2007 and 2006, 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, |  
|                                                                             |  | 2007                               |        |   | 2006                              |   |        | 2007 |  |   | 2006   |  
|Prior bank credit facility                                                   |  | $                                  |       |   |                                   | $ | 974    |      |  | $ | 2,755  |   |  | $ | 2,637  |  
|New bank credit facility                                                     |  |                                    | 1,323  |   |                                   |   |       |      |  |   | 1,747  |   |  |   |       |  
|1999 81/8% senior notes                                                      |  |                                    |       |   |                                   |   |       |      |  |   |       |   |  |   | 284    |  
|2005 61/8% senior notes                                                      |  |                                    | 3,828  |   |                                   |   | 3,828  |      |  |   | 11,484 |   |  |   | 11,527 |  
|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 |   |  |   | 11,979 |  
|2005 67/8% senior subordinated notes                                         |  |                                    | 2,578  |   |                                   |   | 2,578  |      |  |   | 7,734  |   |  |   | 7,763  |  
|WNBA note                                                                    |  |                                    | 69     |   |                                   |   | 82     |      |  |   | 231    |   |  |   | 248    |  
|Line of credit                                                               |  |                                    | 162    |   |                                   |   | 172    |      |  |   | 524    |   |  |   | 415    |  
|Salishan Credit Facility                                                     |  |                                    | 316    |   |                                   |   |       |      |  |   | 841    |   |  |   |       |  
|Amortization of net deferred gain on settlement of derivative instruments. . |  |                                    | 114    |   |                                   |   | 114    |      |  |   | 342    |   |  |   | 330    |  
|Amortization of debt issuance costs                                          |  |                                    | 1,101  |   |                                   |   | 755    |      |  |   | 2,737  |   |  |   | 2,230  |  
|Capitalized interest                                                         |  |                                    | (260   | ) |                                   |   | (448   | )    |  |   | (660   | ) |  |   | (912   | )
|                                                                             |  |                                    |        |   |                                   |   |        |      |  |   |        |   |  |   |        |  
|Total interest expense, net of capitalized interest                          |  | $                                  | 23,840 |   |                                   | $ | 22,664 |      |  | $ | 71,564 |   |  | $ | 68,306 |  
|                                                                             |  |                                    |        |   |                                   |   |        |      |  |   |        |   |  |   |        |  

Sufficiency of Resources

We believe that existing cash balances, financing arrangements and operating cash flows will provide us with sufficient resources to meet our existing
debt obligations, relinquishment payments, foreseeable capital expenditure requirements with respect to current operations and distributions to the Tribe for at least the next twelve months. Distributions to the Tribe are anticipated to total
approximately $75.0 million for fiscal year 2007. 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 the new bank credit
facility (refer to Sources of Funding for Capital Expenditures above). As of June 30, 2007, we had $972.3 million available for borrowing under our new 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.



|                                        |  |                     |           |                        |   |           |  |                   |         |  |   |         |  |   |          
|--------------------------------------- |  | ------------------- | --------- | ---------------------- | - | --------- |  | ----------------- | ------- |  | - | ------- |  | - | ---------
|Contractual Obligations (in thousands)  |  | Total               |           | Payments due by period
|                                        |  | Less than1 year (1) |           | 1-3 years              |   | 3-5 years |  | More than 5 years
|Long-term debt (2)                      |  | $                   | 1,289,192 |                        | $ | 19,747    |  | $                 | 348,500 |  | $ | 18,345  |  | $ | 902,600  
|Interest payments on long-term debt (3) |  |                     | 464,908   |                        |   | 32,891    |  |                   | 174,328 |  |   | 129,750 |  |   | 127,939  
|                                        |  |                     |           |                        |   |           |  |                   |         |  |   |         |  |   |          
|Total                                   |  | $                   | 1,754,100 |                        | $ | 52,638    |  | $                 | 522,828 |  | $ | 148,095 |  | $ | 1,030,539
|                                        |  |                     |           |                        |   |           |  |                   |         |  |   |         |  |   |          

---

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

|(2) | Long-term debt includes maturities scheduled as of June 30, 2007 for our senior notes and senior subordinated notes, amounts required to be paid pursuant to
the new bank credit facility, and our other debt
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | agreements, including the Salishan Credit Facility, but excludes interest payments. Refer to Note 5 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, 2007, pursuant to respective debt agreements. Refer to Note 5 to our condensed consolidated
financial statements in this Quarterly Report on Form 10-Q.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



|                                                |                     |                        |           |  |           |         |            |   |         |  |   |        
|----------------------------------------------- | ------------------- | ---------------------- | --------- |  | --------- | ------- | ---------- | - | ------- |  | - | -------
|Contractual Commitments (in thousands)          |                     | Payments due by period
|                                                | 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)                  |                     |                        | 78,901    |  |           | 158,977 |            |   | 159,859 |  |   | 273,175
|Priority distributions (4)                      |                     |                        | 16,829    |  |           | 35,387  |            |   | 37,826  |  |   | 106,364
|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 
|                                                |                     |                        |           |  |           |         |            |   |         |  |   |        
|Total                                           |                     | $                      | 186,230   |  | $         | 375,364 |            | $ | 378,685 |  | $ | 832,039
|                                                |                     |                        |           |  |           |         |            |   |         |  |   |        

---

|(1) | Amounts represent payment commitments from October 1, 2006 to September 30, 2007.
|--- | ---------------------------------------------------------------------------------

|(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 2006
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 9 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 7 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 $14.0 million pursuant to the priority distribution agreement, as adjusted annually based on the
Consumer Price Index, or CPI. For the purposes of calculating these amounts, we have assumed that we will pay the maximum amount in each of the years covered by the table, as adjusted by an annual CPI adjustment of 3.39%.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(6) | Pursuant to the Race Horse Development and Gaming Act of 2004, Downs Racing, L.P. must pay, on an annual basis, to the PGCB amounts necessary to ensure the hosting municipalities of
Mohegan Sun at Pocono Downs will receive an annual minimum of $10.0 million from the local share assessment included in the daily slot machine tax assessment payments to the PGCB. Refer to Note 7 to our condensed consolidated financial statements in
this Quarterly Report on Form 10-Q.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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

Allowance for Doubtful Accounts

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

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

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



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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.

Derivative Instruments

At times, we use derivative instruments, including interest rate caps, collars and swaps in our strategy to manage interest rate risk associated with the
variable interest rate on our bank credit facility and the fixed interest rates on our senior notes and senior subordinated notes. Our objective in managing interest rate risk is to achieve the lowest possible cost of debt and manage volatility in
the effective cost of debt. We continually monitor risk exposures from derivative instruments held and make the appropriate adjustments to manage these risks within managements established limits. We account for our derivative instruments in
accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, or SFAS 133, which requires that all derivative instruments be recorded on the consolidated balance sheet at fair value. In order to qualify
for hedge accounting in accordance with SFAS 133, the underlying hedged item must expose us to risks associated with market fluctuations and the financial instrument used must be designated as a hedge and must reduce our exposure to market
fluctuation throughout the hedge period. If these criteria are not met, a change in the market value of the financial instrument is recognized as a gain or loss and is recorded as a component to interest expense in the period of change. We exclude
the change in the time value of money when assessing the effectiveness of the hedging relationship. All derivatives are evaluated quarterly. We did not have any derivative instruments as of June 30, 2007.

Relinquishment Liability

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

Property and Equipment

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



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



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

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

Goodwill

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

Intangible Assets

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

Litigation

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

As the successor owner of Downs Racing, we were involved in a dispute with the Wilkes-Barre Area School District, which had filed an
appeal in November 2001 against Downs Racings predecessor company, Pocono Downs, Inc., and the Luzerne County Board of Assessment Appeals relating to certain property tax assessments. The school district challenged the certified assessment for
the tax year 2002, and sought an increase to the assessed value of that property for 2002 and subsequent tax years, including additional assessments for tax year 2007. The captions for these appeal cases were: Wilkes-Barre Area School District v.
Pocono Downs, Inc. (n/k/a Downs Racing, L.P.), Luzerne County Docket #7793-C of 2001; Wilkes-Barre Area School District v. Millcreek Land, Inc. (n/k/a Mill Creek Land, L.P.), Luzerne County Docket #7767 of 2006; and Wilkes-Barre
Area School District v. Pocono Downs, Inc. (n/k/a Downs Racing, L.P.), Luzerne County Docket #7668 of 2006. All three cases were consolidated and a final settlement was reached in June 2007 between the various parties in the litigation and the
settlement was subsequently approved by the Luzerne County Court. Based on the settlement, our liability for this litigation covering tax periods through June 30, 2007 was approximately $3.5 million, which is recorded in our income from
operations for the nine months ended June 30, 2007.

Impact of Inflation

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



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New Accounting Pronouncements

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

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

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



|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 new bank credit facility in which interest will accrue on the basis of a base rate formula or a Eurodollar-based formula, plus Applicable Rates, as defined in the new bank credit facility. As of June 30, 2007, we had $27.0 million drawn on
the new 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
new bank credit facility.

We attempt to manage our interest rate risk through a controlled mix of our long-term fixed rate borrowings and
variable rate borrowings and the use of derivative instruments, including interest rate swaps, in accordance with established policies and procedures. We do not hold or issue financial instruments, including derivative instruments, for speculative
or trading purposes. No derivative instruments were held as of June 30, 2007.



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





|                                            |  |                        |        |   |      |   |       |      |  |   |         |   |  |      |       |   |            |   |        |       |  |   |            |   |  |   |           |   |  |   |          
|------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ----- | ---- |  | - | ------- | - |  | ---- | ----- | - | ---------- | - | ------ | ----- |  | - | ---------- | - |  | - | --------- | - |  | - | ---------
|                                            |  | Expected Maturity Date |        |   |      |   |       |     
|                                            |  | 2007                   |        |   | 2008 |   |       | 2009 |  |   | 2010    |   |  | 2011 |       |   | Thereafter |   |        | Total |  |   | Fair Value
|                                            |  | (in thousands)         |        |   |      |   |       |     
|Liabilities                                 |  |                        |        |   |      |   |       |      |  |   |         |   |  |      |       |   |            |   |        |       |  |   |            |   |  |   |           |   |  |   |          
|Long-Term Debt (including current portion): |  |                        |        |   |      |   |       |      |  |   |         |   |  |      |       |   |            |   |        |       |  |   |            |   |  |   |           |   |  |   |          
|Fixed Rate                                  |  | $                      |       |   |      | $ |      |      |  | $ | 330,000 |   |  | $    |      |   |            | $ | 16,345 |       |  | $ | 875,000    |   |  | $ | 1,221,345 |   |  | $ | 1,203,573
|Average interest rate                       |  |                        |       |   |      |   |      |      |  |   | 6.4     | % |  |      |      |   |            |   | 8.4    | %     |  |   | 7.0        | % |  |   | 6.9       | % |  |   |          
|Variable Rate                               |  | $                      | 19,746 |   |      | $ | 1,000 |      |  | $ | 17,500  |   |  | $    | 1,000 |   |            | $ | 1,000  |       |  | $ | 27,600     |   |  | $ | 67,846    |   |  | $ | 67,846   
|Average interest rate                       |  |                        | 6.2    | % |      |   | 6.8   | %    |  |   | 7.2     | % |  |      | 6.4   | % |            |   | 6.7    | %     |  |   | 6.3        | % |  |   | 6.5       | % |  |   |          



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

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting
during the quarterly period ended June 30, 2007 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.

As the successor owner of
Downs Racing, we were involved in a dispute with the Wilkes-Barre Area School District, which had filed an appeal in November 2001 against Downs Racings predecessor company, Pocono Downs, Inc., and the Luzerne County Board of Assessment
Appeals relating to certain property tax assessments. The school district challenged the certified assessment for the tax year 2002, and sought an increase to the assessed value of that property for 2002 and subsequent tax years, including
additional assessments for tax year 2007. The captions for these appeal cases were: Wilkes-Barre Area School District v. Pocono Downs, Inc. (n/k/a Downs Racing, L.P.), Luzerne County Docket #7793-C of 2001; Wilkes-Barre Area School
District v. Millcreek Land, Inc. (n/k/a Mill Creek Land, L.P.), Luzerne County Docket #7767 of 2006; and Wilkes-Barre Area School District v. Pocono Downs, Inc. (n/k/a Downs Racing, L.P.), Luzerne County Docket #7668 of 2006. All three
cases were consolidated and a final settlement was reached in June 2007 between the various parties in the litigation and the settlement was subsequently approved by the Luzerne County Court. Based on the settlement, the Authoritys liability
for this litigation covering tax periods through June 30, 2007 was approximately $3.5 million, which is recorded in the Authoritys income from operations for the nine months ended June 30, 2007.



|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, 2006.



|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 13, 2007 |  | By:                             |  | /s/    BRUCE S.
BOZSUM                                                                                               
|                      |  |                                 |  | Bruce S. Bozsum Chairman and Member, Management Board                                                                
|                      |  |                                
|Date: August 13, 2007 |  | By:                             |  | /s/    MITCHELL GROSSINGER
ETESS                                                                                     
|                      |  |                                 |  | Mitchell Grossinger Etess Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive Officer)     
|                      |  |                                
|Date: August 13, 2007 |  | 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).                                                                                           
|            | 
|3.14        |  | Amended and Restated Limited Partnership Agreement of Northeast Concessions, L.P., dated as of January 25, 2005 (filed as Exhibit 3.14 to the 2005 Senior Subordinated Form S-4, and
incorporated by reference herein).                                                                                      



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|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3.15        |  | Articles of Organization of Mohegan Ventures-Northwest, LLC, dated as of July 23, 2004 (filed as Exhibit 3.15 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2006, filed with the SEC on August 10, 2006 (the June 2006 10-Q), and incorporated by reference herein).                                                                                                                                                                        
|            | 
|3.16        |  | Operating Agreement of Mohegan Ventures-Northwest, LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of July 23, 2004 (filed as Exhibit 3.16 to the June 2006
10-Q and incorporated by reference herein).                                                                                                                                                                                                                                               
|            | 
|3.17        |  | Articles of Organization of Mohegan Golf, LLC, dated as of November 20, 2006 (filed as Exhibit 3.17 to the Authoritys Form 10-K for the fiscal year ended September 30, 2006 and
incorporated by reference herein).                                                                                                                                                                                                                                                                     
|            | 
|3.18        |  | Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of February 27, 2007 (filed as Exhibit 3.18 to the Authoritys Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2007, filed with the SEC on May 15, 2007(the March 2007 10-Q) and incorporated by reference herein).                                                                                                                                                                          
|            | 
|3.19        |  | Articles of Organization of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.19 to the March 2007 10-Q and incorporated by reference herein).                                                                                                                                                                                                                                                                                                              
|            | 
|4.1         |  | Relinquishment Agreement, dated February 7, 1998, by and among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit
10.14 to the Authoritys Form 10-K405 for the fiscal year ended September 30, 1998, filed with the SEC on December 29, 1998, and incorporated by reference herein).                                                                                                                        
|            | 
|4.2         |  | Indenture, dated as of July 26, 2001, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to
the 83/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.9 to the
Authoritys Registration Statement on Form S-4, File No. 333-69472, filed with the SEC on September 14, 2001 (the 2001 Form S-4), and incorporated by reference herein).
|            | 
|4.3         |  | Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture)
and the State Street Bank and Trust Company, as Trustee, relating to the 83/8% Senior Subordinated Notes Due
2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the June 2003 10-Q, and incorporated by reference herein).                                            
|            | 
|4.4         |  | Second Supplemental Indenture, dated as of July 28, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to
State Street Bank and Trust Company), as Trustee, relating to the 83/8% Senior Subordinated Notes Due 2011 of
the Mohegan Tribal Gaming Authority (filed as exhibit 4.9 to the June 2004 10-Q and incorporated by reference herein).                                                            
|            | 
|4.5         |  | Form of Global 83/8% Senior Subordinated Notes Due
2011 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.9 to the 2001 Form S-4, and incorporated by reference herein).                                                                                                                                                                                                                                                                             
|            | 
|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).                      



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4.7         |  | Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture)
and the State Street Bank and Trust Company, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2003 10-Q, and incorporated by reference
herein).                                                                                                                                      
|            | 
|4.8         |  | Amended and Restated Supplemental Indenture, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as
successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as exhibit 4.14 to the Authoritys Quarterly Report on Form 10-Q for the
quarter ended December 31, 2004, filed with the SEC on February 14, 2005 (the December 2004 10-Q), and incorporated by reference herein).
|            | 
|4.9         |  | Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State
Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.15 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                  
|            | 
|4.10        |  | Supplemental Indenture No. 3, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National
Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the December 2004 10-Q, and incorporated by
reference herein).                                                                                                                     
|            | 
|4.11        |  | Supplemental Indenture No. 4, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary
Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed
as Exhibit 4.11 to the June 2006 10-Q and incorporated by reference herein).                                                        
|            | 
|4.12        |  | Supplemental Indenture No. 5, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as
defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to
the Authoritys Form 10-K for the fiscal year ended September 30, 2006 and incorporated by reference herein).               
|            | 
|4.13        |  | Supplemental Indenture No. 6, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary
Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan
Tribal Gaming Authority (filed as Exhibit 4.13 to the March 2007 10-Q and incorporated by reference herein).                      
|            | 
|4.14        |  | 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).                                                                                                                                                                                                                                                                                                                                                                      
|            | 
|4.15        |  | 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).                                                                                                                                                                                   



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.16        |  | 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).                                                                                                                                   
|            | 
|4.17        |  | 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).                                                                                                      
|            | 
|4.18        |  | 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).                                         
|            | 
|4.19        |  | 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 Form 10-K for the fiscal year ended September 30, 2006 and incorporated by reference herein).
|            | 
|4.20        |  | 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 March 2007 10-Q and incorporated by reference herein).       
|            | 
|4.21        |  | 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).                                                                                                                                                                                                                                                                                                                           
|            | 
|4.22        |  | 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).                                                                                                               
|            | 
|4.23        |  | 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).                                                                                                      
|            | 
|4.24        |  | 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).                                         



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.25        |  | 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 Form 10-K for the fiscal year ended September 30, 2006 and incorporated by reference herein).
|            | 
|4.26        |  | 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 March 2007 10-Q and incorporated by reference herein).       
|            | 
|4.27        |  | 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).                                                                                                                                                                                                                                                                                                                           
|            | 
|4.28        |  | 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).                                                                                                                    
|            | 
|4.29        |  | 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).                                         
|            | 
|4.30        |  | 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 Form 10-K for the fiscal year ended September 30, 2006 and incorporated by reference herein).
|            | 
|4.31        |  | 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 March 2007 10-Q and incorporated by reference herein).       
|            | 
|4.32        |  | 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).                                                                                                                                                                                                                                                                                                                       
|            | 
|4.33        |  | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4.34        |  | 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).                                          
|            | 
|4.35        |  | 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 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authoritys Form 10-K for the fiscal year ended September 30, 2006 and incorporated by reference
herein).
|            | 
|4.36        |  | 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 March 2007 10-Q and incorporated by reference herein).        
|            | 
|4.37        |  | Form of Global 61/8% Senior Notes Due 2013 of the
Mohegan Tribal Gaming Authority (filed as Exhibit 4.32 to the December 2004 10-Q, and incorporated by reference herein).                                                                                                                                                                                                                                                                                                                                                                              
|            | 
|10.1        |  | Amendment to the Land Lease, dated March 6, 2007, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                         
|            | 
|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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