Mohegan Tribal Gaming Authority 10-Q 2008 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2008

OR

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

For the transition period from                     to                     

Commission file number 033-80655

MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)

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

(860) 862-8000

(Registrant’s telephone number, including area code)

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):

Yes  ¨    No  x

MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-Q

		Page Number
PART    I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2008 and September 30, 2007   (unaudited)	3
	Condensed Consolidated Statements of Income for the Three Months and Six Months   Ended March 31, 2008 and 2007 (unaudited)	4
	Condensed Consolidated Statements of Changes in Capital for the Three Months and Six   Months Ended March 31, 2008 and 2007 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended   March 31,2008 and 2007 (unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (unaudited)	7
	Report of Independent Registered Public Accounting Firm	28
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of   Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60
Item 4.	Controls and Procedures	61
PART    II.	OTHER INFORMATION
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 6.	Exhibits	62
Signatures.	Mohegan Tribal Gaming Authority	63

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

	March 31, 2008		September 30, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	87,445	$	105,596
Receivables, net		35,931		25,005
Inventories		16,836		17,119
Other current assets		29,743		25,991
Total current assets		169,955		173,711
Non-current assets:
Property and equipment, net		1,509,001		1,401,206
Goodwill		39,459		39,459
Other intangible assets, net		393,255		394,477
Other assets, net		67,610		71,124
Total assets	$	2,179,280	$	2,079,977
LIABILITIES AND CAPITAL
Current liabilities:
Current portion of long-term debt	$	1,000	$	17,591
Current portion of relinquishment liability		95,672		96,486
Trade payables		36,425		21,975
Accrued interest payable		20,185		20,274
Other current liabilities		202,101		177,265
Total current liabilities		355,383		333,591
Non-current liabilities:
Long-term debt, net of current portion		1,365,587		1,276,109
Relinquishment liability, net of current portion		381,884		406,858
Other long-term liabilities		626		735
Total liabilities		2,103,480		2,017,293
Minority interests		3,200		3,933
Commitments and contingencies
Capital:
Retained earnings		72,600		58,751
Total capital		72,600		58,751
Total liabilities and capital	$	2,179,280	$	2,079,977

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

3

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands)

(unaudited)

	For the Three Months Ended March 31, 2008			For the Three Months Ended March 31, 2007			For the Six Months Ended March 31, 2008			For the Six Months Ended March 31, 2007
Revenues:
Gaming	$	355,877		$	356,904		$	706,522		$	703,170
Food and beverage		24,869			23,614			50,487			48,768
Hotel		11,850			11,221			24,427			24,163
Retail, entertainment and other		31,934			26,685			63,469			58,561
Gross revenues		424,530			418,424			844,905			834,662
Less—Promotional allowances		(31,953	)		(28,400	)		(65,379	)		(60,055	)
Net revenues		392,577			390,024			779,526			774,607
Operating costs and expenses:
Gaming		217,468			207,200			437,745			408,681
Food and beverage		11,398			12,451			24,122			25,579
Hotel		4,305			4,136			8,602			8,081
Retail, entertainment and other		11,440			9,307			22,104			21,514
Advertising, general and administrative		57,797			57,766			113,653			114,347
Corporate expenses		4,017			2,531			11,161			5,184
Pre-opening costs and expenses		12			197			32			3,745
Depreciation and amortization		24,107			23,237			48,652			46,111
Total operating costs and expenses		330,544			316,825			666,071			633,242
Income from operations		62,033			73,199			113,455			141,365
Other income (expense):
Accretion of discount to the relinquishment liability		(6,772	)		(7,448	)		(13,543	)		(14,897	)
Interest income		899			774			1,957			1,540
Interest expense, net of capitalized interest		(22,687	)		(24,113	)		(45,518	)		(47,724	)
Write-off of debt issuance costs		—			(71	)		—			(71	)
Other income (expense), net		(143	)		(247	)		71			(362	)
Total other expense		(28,703	)		(31,105	)		(57,033	)		(61,514	)
Income from continuing operations before minority interests		33,330			42,094			56,422			79,851
Minority interests		132			190			733			328
Income from continuing operations		33,462			42,284			57,155			80,179
Income from discontinued operations		—			36			—			31
Net income	$	33,462		$	42,320		$	57,155		$	80,210

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

4

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(in thousands)

(unaudited)

	Total Capital
Balance, December 31, 2007	$	62,444
Net income		33,462
Distributions to Tribe		(23,306	)
Balance, March 31, 2008	$	72,600
Balance, September 30, 2007	$	58,751
Net income		57,155
Distributions to Tribe		(43,306	)
Balance, March 31, 2008	$	72,600
	Total Capital
Balance, December 31, 2006	$	(19,540	)
Net income		42,320
Distributions to Tribe		(17,906	)
Capital adjustment from majority-owned subsidiary transaction		39
Balance, March 31, 2007	$	4,913
Balance, September 30, 2006	$	(38,855	)
Net income		80,210
Distributions to Tribe		(36,481	)
Capital adjustment from majority-owned subsidiary transaction		39
Balance, March 31, 2007	$	4,913

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

5

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Six Months Ended March 31, 2008			For the Six Months Ended March 31, 2007
Cash flows provided by (used in) operating activities:
Net income	$	57,155		$	80,210
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		48,652			46,194
Accretion of discount to the relinquishment liability		13,543			14,897
Cash paid for accretion of discount to the relinquishment liability		(14,220	)		(15,126	)
Accretion of discount to the Pocono Downs purchase settlement		(623	)		(826	)
Net loss on disposition of assets		129			1,175
Provision for losses on receivables		4,869			1,736
Amortization of debt issuance costs		2,278			1,636
Write-off of debt issuance costs		—			71
Amortization of net deferred gain on settlement of derivative instruments		228			228
Minority interests		(733	)		(328	)
Changes in operating assets and liabilities:
Increase in receivables		(11,648	)		(1,574	)
Decrease (increase) in inventories		283			(1,110	)
Increase in other assets		(1,779	)		(10,915	)
Increase (decrease) in trade payables		3,279			(2,806	)
Increase in other liabilities		2,891			15,610
Net cash flows provided by operating activities		104,304			129,072
Cash flows provided by (used in) investing activities:
Purchases of property and equipment, net of increase in construction payables of $33,632 and $6,378, respectively		(122,974	)		(53,626	)
Payment of Category One slot machine license fee		—			(50,000	)
Acquisition of Menominee Project development rights and other related assets		—			(6,381	)
Proceeds from settlement of contract dispute		—			2,000
Proceeds from asset sales		1,268			195
Issuance of third party loans and advances		(2,674	)		(1,949	)
Payments received on third-party loans		481			397
Net cash flows used in investing activities		(123,899	)		(109,364	)
Cash flows provided by (used in) financing activities:
Prior Bank Credit Facility borrowings—revolving loan		—			278,000
Prior Bank Credit Facility repayments—revolving loan		—			(278,000	)
Bank Credit Facility borrowings—revolving loan		223,000			81,000
Bank Credit Facility repayments—revolving loan		(135,000	)		(16,000	)
Salishan Credit Facility borrowings—revolving loan		2,250			15,250
Line of credit borrowings		228,281			305,436
Line of credit repayments		(244,872	)		(305,436	)
Payments on long-term debt		(1,000	)		(3,550	)
Principal portion of relinquishment liability payments		(25,111	)		(24,599	)
Distributions to Tribe		(43,306	)		(36,481	)
Capitalized debt issuance costs		(2,798	)		(6,921	)
Net cash flows provided by financing activities		1,444			8,699
Net (decrease) increase in cash and cash equivalents		(18,151	)		28,407
Cash and cash equivalents at beginning of period		105,596			75,246
Cash and cash equivalents at end of period	$	87,445		$	103,653
Supplemental disclosure:
Cash paid during the period for interest	$	46,214		$	46,856

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

6

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION:

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

The Authority has the following wholly owned subsidiaries: Mohegan Basketball Club, LLC (“MBC”), Mohegan Golf, LLC (“Mohegan Golf”), Mohegan Commercial Ventures PA, LLC (“MCV-PA”), Mohegan Ventures-Northwest, LLC (“Mohegan Ventures-NW”), Mohegan Ventures Wisconsin, LLC (“MVW”), and MTGA Gaming, LLC (“MTGA Gaming”). MBC owns and operates a professional basketball team in the Women’s National Basketball Association (“WNBA”), the Connecticut Sun, and owns approximately 3.6% of the membership interests in WNBA, LLC. Mohegan Golf owns and operates the Mohegan Sun Country Club at Pautipaug (“Mohegan Sun Country Club”) golf course in southeastern Connecticut. MTGA Gaming evaluates and pursues new business opportunities on behalf of the Authority.

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

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

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

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the unaudited condensed consolidated financial statements do not include all of the information and

7

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

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 six months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2008.

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

Principles of Consolidation

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

Menominee Project

In March 2007, WTG purchased the development rights for the Menominee Project, along with certain other assets, and assumed certain liabilities from Kenesah Gaming Development, LLC. The development rights were determined by management to be an intangible asset with an estimated fair value of $3.7 million, which is periodically reviewed for impairment in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” The Authority also maintains an allowance on the future collection of reimbursable development costs and expenses pertaining to the Menominee Project.

In January 2008, the U.S Department of the Interior’s Bureau of Indian Affairs (“BIA”) rejected 11 applications from tribes with existing reservations to take new off-reservation land into trust in connection with gaming projects. The BIA also advised 11 other tribes that their applications were incomplete and would not be considered further. While no decision has been issued on the Menominee application, the BIA also issued a memorandum addressing its policy on applications for off-reservation gaming projects, dated January 3, 2008, stating that the greater the distance between a proposed project and the tribe’s existing reservation, the greater the scrutiny that would be applied to the application, weighing the potential benefits to the tribe against concern for the commuting distance from the existing reservation, among other factors. As a result of this new policy, the Authority recorded an adjustment to the allowance on the future collection of reimbursable development costs and expenses and an impairment charge to reduce the carrying value of the development rights to their estimated fair value, totaling approximately $2.7 million and $840,000, respectively, as reflected in the accompanying condensed consolidated statement of income for the six months ended March 31, 2008.

8

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

New Accounting Pronouncements

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

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

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

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

9

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 3—FINANCING FACILITIES:

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

	March 31, 2008		September 30, 2007
Bank Credit Facility	$	121,000	$	33,000
2005 6 1/8% Senior Notes		250,000		250,000
2001 8 3/8% Senior Subordinated Notes		16,345		16,345
2002 8% Senior Subordinated Notes		250,000		250,000
2003 6 3/8% Senior Subordinated Notes		330,000		330,000
2004 7 1/8% Senior Subordinated Notes		225,000		225,000
2005 6 7/8% Senior Subordinated Notes		150,000		150,000
WNBA Promissory Note		3,000		4,000
Line of Credit		—		16,591
Salishan Credit Facility		19,500		17,250
MKGA Note Payable		600		600
Subtotal		1,365,445		1,292,786
Net deferred gain on derivative instruments sold		1,142		914
Total debt	$	1,366,587	$	1,293,700

Prior Bank Credit Facility

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

Bank Credit Facility

In March 2007, the Authority entered into a Second Amended and Restated Loan Agreement (the “Bank Credit Facility”) providing for up to $1.0 billion in borrowing capacity from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. The total commitment on this facility may be increased to $1.25 billion at the option of the Authority. The five-year senior secured revolving credit facility includes a $300.0 million term loan conversion provision which is triggered upon the initial accumulation of $300.0 million in total borrowings on the Bank Credit Facility. The term loan requires principal payments in quarterly installments of $750,000 after the conversion date until the maturity date of March 9, 2012, upon which the remaining balances outstanding on the term loan and any revolving loans are payable. As of March 31, 2008, the amount under letters of credit totaled $6.4 million, of which no amount was drawn (refer to “Letters of Credit” below). Inclusive of letters of credit, which reduce borrowing availability under the Bank Credit Facility, the Authority had approximately $872.6 million of available borrowing capacity under the Bank Credit Facility as of March 31, 2008 (without taking into account covenants under the Line of Credit described below).

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

10

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

the revolving loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is between 0.000% and 1.125%, and the Applicable Rate for Eurodollar rate advances is between 1.250% and 2.375%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of America’s announced prime rate or the federal funds rate plus 0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears. As of March 31, 2008, the Authority had $121.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at March 31, 2008 were comprised of: (1) an $87.0 million loan based on a one-month Eurodollar rate of 2.82% plus an Applicable Rate of 1.38% and (2) a $34.0 million loan based on a one-month Eurodollar rate of 2.59% plus an Applicable Rate of 1.38%. The Applicable Rate for commitment fees was 0.25% as of March 31, 2008. Accrued interest, including commitment fees, on the Bank Credit Facility was $205,000 and $96,000 as of March 31, 2008 and September 30, 2007, respectively.

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

On February 13, 2008, the Authority received requisite consent from its lenders to Amendment No. 1 to its Bank Credit Facility. Amendment No. 1, among other things, provides for increases in the permitted capital expenditures for the expansion projects at Mohegan Sun (“Project Horizon”) and Mohegan Sun at Pocono Downs (“Project Sunrise”) from $800.0 million and $200.0 million, respectively, to $950.0 million and $215.0 million, respectively. Amendment No. 1 also modified certain provisions of the loan agreement, including the Authority’s total leverage, senior leverage and minimum fixed charge coverage ratio covenants to conform with the increase in projected expenditures and the change in the projected completion dates for Project Horizon and Project Sunrise.

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

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

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

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

11

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

As of March 31, 2008, the Authority and the Tribe were in compliance with all of their respective covenant requirements in the Bank Credit Facility.

2005 6 ¹/8% Senior Notes

In February 2005, the Authority issued $250.0 million Senior Notes with fixed interest payable at a rate of 6.125% per annum (the “2005 Senior Notes”). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Notes mature on February 15, 2013. The first call date for the 2005 Senior Notes is February 15, 2009. Interest on the 2005 Senior Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Notes are uncollateralized general obligations of the Authority, which are effectively subordinated to all of the existing and future senior secured indebtedness of the Authority, including the Bank Credit Facility. The 2005 Senior Notes rank equally in right of payment with 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing and rank senior to the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing, the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of March 31, 2008 and September 30, 2007, accrued interest on the 2005 Senior Notes was $1.9 million.

2001 8 ³/8% Senior Subordinated Notes

In July 2001, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.375% per annum (the “2001 Senior Subordinated Notes”). The proceeds from this financing were used to pay transaction costs, pay down $90.0 million on the then existing bank credit facility and fund costs related to Project Sunburst. Interest on the 2001 Senior Subordinated Notes is payable semi-annually on January 1 and July 1. The 2001 Senior Subordinated Notes mature on July 1, 2011. The first call date for the 2001 Senior Subordinated Notes was July 1, 2006. The 2001 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2001 Senior Subordinated Notes rank equally with the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC is a guarantor of the 2001 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, 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 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 March 31, 2008. As of March 31, 2008 and September 30, 2007, accrued interest on the 2001 Senior Subordinated Notes was $342,000.

12

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

2002 8% Senior Subordinated Notes

In February 2002, the Authority issued $250.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.0% per annum (the “2002 Senior Subordinated Notes”). The proceeds from this financing were used to pay transaction costs and pay down $243.0 million on the then existing bank credit facility. Interest on the 2002 Senior Subordinated Notes is payable semi-annually on April 1 and October 1. The 2002 Senior Subordinated Notes mature on April 1, 2012. The first call date for the 2002 Senior Subordinated Notes was April 1, 2007. The 2002 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2002 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2002 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of March 31, 2008 and September 30, 2007, accrued interest on the 2002 Senior Subordinated Notes was $10.0 million.

2003 6 ³/8% Senior Subordinated Notes

In July 2003, the Authority issued $330.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.375% per annum (the “2003 Senior Subordinated Notes”). The proceeds from this financing were used to repurchase substantially all of the outstanding $300.0 million 8.75% Senior Subordinated Notes issued in March 1999 and to pay fees and expenses associated with the issuance. Interest on the 2003 Senior Subordinated Notes is payable semi-annually on January 15 and July 15. The 2003 Senior Subordinated Notes mature on July 15, 2009. The 2003 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2003 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2003 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of March 31, 2008 and September 30, 2007, accrued interest on the 2003 Senior Subordinated Notes was $4.4 million.

2004 7 ¹/8% Senior Subordinated Notes

In August 2004, the Authority issued $225.0 million Senior Subordinated Notes with fixed interest payable at a rate of 7.125% per annum (the “2004 Senior Subordinated Notes”). The net proceeds from this financing, together with $130.0 million of availability under the Prior Bank Credit Facility, were used to repurchase substantially all of the outstanding 2001 Senior Subordinated Notes and substantially all of the outstanding 1999 Senior Notes tendered in the tender offers described above and to pay fees and expenses associated with the issuance. The 2004 Senior Subordinated Notes mature on August 15, 2014. The first call date for the 2004 Senior Subordinated Notes is August 15, 2009. Interest on the 2004 Senior Subordinated Notes is payable semi-annually

13

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

on February 15 and August 15. The 2004 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2004 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2004 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of March 31, 2008 and September 30, 2007, accrued interest on the 2004 Senior Subordinated Notes was $2.0 million.

2005 6 ⁷/8% Senior Subordinated Notes

In February 2005, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the “2005 Senior Subordinated Notes”). The net proceeds from this financing were used to repay amounts outstanding under the Prior Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15, 2010. Interest on the 2005 Senior Subordinated Notes is payable semi-annually on February 15 and August 15. The 2005 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2005 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of the 2005 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiary. As of March 31, 2008 and September 30, 2007, accrued interest on the 2005 Senior Subordinated Notes was $1.3 million.

The senior and senior subordinated note indentures contain certain financial and non-financial covenants with which the Authority and the Tribe must comply. The financial covenants include, among other things, limitations on restricted payments and the incurrence of indebtedness, while the non-financial covenants include, among other things, reporting obligations, compliance with laws and regulations and the Authority’s continued existence. As of March 31, 2008, both the Authority and the Tribe were in compliance with all of their respective covenant requirements in the senior and senior subordinated note indentures.

WNBA Promissory Note

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

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

14

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

the WNBA Note. Pursuant to the WNBA Note, principal payments of $1.0 million, subject to adjustment for certain revenue thresholds, and interest payments are required to be paid to the WNBA on each anniversary of the WNBA Note. The WNBA Note is scheduled to mature in January 2011, but will mature no later than January 2013. As of March 31, 2008 and September 30, 2007, the principal balance outstanding on the WNBA Note was $3.0 million and $4.0 million, respectively. As of March 31, 2008 and September 30, 2007, accrued interest on the WNBA Note was $26,000 and $187,000, 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 was amended in March 2008 to extend the maturity date from March 31, 2008 to March 31, 2009. The Line of Credit subjects the Authority to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under the Bank Credit Facility. As of March 31, 2008, the Authority was in compliance with all covenant requirements in the Line of Credit and had $25.0 million of available borrowing capacity under the Line of Credit. As of March 31, 2008, there was no accrued interest on the Line of Credit. As of September 30, 2007, accrued interest on the Line of Credit was $17,000.

Salishan-Mohegan Bank Credit Facility

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

As of March 31, 2008, Salishan-Mohegan had $19.5 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at March 31, 2008 were comprised of: (1) a $17.2 million loan based on a one-month Eurodollar rate of 2.60% plus an Applicable Rate of 2.25%; (2) a $1.5 million loan based on a one-month Eurodollar rate of 3.00% plus an Applicable Rate of 2.25%; and (3) a $750,000 loan based on a one-month Eurodollar rate of 2.56% plus an Applicable Rate of 2.25%. The Applicable Rate for commitment fees was 0.50% as of March 31, 2008. As of March 31, 2008, Salishan-Mohegan had $5.5 million of available borrowing capacity under the Salishan Credit Facility. As of March 31, 2008 and September 30, 2007, accrued interest on the Salishan Credit Facility was $22,000 and $42,000, respectively.

Derivative Instruments

The Authority is considered an “end user” of derivative instruments and engages in derivative transactions from time to time for risk management purposes only. There were no derivative instruments held by the Authority as of March 31, 2008.

15

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Interest rate swap agreements hedging currently outstanding debt instruments of the Authority which qualified for hedge accounting in accordance with FAS 133 and were designated as fair value hedges were sold in prior fiscal years for a net aggregate gain of $1.7 million. The $1.7 million net aggregate gain was deferred and added to the carrying value of the respective notes being hedged and is being amortized and recorded to interest expense over the remaining term of the respective notes. For the three months ended March 31, 2008 and 2007, the Authority recorded amortization of $114,000, and for the six months ended March 31, 2008 and 2007, the Authority recorded amortization of $228,000, to increase interest expense related to the sale of these derivative instruments. The Authority expects to record $455,000 to interest expense over the next twelve months.

Letters of Credit

As of March 31, 2008, the Authority maintained 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 potential contractor and subcontractor liabilities relating to the Project Horizon expansion at Mohegan Sun. The letters of credit expire on August 31, 2008, January 25, 2009 and September 5, 2008, respectively, subject to renewals. As of March 31, 2008, no amounts were drawn on the letters of credit.

NOTE 4—RELATED PARTY TRANSACTIONS:

On March 28, 2008, MTGA Gaming was admitted as a member in Mohegan Gaming & Hospitality, LLC (“MG&H”) a Delaware limited liability company formed by the Tribe. Following the admission of MTGA Gaming, the Tribe holds a 51.0% membership interest in MG&H and MTGA Gaming holds the remaining 49.0% interest. In connection with its admission, MTGA Gaming assigned to MG&H, its one-third membership interest in Leg Sun, LLC along with the right to manage, and participate in the development of the proposed gaming facility and destination resort to be named Legends Sun and located in Wyandotte County, Kansas.

The Tribe provides governmental and certain administrative services to the Authority in conjunction with the operation of Mohegan Sun. During the three months ended March 31, 2008 and 2007, the Authority incurred $5.9 million and $5.7 million, respectively, and for the six months ended March 31, 2008 and 2007, the Authority incurred $11.9 million and $11.1 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 $130,000 relating to these land lease agreements for each of the three months and six months ended March 31, 2008 and 2007, 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 March 31, 2008 and 2007, the Authority incurred costs of $6.4 million and $6.8 million, respectively, for such utilities. During the six months ended March 31, 2008 and 2007, the Authority incurred costs of $12.7 million and $11.9 million, respectively, for such utilities.

The Tribe previously provided services through its Development Department for projects related to Mohegan Sun. The Development Department of the Tribe, including personnel assigned to the department, was transferred to the Authority during the three months ended December 31, 2006. Prior to this transfer, the Authority recorded $53,000 of capital expenditures associated with the Tribe’s Development Department for the six months ended March 31, 2007.

16

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

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

Similarly, any entity awarding a contract or subcontract valued up to $200,000 to be performed on Tribal land or on behalf of the Tribe must give preference, first to certified Mohegan entities and second to other certified Indian entities. This contracting preference is conditioned upon the bid by the preferred certified entity being within 5% of the lowest bid by a non-certified entity. The TERO establishes procedures and requirements for certifying Mohegan entities and other Indian entities. Certification is based largely on the level of ownership and control exercised by the members of the Tribe or other Indian tribes, as the case may be, over the entity bidding on a contract.

NOTE 5—COMMITMENTS AND CONTINGENCIES:

The Mohegan Compact

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

In 2006, the State of Connecticut asserted that Slot Win Contribution payments are required to be made with respect to free slot promotions such as the Authority’s “e-Bonus” program and the Mashantucket Pequot Tribe’s “free play” program. In October 2007, the Tribe entered into an escrow agreement with the State of Connecticut, to escrow, on a monthly basis, an amount equal to 25% of the value of all e-Bonus plays used by patrons at Mohegan Sun. As a result, during the three months and six months ended March 31, 2008, the Authority reflected expenses associated with the e-Bonus escrow payments totaling $2.1 million and $2.3 million, respectively, which is included in the Authority’s Slot Win Contribution for the three months and six months ended March 31, 2008. Pursuant to the escrow agreement, the escrowed funds, plus interest thereon, will either be forwarded to the State of Connecticut or returned to the Authority based on the outcome of the dispute between the Tribe and the State of Connecticut on the accounting of e-Bonus play under the MOU.

The Authority reflected expenses associated with the Slot Win Contribution and e-Bonus escrow totaling $55.7 million and $54.9 million for the three months ended March 31, 2008 and 2007, respectively. For the six months ended March 31, 2008 and 2007, the expenses associated with the Slot Win Contribution and e-Bonus escrow totaled $108.0 million and $112.1 million, respectively. As of March 31, 2008 and September 30, 2007, outstanding Slot Win Contribution and e-Bonus escrow payments to the State of Connecticut totaled $20.1 million and $19.3 million, respectively.

17

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Category One Slot Machine License

In September 2006, a conditional Category One slot machine license was granted to Downs Racing by the Pennsylvania Gaming Control Board (the “PGCB”) for the operation of slot machines at Mohegan Sun at Pocono Downs. After the satisfaction of certain regulatory conditions and the payment of the one-time slot machine license fee of $50.0 million to the PGCB in October 2006, Downs Racing opened Phase I of its gaming and entertainment facility in November 2006. The PGCB approved a permanent Category One slot machine license for Downs Racing in December 2006. This license initially permits Downs Racing to install and operate up to 3,000 slot machines at Mohegan Sun at Pocono Downs. Under certain circumstances, Downs Racing may be permitted to install up to a total of 5,000 slot machines at Mohegan Sun at Pocono Downs. A minimum of 1,500 slot machines were required to be in operation within 12 months of the issuance of the conditional slot machine license. In November 2007, the PGCB granted Downs Racing a one-year extension to reach the 1,500 slot machine threshold.

The Race Horse Development and Gaming Act of 2004 stipulates that a portion of the gross revenues earned on slot machines by holders of Category One licenses must be paid to the PGCB on a daily basis, which includes amounts to be paid to the Pennsylvania Harness Horsemen’s Association Inc., and local share assessments to be paid to the host cities and municipalities. The current assessment of the amount payable to the PGCB on a daily basis is 55% of gross slot revenues. In addition to this daily slot machine tax assessment, Downs Racing must pay, on an annual basis, to the PGCB amounts necessary to ensure that the city and municipality hosting Mohegan Sun at Pocono Downs will receive an annual minimum of $10.0 million from the local share assessment. The local share assessment is equal to the greater of 2.0% of annual gross slot revenues or $10.0 million. Downs Racing maintains a $5.0 million escrow deposit in the name of the Commonwealth of Pennsylvania for the payment of slot machine tax assessments to the PGCB, which is included in other assets in the accompanying condensed consolidated balance sheets.

The Authority reflected expenses associated with the PGCB slot machine and local share tax assessments totaling $23.3 million and $23.9 million for the three months ended March 31, 2008 and 2007, respectively. For the six months ended March 31, 2008 and 2007, the expenses associated with the PGCB slot machine and local share tax assessments totaled $47.0 million and $36.8 million, respectively. As of March 31, 2008 and September 30, 2007, outstanding slot machine and local share tax payments totaled $2.9 million and $6.1 million, respectively.

PGCB Regulatory Fees

In addition to the slot machine tax payments described above, the holders of slot machine licenses are also required to reimburse the PGCB for administrative and operating expenses incurred. The assessment of this amount on Downs Racing and other slot facility operators is yet to be finalized. Based upon an estimate of Down’s Racing’s slot machine revenues compared to current and future licensees in the Commonwealth, Downs Racing is recording expenses associated with the reimbursement of PGCB operating expenses at a rate of 1.5% of gross slot machine revenues. This rate has been approved by the PGCB, which receives corresponding payments on a weekly basis from Downs Racing. The Authority reflected expenses associated with this fee assessment totaling $589,000 and $318,000 for the three months ended March 31, 2008 and 2007, respectively. For the six months ended March 31, 2008 and 2007, the expenses associated with this fee assessment totaled $1.2 million and $950,000, respectively. As of March 31, 2008 and September 30, 2007, outstanding regulatory fee payments to the PGCB totaled $54,000. Additionally, in order to fund current operations of the PGCB, two loans in the amount of $36.0 million and $22.6 million, were granted to the PGCB, and a $7.0 million payment was

18

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

made to the PGCB by current licensees from gaming tax funds received by the Commonwealth of Pennsylvania. The loans and the $7.0 million payment are expected to cover expenses incurred by the PGCB from inception to June 30, 2008, and are anticipated to be repaid in total by the slot machine licensees once all approved gaming facilities are open. Each licensee’s share of these costs will be proportional to each licensee’s gross slot machine revenues. In January 2007, Downs Racing made a prepayment to the PGCB of $800,000 for a portion of their incurred expenses, which is recorded in prepaid expenses in the accompanying condensed consolidated balance sheets.

Priority Distribution Agreement

In August 2001, the Authority and the Tribe entered into an agreement (the “Priority Distribution Agreement”), which obligates the Authority to make monthly payments to the Tribe to the extent of the Authority’s net cash flow, as defined in the Priority Distribution Agreement. The Priority Distribution Agreement, which has a perpetual term, limits the maximum aggregate payments by the Authority to the Tribe in each calendar year to $14.0 million, as adjusted annually in accordance with the formula specified in the Priority Distribution Agreement to reflect the effects of inflation. However, payments pursuant to the Priority Distribution Agreement do not reduce the Authority’s obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other agreements with the Tribe. The monthly payments under the Priority Distribution Agreement are limited obligations of the Authority payable only to the extent of its net cash flow, as defined in the Priority Distribution Agreement, and are not secured by a lien or encumbrance on any assets or property of the Authority. The Authority’s condensed consolidated financial statements reflect payments associated with the Priority Distribution Agreement of $4.4 million and $4.2 million for the three months ended March 31, 2008 and 2007, respectively. For the six months ended March 31, 2008 and 2007, these payments totaled $8.6 million and $8.3 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 $3.3 million.

Pennsylvania Property Tax Litigation

A final settlement was reached in June 2007 between the various parties involved in a dispute with Downs Racing, relating to certain property tax assessments, in Wilkes-Barre, Pennsylvania. Based on the settlement, Downs Racing is required to make agreed upon payments with the Wilkes-Barre Area School District for each tax year through 2015. The total amount of these payments is $18.2 million.

19

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Other Litigation

The Authority is a defendant in certain litigation incurred in the normal course of business. In the opinion of management, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the Authority’s financial position, results of operations or cash flows.

NOTE 6—RELINQUISHMENT AGREEMENT:

In February 1998, the Authority and Trading Cove Associates (“TCA”) entered into 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 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 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 March 31, 2008, the carrying amount of the relinquishment liability was $477.5 million as compared to $503.3 million at September 30, 2007. The decrease in the relinquishment liability during the six months ended March 31, 2008 is due to $39.3 million in relinquishment payments, offset by $13.5 million representing the accretion of discount to the relinquishment liability. Of the $39.3 million in relinquishment payments, $25.1 million represents payment of principal and $14.2 million represents payment of the accretion of discount to the relinquishment liability. During the six months ended March 31, 2007, the Authority paid $39.8 million in relinquishment payments, consisting of $24.7 million in principal amounts and $15.1 million representing the

20

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

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 March 31, 2008 and September 30, 2007, relinquishment payments earned but unpaid were $18.8 million and $20.8 million, respectively.

NOTE 7—DISCONTINUED OPERATIONS:

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

In October 2006, the PGCB granted Presque Isle a conditional license to operate slot machines at Presque Isle Downs in Erie County, Pennsylvania. In February 2007, Presque Isle opened slot machine gaming operations at the Erie property. In July 2007, Presque Isle commenced pari-mutuel wagering at Presque Isle Downs and paid Downs Racing $7.0 million in return for the conveyance of the Erie OTW facility, pursuant to the terms of the agreement. The Authority has accordingly reported the results of the Erie OTW facility from 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 $792,000 and $1.5 million for the three months and six months ended March 31, 2007, respectively.

21

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 8—SEGMENT REPORTING:

As of March 31, 2008, the Authority own and operate Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun Country Club at Pautipaug property in Connecticut (the “Connecticut Entities”), and the Pocono Downs Entities. All of the Authority’s revenues are derived from these operations. The Authority’s executive officers review and assess the performance and operating results and determine the proper allocation of resources to the Connecticut Entities and the Pocono Downs Entities on a separate basis. The Authority, therefore, believes that it has two operating segments, one comprised solely of Mohegan Sun, which includes the operations of the Connecticut Entities, and another, referred to as Pocono Downs, herein, comprised of the operations of the Pocono Downs Entities. The two operating segments are also separate reportable segments due to the differing nature of their operations. The following tables provide financial information on each segment (in thousands):

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2008			2007			2008			2007(1)
Net revenues:
Mohegan Sun	$	346,467		$	342,592		$	685,894		$	698,125
Pocono Downs		46,110			47,432			93,632			76,482
Total		392,577			390,024			779,526			774,607
Income (loss) from operations:
Mohegan Sun		62,840			73,430			118,782			146,198
Pocono Downs		3,230			2,318			6,714			389
Corporate		(4,037	)		(2,549	)		(12,041	)		(5,222	)
Total		62,033			73,199			113,455			141,365
Accretion of discount to the relinquishment liability		(6,772	)		(7,448	)		(13,543	)		(14,897	)
Interest income		899			774			1,957			1,540
Interest expense, net of capitalized interest		(22,687	)		(24,113	)		(45,518	)		(47,724	)
Write-off of debt issuance costs		—			(71	)		—			(71	)
Other income (expense), net		(143	)		(247	)		71			(362	)
Income from continuing operations before minority interests		33,330			42,094			56,422			79,851
Minority interests		132			190			733			328
Income from continuing operations		33,462			42,284			57,155			80,179
Income from discontinued operations		—			36			—			31
Net income	$	33,462		$	42,320		$	57,155		$	80,210

	For the Six Months Ended March 31,
	2008		2007
Capital expenditures:
Mohegan Sun	$	84,078	$	29,608
Pocono Downs		72,527		30,392
Corporate		1		4
Total	$	156,606	$	60,004
	March 31, 2008		September 30, 2007
Total assets:
Mohegan Sun	$	1,575,566	$	1,540,349
Pocono Downs (including goodwill of $39,459)		510,532		444,206
Corporate		93,182		95,422
Total	$	2,179,280	$	2,079,977

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

22

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 9—SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:

As of March 31, 2008, substantially all of the Authority’s outstanding public debt, including its 2005 Senior Notes, 2002 Senior Subordinated Notes, 2003 Senior Subordinated Notes, 2004 Senior Subordinated Notes and 2005 Senior Subordinated Notes, is fully and unconditionally guaranteed by the following subsidiaries of the Authority: MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming. MBC is the only subsidiary guarantor, on a full and unconditional basis, of the 2001 Senior Subordinated Notes. Separate financial statements and other disclosures concerning MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG and MTGA Gaming are not presented below because the Authority believes that the summarized financial information provided below and in Note 8 is adequate for investor analysis of these subsidiaries. Condensed consolidating financial statement information for the Authority, MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs Entities, Mohegan Golf, MVW, WTG, MTGA Gaming and the non-guarantor subsidiary, Salishan-Mohegan, as of March 31, 2008 and September 30, 2007 and for the three months and six months ended March 31, 2008 and 2007 is as follows (in thousands):

CONDENSED CONSOLIDATING BALANCE SHEETS

	As of March 31, 2008
	Authority		Guarantor Subsidiaries		Non-Guarantor Subsidiary		Consolidating/ Eliminating Adjustments			Consolidated Total
ASSETS
Property and equipment, net	$	1,301,005	$	188,045	$	19,951	$	—		$	1,509,001
Intercompany receivables		293,575		10,855		—		(304,430	)		—
Investment in subsidiaries		198,078		2,635		—		(200,713	)		—
Other intangible assets, net		119,827		273,428		—		—			393,255
Other assets, net		193,938		67,025		16,061		—			277,024
Total assets	$	2,106,423	$	541,988	$	36,012	$	(505,143	)	$	2,179,280
LIABILITIES AND CAPITAL
Total current liabilities	$	307,510	$	47,581	$	292	$	—		$	355,383
Long-term debt, net of current portion		1,343,487		2,600		19,500		—			1,365,587
Relinquishment liability, net of current portion		381,884		—		—		—			381,884
Intercompany payables		—		293,575		10,855		(304,430	)		—
Other long-term liabilities		626		—		—		—			626
Total liabilities		2,033,507		343,756		30,647		(304,430	)		2,103,480
Minority interests in subsidiaries		—		469		—		2,731			3,200
Total capital		72,916		197,763		5,365		(203,444	)		72,600
Total liabilities and capital	$	2,106,423	$	541,988	$	36,012	$	(505,143	)	$	2,179,280

23

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

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

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

	For the Three Months Ended March 31, 2008
	Authority			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	346,473		$	46,105		$	—		$	(1	)	$	392,577
Operating costs and expenses:
Gaming and other operations		209,410			35,202			—			(1	)		244,611
Advertising, general and administrative		55,162			6,318			334			—			61,814
Pre-opening costs and expenses		3			9			—			—			12
Depreciation and amortization		20,901			3,206			—			—			24,107
Total operating costs and expenses		285,476			44,735			334			(1	)		330,544
Income (loss) from operations		60,997			1,370			(334	)		—			62,033
Accretion of discount to the relinquishment liability		(6,772	)		—			—			—			(6,772	)
Interest expense, net of capitalized interest		(13,135	)		(9,229	)		(531	)		208			(22,687	)
Loss on interests in subsidiaries		(7,898	)		(82	)		—			7,980			—
Other income (expense), net		270			(2	)		696			(208	)		756
Income (loss) from continuing operations before minority interests		33,462			(7,943	)		(169	)		7,980			33,330
Minority interests		—			45			—			87			132
Net income (loss)	$	33,462		$	(7,898	)	$	(169	)	$	8,067		$	33,462

24

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

	For the Three Months Ended March 31, 2007
	Authority			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	342,593		$	47,434		$	—		$	(3	)	$	390,024
Operating costs and expenses:
Gaming and other operations		197,809			35,245			—			(3	)		233,051
Advertising, general and administrative		51,714			8,109			517			—			60,340
Pre-opening costs and expenses		4			193			—			—			197
Depreciation and amortization		20,358			2,879			—			—			23,237
Total operating costs and expenses		269,885			46,426			517			(3	)		316,825
Income (loss) from operations		72,708			1,008			(517	)		—			73,199
Accretion of discount to the relinquishment liability		(7,448	)		—			—			—			(7,448	)
Interest expense, net of capitalized interest		(14,927	)		(9,186	)		(573	)		573			(24,113	)
Loss on interests in subsidiaries		(8,024	)		(163	)		—			8,187			—
Other income, net		11			258			760			(573	)		456
Income (loss) from continuing operations before minority interests		42,320			(8,083	)		(330	)		8,187			42,094
Minority interests		—			23			—			167			190
Income (loss) from continuing operations		42,320			(8,060	)		(330	)		8,354			42,284
Income from discontinued operations		—			36			—			—			36
Net income (loss)	$	42,320		$	(8,024	)	$	(330	)	$	8,354		$	42,320

	For the Six Months Ended March 31, 2008
	Authority			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	685,660		$	93,869		$	—		$	(3	)	$	779,526
Operating costs and expenses:
Gaming and other operations		420,625			71,951			—			(3	)		492,573
Advertising, general and administrative		109,448			14,643			723			—			124,814
Pre-opening costs and expenses		15			17			—			—			32
Depreciation and amortization		41,432			7,220			—			—			48,652
Total operating costs and expenses		571,520			93,831			723			(3	)		666,071
Income (loss) from operations		114,140			38			(723	)		—			113,455
Accretion of discount to the relinquishment liability		(13,543	)		—			—			—			(13,543	)
Interest expense, net of capitalized interest		(26,306	)		(18,512	)		(1,154	)		454			(45,518	)
Loss on interests in subsidiaries		(17,627	)		(153	)		—			17,780			—
Other income, net		491			426			1,565			(454	)		2,028
Income (loss) from continuing operations before minority interests		57,155			(18,201	)		(312	)		17,780			56,422
Minority interests		—			574			—			159			733
Net income (loss)	$	57,155		$	(17,627	)	$	(312	)	$	17,939		$	57,155

25

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

	For the Six Months Ended March 31, 2007
	Authority			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	698,134		$	76,485		$	—		$	(12	)	$	774,607
Operating costs and expenses:
Gaming and other operations		405,726			58,141			—			(12	)		463,855
Advertising, general and administrative		106,901			11,625			1,005			—			119,531
Pre-opening costs and expenses		308			3,437			—			—			3,745
Depreciation and amortization		41,105			5,006			—			—			46,111
Total operating costs and expenses		554,040			78,209			1,005			(12	)		633,242
Income (loss) from operations		144,094			(1,724	)		(1,005	)		—			141,365
Accretion of discount to the relinquishment liability		(14,897	)		—			—			—			(14,897	)
Interest expense, net of capitalized interest		(30,167	)		(17,557	)		(1,101	)		1,101			(47,724	)
Loss on interests in subsidiaries		(18,972	)		(295	)		—			19,267			—
Other income, net		152			550			1,506			(1,101	)		1,107
Income (loss) from continuing operations before minority interests		80,210			(19,026	)		(600	)		19,267			79,851
Minority interests		—			23			—			305			328
Income (loss) from continuing operations		80,210			(19,003	)		(600	)		19,572			80,179
Income from discontinued operations		—			31			—			—			31
Net income (loss)	$	80,210		$	(18,972	)	$	(600	)	$	19,572		$	80,210

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

	For the Six Months Ended March 31, 2008
	Authority			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidating/ Eliminating Adjustments			Consolidated Total
Net cash flows provided by (used in) operating activities	$	112,153		$	(7,169	)	$	(680	)	$	—		$	104,304
Cash flows used in investing activities:
Purchases of property and equipment		(76,106	)		(46,868	)		—			—			(122,974	)
Other cash flows used in investing activities		(54,428	)		(570	)		(1,431	)		55,504			(925	)
Net cash flows used in investing activities		(130,534	)		(47,438	)		(1,431	)		55,504			(123,899	)
Cash flows provided by (used in) financing activities:
Bank Credit Facility borrowings—revolving loan		223,000			—			—			—			223,000
Bank Credit Facility repayments—revolving loan		(135,000	)		—			—						(135,000	)
Line of credit borrowings		228,281			—			—			—			228,281
Line of credit repayments		(244,872	)		—			—			—			(244,872	)
Principal portion of relinquishment liability payments		(25,111	)		—			—			—			(25,111	)
Distributions to Tribe		(43,306	)		—			—			—			(43,306	)
Other cash flows provided by (used in) financing activities		(2,797	)		54,475			2,278			(55,504	)		(1,548	)
Net cash flows provided by financing activities		195			54,475			2,278			(55,504	)		1,444
Net (decrease) increase in cash and cash equivalents		(18,186	)		(132	)		167			—			(18,151	)
Cash and cash equivalents at beginning of period		89,282			16,307			7			—			105,596
Cash and cash equivalents at end of period	$	71,096		$	16,175		$	174		$	—		$	87,445

26

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

	For the Six Months Ended March 31, 2007
	Authority			Guarantor Subsidiaries			Non-Guarantor Subsidiary			Consolidating/ Eliminating Adjustments			Consolidated Total
Net cash flows provided by (used in) operating activities	$	116,920		$	12,624		$	(472	)	$	—		$	129,072
Cash flows provided by (used in) investing activities:
Purchases of property and equipment		(27,966	)		(25,660	)		—			—			(53,626	)
Payment of Category One slot machine license fee		—			(50,000	)		—			—			(50,000	)
Other cash flows provided by (used in) investing activities		(76,495	)		3,417			(1,889	)		69,229			(5,738	)
Net cash flows used in investing activities		(104,461	)		(72,243	)		(1,889	)		69,229			(109,364	)
Cash flows provided by (used in) financing activities:
Prior Bank Credit Facility borrowings—revolving loan		278,000			—			—			—			278,000
Prior Bank Credit Facility repayments—revolving loan		(278,000	)		—			—			—			(278,000	)
Bank Credit Facility borrowings—revolving loan		81,000			—			—			—			81,000
Line of credit borrowings		305,436			—			—			—			305,436
Line of credit repayments		(305,436	)		—			—			—			(305,436	)
Principal portion of relinquishment liability payments		(24,599	)		—			—			—			(24,599	)
Distributions to Tribe		(36,481	)		—			—			—			(36,481	)
Other cash flows provided by (used in) financing activities		(22,625	)		78,132			2,501			(69,229	)		(11,221	)
Net cash flows provided by (used in) financing activities		(2,705	)		78,132			2,501			(69,229	)		8,699
Net increase in cash and cash equivalents		9,754			18,513			140			—			28,407
Cash and cash equivalents at beginning of period		75,794			(548	)		—			—			75,246
Cash and cash equivalents at end of period	$	85,548		$	17,965		$	140		$	—		$	103,653

27

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 March 31, 2008, and the related condensed consolidated statements of income and of changes in capital for each of the three-month and six-month periods ended March 31, 2008 and 2007 and the condensed consolidated statement of cash flows for the six-month periods ended March 31, 2008 and 2007. These interim financial statements are the responsibility of the Authority’s management.

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

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

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

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut.

May 14, 2008

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include information relating to business development activities, as well as capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and increased competition. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on our behalf. These risks and uncertainties include, but are not limited to, those relating to increased competition (including the legalization or expansion of gaming in New England, New York, New Jersey and Pennsylvania), the financial performance of Mohegan Sun, Mohegan Sun at Pocono Downs and the off-track wagering facilities located in Pennsylvania, or the Pocono Downs entities, dependence on existing management, potential adverse changes in local, regional, national or global economic climates, our ability to complete our current and proposed expansion projects at Mohegan Sun and Mohegan Sun at Pocono Downs on time and on budget, our leverage and ability to meet our debt service obligations, changes in federal, state or local tax laws or the administration of such laws, changes in gaming laws or regulations (including the limitation, denial or suspension of licenses required under gaming laws and regulations), the availability of financing on favorable terms and the ability to achieve positive results on our diversification projects. Additional information concerning potential factors that could affect our financial results is included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2007, as well as our other reports and filings with the SEC. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances, except as required by law. We 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. 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.

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Mohegan Sun

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

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

Casino of the Earth

As of March 31, 2008, the Casino of the Earth had approximately 188,000 square feet of gaming space and offered:

• approximately 3,600 slot machines and 200 table games (including blackjack, roulette, craps and baccarat);

• food and beverage amenities, including the Birches Bar & Grill, a 285-seat full-service restaurant and bar, three full-service themed fine dining restaurants, with a fourth area featuring cuisine from all three adjacent restaurant themes, a 630-seat buffet, a ten-station food court featuring international and domestic cuisine, the “Hong Kong” Street food outlet offering authentic Southeast Asian cuisine, and multiple service bars, all operated by us, for a current total of approximately 1,700 restaurant seats;

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

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

• five retail shops providing shopping opportunities ranging from Mohegan Sun logo souvenirs to cigars; and

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

Casino of the Sky

As of March 31, 2008, the Casino of the Sky had approximately 119,000 square feet of gaming space and offered:

• approximately 2,400 slot machines and 120 table games (including blackjack, roulette, craps and baccarat);

• food and beverage amenities, including two full-service restaurants, two quick-service restaurants, a 24-hour coffee shop, a 350-seat buffet and five lounges and bars operated by us, as well as four full-service restaurants, three quick-service restaurants and a multi-station food court operated by third parties, for a total of approximately 2,600 restaurant seats;

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

• the Mohegan Sun Arena with seating for up to 10,000;

• a 350-seat Cabaret;

• The Shops at Mohegan Sun containing 32 different retail shops, eight of which we own;

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

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

• approximately 100,000 square feet of convention space; and

• a child care facility and an arcade style entertainment area operated by a third party.

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

Project Horizon

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

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

We are also constructing the Casino of the Wind, a new gaming area adjacent to the Casino of the Sky, which is expected to include approximately 45,000 square feet of gaming space with approximately 670 slot machines, 28 table games and a themed poker room with 42 tables, as well as approximately 20,000 square feet of new dining and retail amenities, including a two-level, 16,000-square-foot Jimmy Buffett’s Margaritaville Restaurant and the return of Chief’s Deli, a casual dining restaurant which we will operate. Groundbreaking for the Casino of the Wind occurred in June 2007, and the new casino is scheduled to open in the fall of 2008. The estimated cost of the Casino of the Wind is $125.0 million.

Project Horizon also includes the Earth Expansion, which features the Earth hotel. The Earth hotel is expected to include approximately 919 rooms, including approximately 261 House of Blues-themed hotel rooms, and a House of Blues Foundation Room. The Earth Expansion also is planned to include new House of Blues-themed dining and entertainment amenities, including an approximately 36,000-square-foot music hall and a 3,000-square-foot special events room. In addition, the Earth Expansion will include approximately 44,000 square feet of retail space, additional food and beverage facilities, including two fine-dining options, a burger restaurant, four bars, a family-style sit down pizzeria and a four-station quick-serve dining area. Groundbreaking for the Earth Expansion occurred on May 14, 2008. The Earth hotel and related facilities are expected to open in October 2010. The estimated cost of the Earth Expansion is $682.0 million.

The Property Infrastructure component of Project Horizon is underway and includes a 1,500-space parking garage and additional surface parking lots, site development and road improvements on or adjacent to the property. The estimated cost is $101.0 million.

Total costs for Project Horizon, inclusive of costs incurred to date, currently are estimated to be approximately $925.0 million, exclusive of capitalized interest. Remaining project costs are estimated to be incurred as follows: fiscal year 2008, $207.0 million; fiscal year 2009, $270.0 million; fiscal year 2010, $357.0 million; and fiscal year 2011, $45.0 million.

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Connecticut Sun

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

Mohegan Golf

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

Mohegan Sun at Pocono Downs

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

Downs Racing continues its harness racing activities for the 2008 racing season, which began on April 1, 2008. Year round simulcast pari-mutuel wagering activities also are conducted at Mohegan Sun at Pocono Downs and the OTW facilities. A new state of the art, pari-mutuel simulcast facility at Mohegan Sun at Pocono Downs opened in March 2006.

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

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

Pocono Downs was the first location to offer slot machine gaming in the Commonwealth of Pennsylvania when Phase I of the gaming and entertainment facility opened to the public on November 14, 2006. The total cost incurred for development of the Phase I facility was approximately $70.0 million, excluding a $50.0 million one-time slot machine license fee. The two-level casino includes 90,000 square feet of gaming space, currently operates 24 hours a day, seven days a week and houses approximately 1,200 slot machines with denominations ranging from one cent to $25. The facility also offers two casino bars, a food court and a retail shop.

Project Sunrise, the Phase II gaming and entertainment facility at Mohegan Sun at Pocono Downs, is being developed at Pocono Downs on land adjacent to the existing gaming facility. When completed, the combined facility is anticipated to include approximately 2,500 slot machines, three full-service restaurants, a 300-seat

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buffet, a quick-serve dining area, six retail outlets, three bars/lounges, additional parking and bus amenities. Construction commenced in May 2007 with a grand opening planned in the summer of 2008. The final cost of Project Sunrise is anticipated to be approximately $208.0 million.

Other Diversification Projects

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

Cowlitz Project

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

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

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.

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

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

Other Projects

New York

In April 2008, our wholly owned subsidiary, MTGA Gaming, LLC, or MTGA Gaming, and Capital Play, Inc., or Capital Play, and its partners, Extell Development Company and Plainfield Special Situations Master Fund Limited, submitted a new joint proposal to the State of New York to develop and manage the proposed VLT facility and a mixed-use retail and hotel facility to be developed at Aqueduct Racetrack in Jamaica, New York. If Capital Play’s bid is selected, MTGA Gaming would manage the proposed 4,500 VLT facility at Aqueduct Racetrack, which is currently expected to open in the fall of 2009.

Kansas

In September 2007, MTGA Gaming, along with Olympia Gaming-KC, LLC, and RED Leg Sun, LLC, or RED, formed Leg Sun, LLC, or Leg Sun, a joint venture which was created to submit an application to the Kansas Lottery Commission for the proposed development of a gaming facility and destination resort to be named Legends Sun and located in Wyandotte County, Kansas. In accordance with the Kansas Expanded Lottery Act, the project will be subject to various reviews, requirements and approvals by the Kansas Lottery Commission, which is considering several other proposals for the right to develop a single resort casino in Wyandotte County. Three applicants, Leg Sun, Pinnacle Entertainment, Inc., and Cordish Company, received endorsements from the Unified Government of Wyandotte County/Kansas City, Kansas for their proposals and have applied to the Kansas Lottery Commission for approval as the gaming facility manager for Wyandotte County. Two other applicants, Las Vegas Sands Corporation and Golden Gaming, Inc., also have received endorsements from the city of Edwardsville, also located in Wyandotte County, and have applied to the Kansas Lottery Commission for approval. The Kansas Lottery Gaming Facility Review Board is expected to select a manager for the Wyandotte County facility by the end of September 2008.

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If selected by the Kansas Lottery Gaming Facility Review Board, the proposed $770.0 million Legends Sun complex would feature a wide array of attractions and amenities that include a casino with approximately 2,000 slot machines, 60 table games and 25 poker tables, a Robert Trent Jones II designed championship golf course, a luxury hotel with approximately 350 rooms, a convention and conference facility, approximately 200,000 square feet of mixed-use retail and approximately 200,000 square feet of residential development.

In a separate matter, in February 2008, a Kansas district court judge ruled that the Kansas Expanded Lottery Act does not violate the Kansas Constitution and properly allows for state-owned casinos, including those being proposed in Wyandotte County. On May 14, 2008, the Kansas Supreme Court heard an appeal of the district court decision.

On March 28, 2008, MTGA Gaming was admitted as a member in Mohegan Gaming & Hospitality, LLC, or MG&H, a Delaware limited liability company formed by the Tribe. Following the admission of MTGA Gaming, the Tribe holds a 51.0% membership interest in MG&H and MTGA Gaming holds the remaining 49.0% interest. In connection with its admission, MTGA Gaming assigned to MG&H, its one-third membership interest in Leg Sun, along with the right to manage, and participate in the development of, the planned Legends Sun complex. MG&H subsequently assigned the membership interest in Leg Sun to Mohegan Resorts, LLC, or Mohegan Resorts, a Delaware limited liability company formed by MG&H, as its sole member. In turn, Mohegan Resorts assigned the membership interest in Leg Sun to Mohegan Resorts Kansas, LLC, a Delaware limited liability company formed by Mohegan Resorts, as its sole member. It is anticipated that, in addition to the ownership, management and development activities related to the Legends Sun project, certain of our and the Tribe’s diversification efforts will be conducted, directly or indirectly, through MG&H and Mohegan Resorts.

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, 2007 for further detail regarding our current and projected competition from other gaming operations.

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

Mohegan Sun

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

Connecticut

According to published reports, the three-year, $700.0 million expansion of Foxwoods is nearing completion, and MGM Grand at Foxwoods is expected to open on May 17, 2008, with 825 hotel rooms, 1,444 slot machines, 53 table games and additional retail, entertainment, parking, meeting and convention facilities.

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New York

St. Regis Mohawk Tribe—On January 4, 2008, the BIA notified the St. Regis Mohawk Tribe of its rejection of the tribe’s application to take 29 acres of land into trust for gaming adjacent to the Monticello Raceway in Monticello, New York. This decision followed the BIA’s rejection of 10 other land-into-trust applications and the issuance of new guidance regarding taking off-reservation land into trust for tribal gaming, which requires greater scrutiny of the perceived benefits to the tribe in such acquisitions the greater the distance between a proposed project and the tribe’s existing reservation. On January 10, 2008, the St. Regis Mohawk Tribe filed a suit in federal district court in New York to invalidate the BIA’s decision. According to published reports, in February 2008, Empire Resorts closed its development office at the Monticello Raceway and entered into an agreement with Concord Associates, L.P., for the development of a $500.0 million to $700.0 million resort, harness race track and VLT facility at the Concord Hotel property in nearby Kiamesha Lake, New York, to replace the current Monticello Raceway and Mighty M VLT facility. Demolition of certain buildings at the Concord Hotel property commenced in April 2008. On February 13, 2008, the St. Regis Mohawk Tribe reported that they would be ending their pursuit of a casino at the Monticello Raceway and withdrawing their lawsuit challenging the BIA decision.

Aqueduct—The State of New York and the New York Racing Association, or NYRA, reached an agreement on February 13, 2008 for the NYRA to continue to operate racing at the three NYRA tracks for a new term of 25 years. The NYRA’s reorganization plan was approved by a bankruptcy court on April 28, 2008, but VLT rights at the NYRA’s Aqueduct Racetrack will be awarded separately. MTGA Gaming, in conjunction with Capital Play, was one of six groups that submitted initial bids to operate at least 4,500 VLTs at the Aqueduct Racetrack and one of three groups that presented updated bids in April 2008. The other bidders are S.L. Green Realty Corporation, which has partnered with Hard Rock Entertainment, and Saratoga Harness Racing, Inc. and its partner, Delaware North Companies. According to recent reports, the VLT franchise at Aqueduct will be awarded by joint agreement of the Governor, Senate Majority Leader and House Speaker in New York and construction is expected to take 12 to 14 months.

Massachusetts

On March 21, 2008, the Massachusetts House of Representatives defeated Governor Patrick’s casino proposal bill by a vote of 108 to 46. Also in March 2008, the BIA commenced public hearings on the request by the federally-recognized Mashpee Wampanoag Tribe to take approximately 539 acres of land into trust in the town of Middleboro and additional land in the town of Mashpee for the tribe’s initial reservation. According to published reports, the Mashpee Wampanoag Tribe has scaled back plans for its $1.0 billion casino project. Plans include a 240,000 square-foot casino, three or four stories in height, with an adjoining 15 to 18 story-hotel. According to two recent polls conducted by Citizens for Limited Taxation and the UMass-Dartmouth Center for Policy Analysis, public opinion in Massachusetts favors casino gambling in the state by an almost two-to-one margin.

New Jersey

Tropicana Entertainment, LLC, the parent company of the Tropicana Casino and Resort filed for bankruptcy on May 5, 2008. Published reports also indicate that Trump Entertainment Resorts, Inc., is reportedly exploring strategic options, including the sale of its three Atlantic City properties. On April 23, 2008, the city council in Atlantic City gave final approval to an extended ban on smoking that will prohibit smoking on all casino gaming floors effective October 15, 2008. All but one of the city’s casinos have announced plans to build separate smoking rooms, which under the ordinance, may not be staffed nor offer gaming.

Rhode Island

In March 2008, UTGR, Inc. the owner of the Twin River VLT facility in Lincoln reportedly missed a loan payment and had its corporate credit rating downgraded. On May 6, 2008, the Rhode Island state legislature overrode the Governor’s veto of a bill to expand gaming hours at Twin River and Newport Grand to 24 hours per

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day on weekends and holidays, and to 3 a.m. on weekdays, with liquor sales still ending at 1 a.m. Twin River adopted the expanded hours on May 9, 2008.

Mohegan Sun at Pocono Downs

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

Mount Pocono—In October 2007, Mount Airy #1, LLC opened its $412.0 million Mount Airy Casino Resort approximately 40 miles from Pocono Downs, and houses approximately 2,300 slot machines. In late 2007, the facility introduced a 188-room hotel and Gypsies Lounge Nightclub. Reports indicate that by the end of 2008, the facility will be expanded to include 3,000 slot machines, 400 hotel rooms, four restaurants, a night club, conference rooms, a spa, indoor and outdoor pools, retail shops and additional parking. On January 30, 2008, the license of Mount Airy #1, LLC was suspended by the PGCB and a trustee was appointed to oversee casino operations at Mount Airy Casino Resort following the filing of perjury charges against Mount Airy’s owner, Louis A. DeNaples.

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

Explanation of Key Financial Statement Captions

Gross revenues

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

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

• food and beverage revenues;

• hotel revenues; and

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

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

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with wide-area progressive jackpot amounts, to arrive at net slot revenues, also referred to as net slot win. Net slot revenues are included in gaming revenues in the accompanying consolidated statements of income. Slot handle is the total amount wagered by patrons on slot machines during the period, including free promotional slot plays used by patrons at Mohegan Sun, or the e-Bonus program. Gross slot hold percentage is the gross slot win as a percentage of slot handle. Net slot hold percentage is the net slot win as a percentage of slot handle.

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

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

Promotional allowances

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

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

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

Gaming expenses

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

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

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

Income from operations

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

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

In February 1998, we entered into a relinquishment agreement with Trading Cove Associates, or TCA. The relinquishment agreement provides that we will make certain payments to TCA out of, and determined as a percentage of, revenues (as defined in the relinquishment agreement) generated by Mohegan Sun over a 15-year period. In accordance with Statement of Financial Accounting Standards, or SFAS, No. 5, “Accounting for Contingencies,” or SFAS 5, we have recorded a relinquishment liability of the estimated present value of our obligations under the relinquishment agreement. We reassess projected revenues (and consequently the relinquishment liability) (i) annually in conjunction with our budgeting process and (ii) when necessary to account for material increases or decreases in projected revenues over the relinquishment period. Further, we record a quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimates and judgments used with respect to calculating the relinquishment liability, future events that affect such estimates and judgments may cause the actual relinquishment liability to differ significantly from the estimate. In addition, we have capitalized $130.0 million of this relinquishment liability in connection with the trademark value of the Mohegan Sun brand name. Under SFAS No. 142, “Goodwill and Other Intangible Assets,” or SFAS 142, the Mohegan Sun trademark is no longer subject to amortization because it has been deemed to have an indefinite useful life. SFAS 142, however, requires the trademark to be evaluated at least annually for impairment by applying a fair-value test and, if impairment occurs, the amount of impaired trademark must be written off immediately. Refer to Note 6 to our condensed consolidated financial statements for a further discussion of how we account for the relinquishment liability

Results of Operations

Summary Operating Results

As of March 31, 2008, we own and operate Mohegan Sun, the Connecticut Sun WNBA franchise and the Mohegan Sun Country Club at Pautipaug property in Connecticut, or the Connecticut entities, and the Pocono Downs entities. All of our revenues are derived from these operations. Our executive officers review and assess the performance and operating results and determine the proper allocation of resources to the Connecticut entities and the Pocono Downs entities on a separate basis. We therefore believe that we have two operating segments, one comprised solely of Mohegan Sun, which includes the operations of the Connecticut entities, and another, referred to as Pocono Downs, herein, comprised of the operations of the Pocono Downs entities. The two operating segments are also separate reportable segments due to the differing nature of their operations. See Note 8 to the condensed consolidated financial statements for financial information about the segments.

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

	For the Three Months Ended March 31,											For the Six Months Ended March 31,
	2008			2007			Dollar Variance			Percentage Variance		2008			2007(1)			Dollar Variance			Percentage Variance
Net revenues:
Mohegan Sun	$	346,467		$	342,592		$	3,875		1.1	%	$	685,894		$	698,125		$	(12,231	)	-1.8	%
Pocono Downs		46,110			47,432			(1,322	)	-2.8	%		93,632			76,482			17,150		22.4	%
Total	$	392,577		$	390,024		$	2,553		0.7	%	$	779,526		$	774,607		$	4,919		0.6	%
Income (loss) from operations:
Mohegan Sun	$	62,840		$	73,430		$	(10,590	)	-14.4	%	$	118,782		$	146,198		$	(27,416	)	-18.8	%
Pocono Downs		3,230			2,318			912		39.3	%		6,714			389			6,325		1626.0	%
Corporate expenses		(4,037	)		(2,549	)		(1,488	)	-58.4	%		(12,041	)		(5,222	)		(6,819	)	-130.6	%
Total	$	62,033		$	73,199		$	(11,166	)	-15.3	%	$	113,455		$	141,365		$	(27,910	)	-19.7	%
Net income	$	33,462		$	42,320		$	(8,858	)	-20.9	%	$	57,155		$	80,210		$	(23,055	)	-28.7	%

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

The important factors and trends that most contributed to our financial performance for the three months and six months ended March 31, 2008 and 2007 are as follows:

• lower slot revenues at Mohegan Sun in the three months and six months ended March 31, 2008, due to increased competition in the Northeast gaming market from Foxwoods Resort Casino in Connecticut and VLT facilities at Yonkers Raceway in Yonkers, New York and Twin River in Lincoln, Rhode Island;

• a general downturn in the regional economy which had the effect of reducing slot revenues for the three months and six months ended March 31, 2008;

• the opening of the Phase I slot facility at Mohegan Sun at Pocono Downs in November 2006, which generated gross slot revenues of $79.2 million and $62.2 million for the six months ended March 31, 2008 and 2007, respectively;

• higher table games drop and revenues at Mohegan Sun, resulting from the continued success of Mohegan Sun’s domestic and Asian table games marketing program and by the August 2007 opening of the 46-table Sunrise Square expansion;

• higher marketing and promotional costs in response to the increased competition in the Northeast gaming market from Foxwoods Resort Casino, Yonkers Raceway and Twin River;

• higher operating costs for Mohegan Sun, including medical benefit costs and salary and wage costs;

• the launching of new television commercials highlighting the Mohegan Sun brand during the three months ended March 31, 2008;

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

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

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Non-recurring factors that affected our financial performance for the three months and six months ended March 31, 2008 and 2007 are as follows:

• abnormally high promotional activities in December 2007 from Foxwoods Resort Casino, which had the effect of reducing slot revenues for the Connecticut gaming market for the six months ended March 31, 2008, including slot revenues at Mohegan Sun;

• unfavorable weather conditions in the Northeast region compared to the prior year, which also contributed to the decrease in slot revenues at Mohegan Sun for the six months ended March 31, 2008;

• a $3.5 million non-cash charge in the six months ended March 31, 2008 due to an adjustment to the allowance on the future collection of reimbursable development costs and expenses, and an impairment charge to reduce the carrying value of development rights, both pertaining to the Menominee project as discussed above under “Overview-Other Diversification Projects-Menominee Project”; and

• a $3.3 million charge recorded in the three months ended March 31, 2007 in connection with a settlement of property tax litigation related to the Pocono Downs facility.

Net revenues increased slightly for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily as a result of the growth in table games revenues and entertainment and other revenues at Mohegan Sun. This increase was partially offset by the decline in slot revenues at Mohegan Sun and an increase in promotional allowances at both Mohegan Sun and Mohegan Sun at Pocono Downs. The increase in net revenues for the six months ended March 31, 2008 was also due to the increase in slot revenues at Mohegan Sun at Pocono Downs due to a full period of operations of the slot facility.

Income from operations decreased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year as a result of increases in operating costs and expenses of 4.3% and 5.2%, respectively, partially offset by the slight increase in net revenues. Our operating margin, or income from operations as a percentage of net revenues, for the three months and six months ended March 31, 2008 decreased to 15.8% and 14.6%, respectively, from 18.8% and 18.2%, respectively, for the same periods in the prior year. This decline was primarily attributable to decreases in Mohegan Sun’s operating margin for the three months and six months ended March 31, 2008 compared to the same periods in the prior year of 330 and 360 basis points, respectively, to 18.1% and 17.3% for the three months and six months ended March 31, 2008, respectively, from 21.4% and 20.9% for the three months and six months ended March 31, 2007, respectively. This decline was primarily attributable to the decrease in slot revenues; higher casino marketing and promotional expenditures in response to the increased competition and promotional activities in our market; higher advertising expenditures from the production and release of new television commercials; higher medical benefit costs; and increased direct labor costs principally due to market driven compensation adjustments. The overall decrease in operating margin for the six months ended March 31, 2008 was also due to a full period of operations of the 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, and the $6.8 million increase in corporate related expenses as further discussed below under “Corporate Expenses and Other Income (Expense).”

Net income decreased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily due to the decrease in income from operations, partially offset by lower interest costs as further discussed below under “Corporate Expenses and Other Income (Expense).”

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Mohegan Sun

Gross Revenues

Gross revenues consisted of the following (in thousands):

	For the Three Months Ended March 31,									For the Six Months Ended March 31,
	2008		2007		Dollar Variance			Percentage Variance		2008		2007		Dollar Variance			Percentage Variance
Gaming	$	311,173	$	311,214	$	(41	)	0.0	%	$	615,960	$	629,847	$	(13,887	)	-2.2	%
Food and beverage		22,663		22,084		579		2.6	%		45,963		46,147		(184	)	-0.4	%
Hotel		11,850		11,221		629		5.6	%		24,427		24,163		264		1.1	%
Retail, entertainment and other		30,836		25,811		5,025		19.5	%		61,149		57,229		3,920		6.8	%
Total	$	376,522	$	370,330	$	6,192		1.7	%	$	747,499	$	757,386	$	(9,887	)	-1.3	%

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

	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2008		2007		2008		2007
Gaming	82.7	%	84.0	%	82.4	%	83.2	%
Food and beverage	6.0	%	6.0	%	6.1	%	6.1	%
Hotel	3.1	%	3.0	%	3.3	%	3.2	%
Retail, entertainment and other	8.2	%	7.0	%	8.2	%	7.5	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

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

	For the Three Months Ended March 31,											For the Six Months Ended March 31,
	2008			2007			Variance			Percentage Variance		2008			2007			Variance			Percentage Variance
Slot handle	$	2,566		$	2,518		$	48		1.9	%	$	4,990		$	5,193		$	(203	)	-3.9	%
Gross slot revenues	$	214		$	220		$	(6	)	-2.7	%	$	422		$	449		$	(27	)	-6.0	%
Net slot revenues	$	206		$	212		$	(6	)	-2.8	%	$	408		$	434		$	(26	)	-6.0	%
Weighted average number of slot machines (in units)		6,161			6,105			56		0.9	%		6,173			6,145			28		0.5	%
Gross slot hold percentage		8.3	%		8.7	%		-0.4	%	-4.6	%		8.5	%		8.6	%		-0.1	%	-1.2	%
Gross slot win per unit per day   (in dollars)	$	382		$	400		$	(18	)	-4.5	%	$	374		$	401		$	(27	)	-6.7	%
Table games drop	$	666		$	624		$	42		6.7	%	$	1,315		$	1,209		$	106		8.8	%
Table games revenues	$	102		$	96		$	6		6.3	%	$	203		$	191		$	12		6.3	%
Weighted average number of table games (in units)		324			305			19		6.2	%		323			305			18		5.9	%
Table games hold percentage (1)		15.4	%		15.4	%		—		—			15.4	%		15.8	%		-0.4	%	-2.5	%
Table games revenue per unit per day (in dollars)	$	3,473		$	3,500		$	(27	)	-0.8	%	$	3,429		$	3,435		$	(6	)	-0.2	%

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

Gaming revenues for the three months and six months ended March 31, 2008 compared to the same periods in the prior year decreased primarily due to the decline in slot revenues. The decrease in slot revenues was primarily attributable to the increased competition from Yonkers Raceway and Twin River and the continued weakening of consumer spending in the Northeast region. The decline in slot revenues for the six months ended

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March 31, 2008 was also attributable to the abnormally high December 2007 promotional activities from Foxwoods Resort Casino, which had the effect of reducing slot revenues for the Connecticut gaming market, including slot revenues at Mohegan Sun. During the six months ended March 31, 2008, Foxwoods Resort Casino issued free promotional slot plays to their patrons totaling $42.2 million compared to $13.9 million in the same period in the prior year. The State of Connecticut reported slot revenues of $389.4 million and $410.1 million for the three months ended March 31, 2008 and 2007, respectively, and $774.0 million and $835.3 million for the six months ended March 31, 2008 and 2007, respectively, representing decreases of 5.1% and 7.3% in the Connecticut market for the three months and six months ended March 31, 2008, respectively. However, Mohegan Sun increased its market share to 55.0% and 54.6% for the three months and six months ended March 31, 2008, respectively, from 53.6% and 53.7% for the same periods in the prior year, respectively. Mohegan Sun also increased its slot win efficiency, or percentage of gross slot win in the Connecticut slot market divided by the percentage of slot machines in the market, to 117.1% and 117.5% for the three months and six months ended March 31, 2008, respectively, from 116.8% and 116.7% for the same periods in the prior year, respectively. The decrease in gross slot hold percentage, or gross slot revenues divided by slot handle, was primarily attributable to the introduction $8.5 million and $9.2 million in free promotional slot play during the three and six months ended March 31, 2008, respectively. The decrease in slot revenues for the three months and six months ended March 31, 2008 was partially offset by the increase in table games revenues due to the continued success of Mohegan Sun’s domestic and Asian table games marketing program and by the opening of the 46-table Sunrise Square expansion in August 2007.

Food and beverage revenues for the three months ended March 31, 2008 compared to the same period in the prior year increased slightly as a result of a $307,000 increase in food revenues and a $272,000 increase in beverage revenues. These increases were primarily attributable to the addition of $1.0 million in food and beverage revenues from the “Hong Kong” Street food outlet in Sunrise Square, which opened in August 2007, partially offset by decreased patronage at other Authority-owned food and beverage outlets. Food and beverage revenues for the six months ended March 31, 2008 compared to the same period in the prior year decreased slightly as a result of a $198,000 decrease in food revenues. This decrease was primarily due to the decreased patronage described above, partially offset by the addition of $2.1 million in food and beverage revenues from the “Hong Kong” Street food outlet.

The following table presents data related to hotel revenues:

	For the Three Months Ended March 31,											For the Six Months Ended March 31,
	2008			2007			Variance			Percentage Variance		2008			2007			Variance			Percentage Variance
Rooms occupied		96,242			96,700			(458	)	-0.5	%		196,309			193,140			3,169		1.6	%
Average daily room rate (ADR)	$	116		$	110		$	6		5.5	%	$	116		$	119		$	(3	)	-2.5	%
Occupancy rate		90.0	%		91.4	%		-1.4	%	-1.5	%		91.3	%		90.3	%		1.0	%	1.1	%
Revenue per available room (REVPAR)	$	105		$	101		$	4		4.0	%	$	105		$	107		$	(2	)	-1.9	%

Hotel revenues for the three months ended March 31, 2008 compared to the same period in the prior year increased as a result of an increase in ADR, partially offset by a decrease in hotel occupancy. The increase in ADR is consistent with increases in room rates offered to transient and group hotel guests in the Northeast gaming market. Hotel revenues for the six months ended March 31, 2008 compared to the same period in the prior year increased as a result of an increase in hotel occupancy, partially offset by a decrease in ADR. The increase in hotel occupancy is the result of rooms being out of service during the six months ended March 31, 2007 due to the hotel room renovation program, which began in January 2007 and was completed in June 2007.

Retail, entertainment and other revenues for the three months and six months ended March 31, 2008 compared to the same periods in the prior year increased primarily as a result of increases in entertainment revenues of $3.3 million, or 39.7%, and $2.4 million, or 11.7%, respectively, due to increases in average price

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per ticket at the Mohegan Sun Arena of 39.7% and 11.0%, respectively. The increases in average price per ticket were due to increases in the number of headliner shows performed in the Arena as compared to the same periods in the prior year. The increase in retail, entertainment and other revenues for the three months and six months ended March 31, 2008 compared to the same periods in the prior year is also the result of increases in gasoline revenues of $1.1 million, or 18.1%, and $1.8 million, or 16.3%, respectively, due to increases in average price per gallon of gasoline sold at the Mohegan Sun gasoline and convenience center.

Promotional Allowance

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

	For the Three Months Ended March 31,									For the Six Months Ended March 31,
	2008		2007		Dollar Variance			Percentage Variance		2008		2007		Dollar Variance			Percentage Variance
Food and beverage	$	10,754	$	10,322	$	432		4.2	%	$	21,655	$	21,198	$	457		2.2	%
Hotel		3,681		3,794		(113	)	-3.0	%		7,608		8,217		(609	)	-7.4	%
Retail, entertainment and other		15,620		13,622		1,998		14.7	%		32,342		29,846		2,496		8.4	%
Total	$	30,055	$	27,738	$	2,317		8.4	%	$	61,605	$	59,261	$	2,344		4.0	%

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 March 31,									For the Six Months Ended March 31,
	2008		2007		Dollar Variance			Percentage Variance		2008		2007		Dollar Variance			Percentage Variance
Food and beverage	$	11,355	$	10,735	$	620		5.8	%	$	22,748	$	21,647	$	1,101		5.1	%
Hotel		1,983		2,106		(123	)	-5.8	%		3,985		4,142		(157	)	-3.8	%
Retail, entertainment and other		12,870		11,235		1,635		14.6	%		26,894		24,498		2,396		9.8	%
Total	$	26,208	$	24,076	$	2,132		8.9	%	$	53,627	$	50,287	$	3,340		6.6	%

Promotional allowances for the three months and six months ended March 31, 2008 compared to the same periods in the prior year increased as a result of an increase in retail, entertainment and other promotional allowances, driven primarily by the higher retail price of entertainment offerings and gasoline as discussed above under “Gross Revenues.”

Operating Costs and Expenses

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

	For the Three Months Ended March 31,									For the Six Months Ended March 31,
	2008		2007		Dollar Variance			Percentage Variance		2008		2007		Dollar Variance			Percentage Variance
Gaming	$	183,221	$	173,950	$	9,271		5.3	%	$	368,329	$	354,475	$	13,854		3.9	%
Food and beverage		11,148		11,184		(36	)	-0.3	%		23,040		22,979		61		0.3	%
Hotel		4,305		4,136		169		4.1	%		8,602		8,081		521		6.4	%
Retail, entertainment and other		11,316		8,955		2,361		26.4	%		21,829		20,881		948		4.5	%
Advertising, general and administrative		52,434		50,403		2,031		4.0	%		103,354		103,812		(458	)	-0.4	%
Pre-opening costs and expenses		3		4		(1	)	-25.0	%		15		308		(293	)	-95.1	%
Depreciation and amortization		21,200		20,528		672		3.3	%		41,943		41,389		554		1.3	%
Total	$	283,627	$	269,160	$	14,467		5.4	%	$	567,112	$	551,925	$	15,187		2.8	%

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Gaming costs and expenses increased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily as a result of higher casino marketing and promotional expenditures in response to the increased competition and promotional activities in our market; higher medical benefit costs; increased direct labor costs principally due to market driven compensation adjustments; and an increase in non-gaming complimentaries redeemed by casino patrons at Authority-owned outlets. The increase in gaming costs and expenses for the six months ended March 31, 2008 was partially offset by lower slot win contribution to the State of Connecticut commensurate with the decline in gross slot revenues for the period. Slot win contribution expenses totaled $55.7 million and $108.0 million for the three months and six months ended March 31, 2008, respectively, and $54.9 million and $112.1 million for the three months and six months ended March 31, 2007, respectively. As a result of the cost increases mentioned above, gaming costs and expenses as a percentage of gaming revenues increased to 58.9% and 59.8% for the three months and six months ended March 31, 2008, respectively, from 55.9% and 56.3% for the three months and six months ended March 31, 2007, respectively.

Food and beverage costs and expenses for the three months ended March 31, 2008 were comparable to food and beverage costs and expenses for the same period in the prior year. Food and beverage costs and expenses increased slightly for the six months ended March 31, 2008 compared to the same period in the prior year due to higher direct labor and medical benefit costs, partially offset by a higher amount of food and beverage complimentaries resulting in an increased amount of food and beverage costs being allocated to gaming costs and expenses.

Hotel costs and expenses increased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily as a result of increased direct labor and medical benefit costs.

Retail, entertainment and other costs and expenses increased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily due to a substantial increase in direct entertainment costs during the three months ended March 31, 2008, resulting from the change in the mix of Mohegan Sun Arena events to include more headliner shows. The increase in retail, entertainment and other costs and expenses for the three months and six months ended March 31, 2008 was partially offset by increased entertainment and other complimentaries resulting in a higher amount of retail, entertainment and other costs and expenses being allocated to gaming costs and expenses, as well as decreased cost of goods sold for retail due to lower patronage at Authority-owned retail outlets.

Advertising, general and administrative costs and expenses increased for the three months ended March 31, 2008 compared to the same period in the prior year primarily as a result of the increase in advertising expenditures from the production and release of new television commercials, higher direct labor and medical benefit costs and increased professional costs and consulting expenditures. The increase was partially offset by decreases in property maintenance costs and workers’ compensation costs. Advertising, general and administrative costs and expenses decreased for the six months ended March 31, 2008 compared to the same period in the prior year primarily as a result of approximately $2.0 million in non-recurring charges recorded during the six months ended March 31, 2007 in connection with the Mohegan Sun ten-year anniversary festivities for employees and casino patrons, as well as decreases in property maintenance costs and workers’ compensation costs. The decrease in advertising, general and administrative costs and expenses for the six months ended March 31, 2008 was partially offset by higher direct labor and medical benefit costs, increased professional costs and consulting expenditures, and higher utility costs.

Pre-opening costs and expenses for the three months and six months ended March 31, 2008 and 2007 were comprised of personnel, consulting and other costs associated with the development plans for Project Horizon, as described above under “Overview-Mohegan Sun.” Pre-opening costs and expenses for the six months ended March 31, 2007 related primarily to the Sunrise Square component of Project Horizon, which opened in August 2007.

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Mohegan Sun at Pocono Downs

Gross Revenues

Gross revenues consisted of the following (in thousands):

	For the Three Months Ended March 31,									For the Six Months Ended March 31,
	2008		2007		Dollar Variance			Percentage Variance		2008		2007(1)		Dollar Variance		Percentage Variance
Gaming	$	44,704	$	45,690	$	(986	)	-2.2	%	$	90,562	$	73,323	$	17,239	23.5	%
Food and beverage		2,206		1,530		676		44.2	%		4,524		2,621		1,903	72.6	%
Retail and other		1,098		874		224		25.6	%		2,320		1,332		988	74.2	%
Total	$	48,008	$	48,094	$	(86	)	-0.2	%	$	97,406	$	77,276	$	20,130	26.0	%

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

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

	For the Three Months Ended March 31,				For the Six Months Ended March 31,
	2008		2007		2008		2007(1)
Gaming	93.1	%	95.0	%	93.0	%	94.9	%
Food and beverage	4.6	%	3.2	%	4.6	%	3.4	%
Retail and other	2.3	%	1.8	%	2.4	%	1.7	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

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

	For the Three Months Ended March 31,											For the Six Months Ended March 31,
	2008			2007			Variance			Percentage Variance		2008			2007(1)			Variance			Percentage Variance
Slot handle	$	453,130		$	418,203		$	34,927		8.4	%	$	912,924		$	636,110		$	276,814		43.5	%
Gross slot revenues	$	39,293		$	40,493		$	(1,200	)	-3.0	%	$	79,193		$	62,309		$	16,884		27.1	%
Net slot revenues	$	39,226		$	39,853		$	(627	)	-1.6	%	$	79,085		$	61,482		$	17,603		28.6	%
Weighted average number of slot machines (in units)		1,203			1,107			96		8.7	%		1,203			1,104			99		9.0	%
Gross slot hold percentage		8.7	%		9.7	%		-1.0	%	-10.3	%		8.7	%		9.8	%		-1.1	%	-11.2	%
Gross slot win per unit per day (in dollars)	$	359		$	406		$	(47	)	-11.6	%	$	360		$	409		$	(49	)	-12.0	%

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

Gaming revenues for the three months ended March 31, 2008 compared to the same period in the prior year decreased principally as a result of a decline in slot revenues due to the opening of Mount Airy Resort Casino on October 22, 2007, as discussed above under “Market and Competition from Other Gaming Operations-Mohegan Sun at Pocono Downs.” Gaming revenues for the six months ended March 31, 2008 compared to the same period in the prior year increased as a result of the increase in slot revenues due to a full period of operations of the slot facility, which opened on November 14, 2006. Gaming revenues for the three months and six months ended

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March 31, 2008 were also impacted by unfavorable weather conditions in Northeast Pennsylvania. Mohegan Sun at Pocono Downs’ slot win efficiency, or percentage of gross slot win in the Northeastern Pennsylvania slot market divided by the percentage of slot machines in the market, for the three and six months ended March 31, 2008 was 155.5% and 150.8%, respectively. Gross slot win per unit per day for the three months and six months ended March 31, 2008 compared to the same periods in the prior year decreased primarily due to the lower gross slot hold percentage and the opening of Mount Airy Resort Casino which had the effect of increasing slot product in the northeastern Pennsylvania gaming market. The decrease in gross slot hold percentage was primarily attributable to the introduction of electronic blackjack games during the period and a greater demand for higher denomination slot machines, both of which had a lower hold percentage than other slot machines.

Food and beverage revenues for the three months and six months ended March 31, 2008 compared to the same periods in the prior year increased primarily as a result of increased utilization of Mohegan Sun at Pocono Downs Player’s Club points and promotional coupons at the property’s restaurants. The increase in food and beverage revenues for the six months ended March 31, 2008 is also attributable to the full period of operations of the slot facility, which resulted in increased patron visitation to the facility.

Retail and other revenues for the three months and six months ended March 31, 2008 compared to the same periods in the prior year increased primarily as a result of increased utilization of Mohegan Sun at Pocono Downs Player’s Club points and promotional coupons at the property’s retail outlet. The increase in retail and other revenues for the six months ended March 31, 2008 is also attributable to the full period of operations of the slot facility, which resulted in increased patron visitation to the facility.

Promotional Allowances

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

	For the Three Months Ended March 31,								For the Six Months Ended March 31,
	2008		2007		Dollar Variance		Percentage Variance		2008		2007(1)		Dollar Variance		Percentage Variance
Food and beverage	$	1,488	$	435	$	1,053	242.1	%	$	2,827	$	524	$	2,303	439.5	%
Retail		410		227		183	80.6	%		947		270		677	250.7	%
Total	$	1,898	$	662	$	1,236	186.7	%	$	3,774	$	794	$	2,980	375.3	%

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

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

	For the Three Months Ended March 31,								For the Six Months Ended March 31,
	2008		2007		Dollar Variance		Percentage Variance		2008		2007(1)		Dollar Variance		Percentage Variance
Food and beverage	$	1,996	$	532	$	1,464	275.2	%	$	3,539	$	649	$	2,890	445.3	%
Retail		478		249		229	92.0	%		1,101		311		790	254.0	%
Total	$	2,474	$	781	$	1,693	216.8	%	$	4,640	$	960	$	3,680	383.3	%

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

Promotional allowances increased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily due to increased promotional programs offered and higher redemptions under the Player’s Club program.

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Operating Costs and Expenses

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

	For the Three Months Ended March 31,									For the Six Months Ended March 31,
	2008		2007		Dollar Variance			Percentage Variance		2008		2007(1)		Dollar Variance			Percentage Variance
Gaming	$	34,247	$	33,250	$	997		3.0	%	$	69,416	$	54,206	$	15,210		28.1	%
Food and beverage		250		1,267		(1,017	)	-80.3	%		1,082		2,600		(1,518	)	-58.4	%
Retail and other		124		352		(228	)	-64.8	%		275		633		(358	)	-56.6	%
Advertising, general and administrative		5,363		7,363		(2,000	)	-27.2	%		10,299		10,535		(236	)	-2.2	%
Pre-opening costs and expenses		9		193		(184	)	-95.3	%		17		3,437		(3,420	)	-99.5	%
Depreciation and amortization		2,887		2,689		198		7.4	%		5,829		4,682		1,147		24.5	%
Total	$	42,880	$	45,114	$	(2,234	)	-5.0	%	$	86,918	$	76,093	$	10,825		14.2	%

(1) Includes operating results of Phase I slot facility at Mohegan Sun at Pocono Downs from opening date of November 14, 2006 to March 31, 2007.

Gaming costs and expenses increased for the three months ended March 31, 2008 compared to the same period in the prior year primarily as a result of an increase in non-gaming complimentaries redeemed by casino patrons at food and beverage and retail outlets at the facility, partially offset by lower expenses associated with the PGCB slot machine and local share tax assessments commensurate with the decline in gross slot revenues for the period. Gaming costs and expenses increased for the six months ended March 31, 2008 compared to the same period in the prior year primarily as a result of higher operating costs and expenses necessary to support the full period of slot operations, including expenses associated with the PGCB slot machine and local share tax assessments, as well as an increase in non-gaming complimentaries redeemed by casino patrons at food and beverage and retail outlets at the facility. Slot machine and local share tax assessments to the PGCB totaled $23.3 million and $23.9 million for the three months ended March 31, 2008 and 2007, respectively, and $47.0 million and $36.8 million for the six months ended March 31, 2008 and 2007, respectively. As a result of the cost increases mentioned above, gaming costs and expenses as a percentage of gaming revenues increased to 76.6% and 76.7% for the three months and six months ended March 31, 2008, respectively, from 72.8% and 73.9% for the three months and six months ended March 31, 2007, respectively.

Food and beverage costs and expenses decreased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily due to a higher amount of food and beverage complimentaries resulting in an increased amount of food and beverage costs being allocated to gaming costs and expenses.

Retail and other costs and expenses decreased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily due to a higher amount of retail and other complimentaries resulting in an increased amount of retail and other costs being allocated to gaming costs and expenses.

Advertising, general and administrative costs and expenses decreased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily due to the $3.3 million non-recurring charge recorded during the three months ended March 31, 2007 in connection with a settlement of property tax litigation related to the Pocono Downs facility. This decrease was partially offset by higher advertising expenditures in response to the new competition, higher medical benefit costs due to an increase in the number of eligible participants and increased direct labor costs. The decrease in advertising, general and administrative costs and expenses for the six months ended March 31, 2008 was also partially offset by higher operating costs and expenses necessary to support the full period of slot operations.

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Pre-opening costs and expenses for the three months and six months ended March 31, 2008 were comprised of personnel, consulting and other costs associated with the development plans for Project Sunrise, as described above under “Overview-Mohegan Sun at Pocono Downs.” Pre-opening costs and expenses for the three months and six months ended March 31, 2007 related primarily to the opening of the Phase I slot facility.

Depreciation and amortization increased for the three months ended March 31, 2008 compared to the same period in the prior year primarily due to the placement of new capital assets into service. Depreciation and amortization increased for the six months ended March 31, 2008 compared to the same period in the prior year primarily due to a full period of depreciation on the slot facility and related slot machines and equipment placed in service in November 2006.

Corporate Expenses and Other Income (Expense)

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

	For the Three Months Ended March 31,										For the Six Months Ended March 31,
	2008			2007			Dollar Variance		Percentage Variance		2008			2007			Dollar Variance		Percentage Variance
Corporate expenses:
Depreciation and amortization	$	20		$	20		$	—	—		$	880		$	40		$	840	2100.0	%
Corporate expenses		4,017			2,531			1,486	58.7	%		11,161			5,184			5,977	115.3	%
Total corporate expenses	$	4,037		$	2,551		$	1,486	58.3	%	$	12,041		$	5,224		$	6,817	130.5	%
Other income (expense):
Accretion of discount to the relinquishment liability(1)	$	(6,772	)	$	(7,448	)	$	676	-9.1	%	$	(13,543	)	$	(14,897	)	$	1,354	-9.1	%
Interest income(2)		899			774			125	16.1	%		1,957			1,540			417	27.1	%
Interest expense, net of capitalized interest		(22,687	)		(24,113	)		1,426	-5.9	%		(45,518	)		(47,724	)		2,206	-4.6	%
Write-off of debt issuance costs(3)		—			(71	)		71	-100.0	%		—			(71	)		71	-100.0	%
Other income (expense), net		(143	)		(247	)		104	-42.1	%		71			(362	)		433	-119.6	%
Total other expense, net	$	(28,703	)	$	(31,105	)	$	2,402	-7.7	%	$	(57,033	)	$	(61,514	)	$	4,481	-7.3	%

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

(2) Comprised primarily of interest earned on long-term receivables from the Menominee Tribe related to the Menominee Project and the Cowlitz Tribe related to the Cowlitz Project, both more fully described in Notes 4 and 16, respectively, to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2007.

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

Total corporate expenses increased for the three months ended March 31, 2008 compared to the same period in the prior year primarily as a result increased professional costs and consulting expenditures related to various diversification efforts as described above under “Overview-Other Diversification Projects.” Total corporate expenses increased for the six months ended March 31, 2008 compared to the same period in the prior year primarily as a result of an adjustment to the allowance on the future collection of reimbursable development costs and expenses pertaining to the Menominee Project, as well as an impairment charge to reduce the carrying value of the development rights related to the Menominee Project to their estimated fair value. These adjustments were made as a result of January 2008 guidance from the BIA relating to its policy on taking off-reservation land into trust for gaming purposes as discussed above under “Overview-Other Diversification Projects-Menominee Project.” The resulting non-cash charge for this occurrence totaled approximately $3.5 million. The increase in

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total corporate expenses for the six months ended March 31, 2008 is also due to the increased professional costs and consulting expenditures.

Interest expense, net of capitalized interest, decreased for the three months and six months ended March 31, 2008 compared to the same periods in the prior year primarily due to the capitalization of approximately $1.8 million and $3.1 million in interest costs relating to Project Horizon and Project Sunrise for the three months and six months ended March 31, 2008, respectively, compared to $42,000 and $400,000 for the same periods in the prior year, respectively, relating to the Phase I slot facility at Pocono Downs. The weighted average outstanding debt was $1.35 billion and $1.33 billion for the three months and six months ended March 31, 2008, respectively, and $1.31 billion and $1.30 billion for the three months and six months ended March 31, 2007, respectively. The increase in weighted average outstanding debt was due to additional borrowings on the bank credit facility to fund Project Horizon and Project Sunrise. The weighted average interest rate for the three months and six months ended March 31, 2008 was 7.2% and 7.3%, respectively, compared to 7.4% for each of the three months and six months ended March 31, 2007.

Seasonality

The gaming industry in Connecticut is seasonal in nature, with the heaviest gaming activity often occurring at Mohegan Sun between May and August. Additionally, live harness racing activity at Pocono Downs is seasonal, with the racing season commencing in late March/early April and usually ending in November. The 2008 racing season is expected to end in September. The overall gaming industry in Pennsylvania also is expected to be seasonal in nature. Accordingly, the results of operations for the three months and six months ended March 31, 2008 are not necessarily indicative of the operating results for other interim periods or a full fiscal year.

Liquidity, Capital Resources and Capital Spending

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

	For the Six Months Ended March 31,
	2008			2007			Dollar Variance			Percentage Variance
Net cash flows provided by operating activities	$	104,304		$	129,072		$	(24,768	)	-19.2	%
Net cash flows used in investing activities		(123,899	)		(109,364	)		(14,535	)	13.3	%
Net cash flows provided by financing activities		1,444			8,699			(7,255	)	-83.4	%
Net (decrease) increase in cash and cash equivalents	$	(18,151	)	$	28,407		$	(46,558	)	-163.9	%

As of March 31, 2008 and September 30, 2007, we held cash and cash equivalents of $87.4 million and $105.6 million, respectively. As a result of the cash-based nature of our business, operating cash flow levels tend to follow trends in our operating income, excluding the effects of non-cash charges, such as depreciation and amortization and relinquishment liability reassessments. The decrease in cash provided by operating activities for the six months ended March 31, 2008 compared to the same period in the prior year is attributable primarily to the decrease in operating income after adjustments for non-cash items and higher working capital requirements, partially offset by the receipt of $7.0 million pursuant to the amendment to the Pocono Downs purchase agreement, as discussed above under “Overview-Mohegan Sun at Pocono Downs.”

Operating activities are a significant source of our cash flows. We use our cash flows provided by operating activities primarily to meet our working capital requirements, provide funding for our maintenance capital expenditures and a portion of our expansion capital expenditures, reduce our debt, provide distributions to the Tribe, provide payments under the relinquishment agreement and, from time to time, make investments. While we do not believe that there is any trend or a likely event that would adversely impact the level of our cash flows

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provided by operating activities, there are numerous potential factors which may cause a substantial reduction in the amount of such cash flows, including, but not limited to, the following:

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

• eroding consumer confidence in the economy, which could result in reduced spending on discretionary items such as gaming activities;

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

• a change in Connecticut or Pennsylvania state laws regarding smoking in gaming facilities; and

• an act of terrorism in the United States of America.

In addition to cash generated by operating activities, we have relied on external sources of liquidity to meet our capital requirements. The increase in cash used in investing activities for the six months ended March 31, 2008 compared to the same period in the prior year is attributable primarily to a $69.3 million increase in capital expenditures due to the construction projects described below under “Capital Expenditures-Capital Expenditures Incurred;” partially offset by the payment of the one-time slot machine license fee of $50.0 million to the PGCB and the acquisition of the Menominee Project development rights and other related assets for $6.4 million, both of which occurred during the six months ended March 31, 2007. The decrease in cash used in financing activities for the six months ended March 31, 2008 compared to the same period in the prior year is attributable primarily to a $6.6 million decrease in total net borrowings. Borrowings during the six months ended March 31, 2008 were used principally to fund capital expenditures at Mohegan Sun and Pocono Downs. Borrowings during the six months ended March 31, 2007 funded the payment of the $50.0 million slot license fee for Pocono Downs.

External Sources of Liquidity

Notes. We financed the purchase of the Pocono Downs entities and much of the costs of construction of Mohegan Sun and Pocono Downs with the net proceeds raised from the issuance of notes and borrowings under our bank credit facilities. As of March 31, 2008, we had $16.3 million outstanding in 8 ³/8% 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 6 ³/8% senior subordinated notes due July 15, 2009, or the 2003 senior subordinated notes; $225.0 million outstanding in 7 ¹/8% 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 6 ¹/8% senior notes due February 15, 2013 and first callable February 15, 2009, or the 2005 senior notes; and $150.0 million outstanding in 6 ⁷/8% senior subordinated notes due February 15, 2015 and first callable February 15, 2010, or the 2005 senior subordinated notes. MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming are guarantors of each of these notes, except for the 2001 senior subordinated notes, which are guaranteed solely by MBC. Refer to Note 3 to our condensed consolidated financial statements in this Form 10-Q for a further discussion of these notes.

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

Bank Credit Facility. In March 2007, we entered into a bank credit facility providing for up to $1.0 billion in borrowing capacity from a syndicate of 23 financial institutions and commercial banks, with Bank of America, N.A. serving as Administrative Agent. The total commitment on this facility may be increased to $1.25 billion at our option. The five-year senior secured revolving credit facility includes a $300.0 million term loan conversion provision which is triggered upon the initial accumulation of $300.0 million in total borrowings on the bank

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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 March 31, 2008, the amount under letters of credit totaled $6.4 million, of which no amount was drawn, as discussed below under “Letters of Credit.” Inclusive of letters of credit, which reduce borrowing availability under the bank credit facility, we had approximately $872.6 million of available borrowing capacity under the bank credit facility as of March 31, 2008, without taking into account covenants under the line of credit as described below.

At our option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month Eurodollar rate, plus in either case, the Applicable Rate based on our Total Leverage Ratio, as each term is defined in the bank credit facility, at the time each loan is made. We also pay commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the product obtained by multiplying the Applicable Rate for commitment fees by the average daily unused commitment for that calendar quarter. The Applicable Rate for base rate advances is between 0.000% and 1.125%, and the Applicable Rate for Eurodollar rate advances is between 1.250% and 2.375%. The Applicable Rate for commitment fees is between 0.200% and 0.350%. The base rate is the higher of Bank of America’s announced prime rate or the federal funds rate plus 0.50%. Interest on Eurodollar loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears. As of March 31, 2008, we had $121.0 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at March 31, 2008 were comprised of: (1) an $87.0 million loan based on a one-month Eurodollar rate of 2.82% plus an Applicable Rate of 1.38% and (2) a $34.0 million loan based on a one-month Eurodollar rate of 2.59% plus an Applicable Rate of 1.38%. The Applicable Rate for commitment fees was 0.25% as of March 31, 2008.

The 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 bank credit facility as we or our guarantor subsidiaries acquire them. Our obligations under the bank credit facility are guaranteed by MBC, Mohegan Ventures-NW, MCV-PA, the Pocono Downs entities, Mohegan Golf, MVW, WTG and MTGA Gaming. The bank credit facility subjects us to a number of restrictive covenants, including financial covenants. These financial covenants relate to, among other things, our permitted total debt and senior debt leverage ratios, our minimum fixed charge coverage ratio, our maximum capital expenditures and a periodic test which ensures we have sufficient liquidity under the bank credit facility and other allowed borrowings, projected cash flows over applicable construction periods and existing cash and cash equivalents to cover planned construction expenditures.

On February 13, 2008, we received requisite consent from our lenders to Amendment No. 1 to the bank credit facility. Amendment No. 1, among other things, provide for increases in the permitted capital expenditures for Project Horizon and Project Sunrise from $800.0 million and $200.0 million, respectively, to $950.0 million and $215.0 million, respectively. Amendment No. 1 also modifies certain provisions of the loan agreement, including our total leverage, senior leverage and minimum fixed charge coverage ratio covenants to conform with the increase in projected expenditures and the change in the projected completion dates for Project Horizon and Project Sunrise.

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

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

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

• except under specific conditions, limit us from selling or disposing of our assets, limit the transfer of our assets to our non-guarantor subsidiary, limit the incurrence by us and our guarantor subsidiaries of

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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 March 31, 2008, we and the Tribe were in compliance with all of our and their respective covenant requirements in the bank credit facility.

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

Letters of Credit.As of March 31, 2008, we maintained 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 potential contractor and subcontractor liabilities relating to the Project Horizon expansion at Mohegan Sun. The letters of credit expire on August 31, 2008, January 25, 2009, and September 5, 2008, respectively, subject to renewals. As of March 31, 2008, no amounts were drawn on the letters of credit.

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

As of March 31, 2008, Salishan-Mohegan had $19.5 million in Eurodollar rate loans and no base rate loans outstanding. The Eurodollar rate loans outstanding at March 31, 2008 were comprised of: (1) a $17.2 million loan based on a one-month Eurodollar rate of 2.60% plus an Applicable Rate of 2.25%; (2) a $1.5 million loan based on a one-month Eurodollar rate of 3.00% plus an Applicable Rate of 2.25%; and (3) a $750,000 loan based on a one-month Eurodollar rate of 2.56% plus an Applicable Rate of 2.25%. The Applicable Rate for commitment fees was 0.50% as of March 31, 2008. As of March 31, 2008, Salishan-Mohegan had $5.5 million of available borrowing capacity under the Salishan Credit Facility.

Capital Expenditures

Capital Expenditures Incurred

Capital expenditures totaled $156.6 million for the six months ended March 31, 2008, compared to $60.0 million for the six months ended March 31, 2007. These capital expenditures were comprised of the following:

• Capital expenditures at Mohegan Sun totaled $84.1 million and $29.6 million for the six months ended March 31, 2008 and 2007, respectively. For the six months ended March 31, 2008, these expenditures consisted primarily of $71.0 million in costs related to the Project Horizon expansion, including $1.7 million in capitalized interest, $11.7 million in maintenance capital expenditures and $1.4 million in property renovation expenditures. For the six months ended March 31, 2007, these expenditures were

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principally related to maintenance capital expenditures, property renovation expenditures and costs related to the Project Horizon expansion.

• Capital expenditures at Mohegan Sun at Pocono Downs totaled $72.5 million and $30.4 million for the six months ended March 31, 2008 and 2007, respectively. For the six months ended March 31, 2008, these expenditures consisted primarily of $71.5 million in costs related to the Project Sunrise expansion, including $1.4 million in capitalized interest and $1.0 million in maintenance capital expenditures. For the six months ended March 31, 2007, these expenditures were comprised primarily of construction costs for the Phase 1 slot facility.

• Capital expenditures for the corporate division were minimal for the six months ended March 31, 2008 and 2007.

Expected Future Capital Expenditures

Capital expenditures for fiscal year 2008 at Mohegan Sun, exclusive of the Project Horizon expansion described above under “Overview-Mohegan Sun-Project Horizon,” are budgeted to be $58.0 million, which are expected to be comprised of the following:

• Maintenance capital expenditures for fiscal year 2008 at Mohegan Sun are anticipated to be $37.3 million for the replacement and improvements of information technology equipment and systems, Casino of the Earth renovations and the addition of slot machines and data warehouse storage.

• Property renovation expenditures are expected to be approximately $20.7 million including the replacement of obsolete coin redemption booths in the Casino of the Sky with slot machines, renovation of the Sky bar on the casino floor and preparation for the connection to the Casino of the Wind.

Total costs for Project Horizon, inclusive of costs incurred to date, currently are estimated to be approximately $925.0 million, exclusive of capitalized interest. Remaining project costs are estimated to be incurred as follows: fiscal year 2008, $207.0 million; fiscal year 2009, $270.0 million; fiscal year 2010, $357.0 million; and fiscal year 2011, $45.0 million.

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

Sources of Funding for Capital Expenditures

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

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Interest Expense

For the three months and six ended March 31, 2008 and 2007, we incurred the following in interest expense, net of capitalized interest (in thousands):

	For the Three Months Ended March 31,						For the Six Months Ended March 31,
	2008			2007			2008			2007
Bank credit facility	$	1,777		$	424		$	3,133		$	424
Prior Bank credit facility		—			1,188			—			2,755
2005 6 1/8% senior notes		3,828			3,828			7,656			7,656
2001 8 3/8 % senior subordinated notes		342			342			685			685
2002 8% senior subordinated notes		5,000			5,000			10,000			10,000
2003 6 3/8% senior subordinated notes		5,259			5,259			10,519			10,519
2004 7 1/8% senior subordinated notes		4,008			4,008			8,016			8,016
2005 6 7/8% senior subordinated notes		2,578			2,578			5,156			5,156
WNBA note		46			74			113			162
Line of credit		64			182			201			362
Salishan Credit Facility		297			290			646			525
Amortization of net deferred gain on settlement of derivative instruments		114			114			228			228
Amortization of debt issuance costs		1,178			868			2,277			1,636
Capitalized interest		(1,804	)		(42	)		(3,112	)		(400	)
Total interest expense, net of capitalized interest	$	22,687		$	24,113		$	45,518		$	47,724

Sufficiency of Resources

We believe that existing cash balances, financing arrangements and operating cash flows will provide us with sufficient resources to meet our existing debt obligations, relinquishment payments, foreseeable capital expenditure requirements with respect to current operations, Project Horizon, Project Sunrise and distributions to the Tribe for at least the next twelve months. Distributions to the Tribe are anticipated to total approximately $80.0 million for fiscal year 2008. Any future investments in Mohegan Sun related to the Project Horizon expansion and in Pocono Downs related to the Project Sunrise expansion are anticipated to be funded through a combination of our operating cash flows and bank credit facility, as discussed above under “Sources of Funding for Capital Expenditures.” As of March 31, 2008, we had $872.6 million available for borrowing capacity under our bank credit facility, without taking into account covenants under the line of credit.

Contractual Obligations and Commitments

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

Contractual Obligations (in thousands)	Total		Payments due by period
			Less than 1 year(1)		1-3 years		3-5 years		More than 5 years
Long-term debt(2)	$	1,365,445	$	—	$	351,500	$	388,345	$	625,600
Interest payments on long-term debt(3)		395,561		44,083		155,287		130,691		65,500
Construction obligations (4)		197,078		197,078		—		—		—
Procurement obligations(5)		26,450		7,010		11,795		5,945		1,700
Total	$	1,984,534	$	248,171	$	518,582	$	524,981	$	692,800

(1) Amounts represent payment obligations from April 1, 2008 to September 30, 2008.

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(2) Long-term debt includes maturities scheduled as of March 31, 2008 for our senior notes and senior subordinated notes, amounts required to be paid pursuant to the bank credit facility, and our other debt agreements, including the Salishan Credit Facility, but excludes interest payments. Refer to Note 3 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

(3) Includes interest payments expected to be paid on long-term debt as of March 31, 2008, pursuant to respective debt agreements. Refer to Note 3 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

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

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

In addition to the contractual obligations described above, we have certain other contractual commitments as of March 31, 2008 that require payments during the periods described below. The calculation of the estimated payments in the table below are based, in large part, on projections of future revenues over an extended period of time, as well as other factors that are indicated more fully in the footnotes to the following table. Since there are estimates and judgments used with respect to calculating these liabilities, future events that affect such estimates and judgments may cause the actual payments to differ from the estimates set forth below. The amounts included in the table are estimates and, while some agreements are perpetual in term, for the purposes of calculating these amounts, we have assumed that the table contains information for only ten years.

Contractual Commitments (in thousands)	Payments due by period
	Less than 1 year(1)		1-3 years		3-5 years		5-10 years
Minimum slot win contributions(2)	$	80,000	$	160,000	$	160,000	$	400,000
Relinquishment commitments(3)		78,034		149,044		168,725		203,197
Priority distributions(4)		17,303		36,100		38,186		105,406
Town of Montville commitment(5)		500		1,000		1,000		2,500
Host municipalities’ local share assessment(6)		10,000		20,000		20,000		50,000
Property tax litigation payments(7)		1,556		3,926		4,646		8,066
Total	$	187,393	$	370,070	$	392,557	$	769,169

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

(2) Slot win contributions are a portion of the gross slot revenues that must be paid by us to the State of Connecticut pursuant to the Mohegan Compact. The slot win contribution is the lesser of (a) 30% of gross slot revenues, or (b) the greater of (i) 25% of gross slot revenues or (ii) $80.0 million. Assuming the slot machine operations at Mohegan Sun produce future results similar to the fiscal year 2007 results, the minimum annual amount to be paid to the State of Connecticut would be $80.0 million.

(3) Relinquishment payments are made by us to TCA under a relinquishment agreement. Relinquishment payments are five percent of revenues, as defined in the relinquishment agreement. Refer to Note 6 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

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

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

(6) Pursuant to the Race Horse Development and Gaming Act of 2004, Downs Racing must pay, on an annual basis, to the PGCB amounts necessary to ensure the hosting municipalities of 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 5 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

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

Critical Accounting Policies and Estimates

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

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

Revenue Recognition

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

Allowance for Doubtful Accounts

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

We also maintain allowances for doubtful accounts for reimbursable costs and expenses incurred by Salishan-Mohegan and WTG for the development of casinos in Clark County, Washington and Kenosha, Wisconsin, respectively, to be owned by the Cowlitz Indian Tribe and Menominee Tribe, respectively. Due to the inherent uncertainty in the development of these casino projects, the reserve for these receivables is based on our estimate of the probability that the receivables will be collected. Future complications in the receipt of financing, the relevant land being taken into trust or other matters affecting the development of the casinos could affect the collectibility of the receivables.

Unredeemed Player’s Club Points

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

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Self-insurance Accruals

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

Relinquishment Liability

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

Property and Equipment

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

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

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

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

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

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impairment by comparing the fair value of the recorded assets to their carrying amount. If the carrying amount of the goodwill exceeds its fair value, an impairment loss will be recognized immediately.

Intangible Assets

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

Litigation

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

Impact of Inflation

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

New Accounting Pronouncements

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

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

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“FAS 141(R)”) and SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“FAS 160”). FAS 141(R) requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values and changes other practices under FAS 141. FAS 141(R) also requires additional disclosure of information surrounding a business combination, such that users of the entity’s financial statements can fully understand the nature and financial impact of the business combination. FAS 160

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requires entities to report non-controlling (minority) interests in subsidiaries as equity in the consolidated financial statements. We are required to adopt FAS 141(R) and FAS 160 simultaneously in our fiscal year beginning October 1, 2009. The provisions of FAS 141(R) will only impact us if we are party to a business combination after the pronouncement has been adopted. We are currently evaluating the potential impact that FAS 160 may have on our financial position, results of operations and cash flows.

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our bank credit facility in which interest will accrue on the basis of a base rate formula or a Eurodollar-based formula, plus Applicable Rates, as defined in the bank credit facility. As of March 31, 2008, we had $121.0 million drawn on the bank credit facility. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—External Sources of Liquidity” for further information relating to the terms and conditions of the bank credit facility.

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

The following table provides information as of March 31, 2008 about our current financial instruments (debt obligations) that are sensitive to changes in interest rates. The table presents principal payments and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied forward rates in respective yield curves, which should not be considered to be precise indicators of actual future interest rates. Fair values for variable-rate debt instruments are considered to approximate their carrying amounts and fair values for fixed-rate debt instruments, which are publicly traded, are based on quoted market prices as of March 31, 2008.

Liabilities	Expected Maturity Date																	Total			Fair Value
	2008		2009			2010			2011			2012			Thereafter
	(in thousands)
Long-Term Debt (including current portion):
Fixed Rate	$	—	$	330,000		$	—		$	16,345		$	250,000		$	625,000		$	1,221,345		$	1,102,547
Average interest rate		—		6.4	%		—			8.4	%		8.0	%		6.7	%		6.9	%
Variable Rate	$	—	$	20,500		$	1,000		$	1,000		$	121,000		$	600		$	144,100		$	144,100
Average interest rate		—		5.3	%		4.7	%		5.1	%		4.8	%		—			4.9	%

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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 March 31, 2008, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of disclosure controls and procedures. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the quarterly period ended March 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

Item 6. Exhibits

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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MOHEGAN TRIBAL GAMING AUTHORITY
Date: May 15, 2008	By:	/s/    BRUCE S. BOZSUM
		Bruce S. Bozsum Chairman and Member, Management Board
Date: May 15, 2008	By:	/s/    MITCHELL GROSSINGER ETESS
		Mitchell Grossinger Etess Chief Executive Officer, Mohegan Tribal Gaming Authority (Principal Executive Officer)
Date: May 15, 2008	By:	/s/    LEO M. CHUPASKA
		Leo M. Chupaska Chief Financial Officer, Mohegan Tribal Gaming Authority (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Constitution of the Mohegan Tribe of Indians of Connecticut, as amended (filed as Exhibit 3.1 to the Authority’s Registration Statement on Form S-4, filed with the SEC on November 1, 2004 (the “2004 Form S-4”), and incorporated by reference herein).
3.2	Ordinance No. 95-2 of the Tribe for Gaming on Tribal Lands, enacted on July 15, 1995 (filed as Exhibit 3.2 to the Authority’s Amendment No. 1 to the Authority’s Registration Statement on Form S-1, filed with the SEC on February 29, 1996 (the “1996 Forms S-1”), and incorporated by reference herein).
3.3	Articles of Organization of Mohegan Basketball Club LLC, dated as of January 27, 2003 (filed as Exhibit 3.3 to the Authority’s Registration Statement on Form S-4, filed with the SEC on September 23, 2003 (the “2003 Form S-4”), and incorporated by reference herein).
3.4	Operating Agreement of Mohegan Basketball Club LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of January 24, 2003 (filed as Exhibit 3.4 to the 2003 Form S-4, and incorporated by reference herein).
3.5	Certificate of Organization of Mohegan Commercial Ventures PA, LLC, dated as of January 6, 2005, as amended (filed as Exhibit 3.5 to the Authority’s Registration Statement on Form S-4, filed with the SEC on June 7, 2005 (the “2005 Senior Subordinated Form S-4”), and incorporated by reference herein).
3.6	Operating Agreement of Mohegan Commercial Ventures PA, LLC, a Commonwealth of Pennsylvania limited liability company, dated as of December 15, 2004 (filed as Exhibit 3.6 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.7	Certificate of Limited Partnership of Downs Racing, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.7 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.8	Amended and Restated Limited Partnership Agreement of Downs Racing, L.P., dated as of January 25, 2005 (filed as Exhibit 3.8 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.9	Certificate of Limited Partnership of Backside, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.9 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.10	Amended and Restated Limited Partnership Agreement of Backside, L.P., dated as of January 25, 2005 (filed as Exhibit 3.10 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.11	Certificate of Limited Partnership of Mill Creek Land, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.11 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.12	Amended and Restated Limited Partnership Agreement of Mill Creek Land, L.P., dated as of January 25, 2005 (filed as Exhibit 3.12 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.13	Certificate of Limited Partnership of Northeast Concessions, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.13 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
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 Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).
3.18	Articles of Amendment of Mohegan Golf, LLC, dated as of April 8, 2008 (filed herewith).
3.19	Certificate of Formation of Wisconsin Tribal Gaming, LLC, dated as of February 27, 2007 (filed as Exhibit 3.18 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 10-Q”), and incorporated by reference herein).
3.20	Articles of Organization of Mohegan Ventures Wisconsin, LLC, dated as of March 1, 2007 (filed as Exhibit 3.19 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 10-Q”), and incorporated by reference herein).
3.21	Certificate of Formation of MTGA Gaming, LLC, dated as of July 27, 2007 (filed as Exhibit 3.20 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).
4.1	Relinquishment Agreement, dated February 7, 1998, by and among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit 10.14 to the Authority’s Form 10-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 8 3/8% 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 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the June 2003 10-Q, and incorporated by reference herein).
4.4	Second Supplemental Indenture, dated as of July 28, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as exhibit 4.9 to the June 2004 10-Q and incorporated by reference herein).
4.5	Form of Global 8 3/8% 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).

65

Exhibit No.	Description
4.6	Indenture, dated as of February 20, 2002, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the Authority’s Registration Statement on Form S-4, filed with the SEC on March 27, 2002 (the “2002 Form S-4”), and incorporated by reference herein).
4.7	Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture) and the State Street Bank and Trust Company, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2003 10-Q, and incorporated by reference herein).
4.8	Amended and Restated Supplemental Indenture, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as exhibit 4.14 to the Authority’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004, filed with the SEC on February 14, 2005 (the “December 2004 10-Q”), and incorporated by reference herein).
4.9	Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.15 to the December 2004 10-Q, and incorporated by reference herein).
4.10	Supplemental Indenture No. 3, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the December 2004 10-Q, and incorporated by reference herein).
4.11	Supplemental Indenture No. 4, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.11 to the June 2006 10-Q and incorporated by reference herein).
4.12	Supplemental Indenture No. 5, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).
4.13	Supplemental Indenture No. 6, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.13 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 10-Q”), and incorporated by reference herein).

66

Exhibit No.	Description
4.14	Supplemental Indenture No. 7, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.14 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).
4.15	Form of Global 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.12 to the 2002 Form S-4, and incorporated by reference herein).
4.16	Indenture, dated as of July 9, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 to the June 2003 10-Q, and incorporated by reference herein).
4.17	Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the December 2004 10-Q, and incorporated by reference herein).
4.18	Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.21 to the December 2004 10-Q, and incorporated by reference herein).
4.19	Supplemental Indenture No. 3, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2006 10-Q and incorporated by reference herein).
4.20	Supplemental Indenture No. 4, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.18 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).
4.21	Supplemental Indenture No. 5, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 10-Q”), and incorporated by reference herein).
4.22	Supplemental Indenture No. 6, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.22 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).

67

Exhibit No.	Description
4.23	Form of Global 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2003 10-Q, and incorporated by reference herein).
4.24	Indenture, dated as of August 3, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 to the June 2004 10-Q, and incorporated by reference herein).
4.25	Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.25 to the December 2004 10-Q, and incorporated by reference herein).
4.26	Supplemental Indenture No. 2, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2006 10-Q and incorporated by reference herein).
4.27	Supplemental Indenture No. 3, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.23 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).
4.28	Supplemental Indenture No. 4, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 10-Q”), and incorporated by reference herein).
4.29	Supplemental Indenture No. 5, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).
4.30	Form of Global 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2004 10-Q, and incorporated by reference herein).
4.31	Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 (filed as Exhibit 4.28 to the December 2004 10-Q, and incorporated by reference herein).
4.32	Supplemental Indenture No. 1, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% 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).

68

Exhibit No.	Description
4.33	Supplemental Indenture No. 2, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.27 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).
4.34	Supplemental Indenture No. 3, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 10-Q”), and incorporated by reference herein).
4.35	Supplemental Indenture No. 4, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.35 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).
4.36	Form of Global 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the December 2004 10-Q, and incorporated by reference herein).
4.37	Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and Wachovia Bank, National Association, as Trustee, relating to the 6 1/8% Senior Notes Due 2013 (filed as Exhibit 4.31 to the December 2004 10-Q, and incorporated by reference herein).
4.38	Supplemental Indenture No. 1, dated as of August 4, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Ventures-Northwest, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.26 to the June 2006 10-Q and incorporated by reference herein).
4.39	Supplemental Indenture No. 2, dated as of December 18, 2006, among the Mohegan Tribal Gaming Authority, Mohegan Golf, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.31 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006, filed with the SEC on December 21, 2006, and incorporated by reference herein).
4.40	Supplemental Indenture No. 3, dated as of March 28, 2007, among the Mohegan Tribal Gaming Authority, Wisconsin Tribal Gaming, LLC and Mohegan Ventures Wisconsin, LLC (each a Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association (as successor to Wachovia Bank, National Association), as Trustee, relating to the 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.36 to the Authority’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2007, filed with the SEC on May 15, 2007 (the “March 2007 10-Q”), and incorporated by reference herein).

69

Exhibit No.	Description
4.41	Supplemental Indenture No. 4, dated as of August 27, 2007, among the Mohegan Tribal Gaming Authority, MTGA Gaming, LLC (as the Subsidiary Guarantor), the other Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.41 to the Authority’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed with the SEC on December 21, 2007, and incorporated by reference herein).
4.42	Form of Global 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.32 to the December 2004 10-Q, and incorporated by reference herein).
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
32.1	Section 1350 Certification of Chief Executive Officer (filed herewith).
32.2	Section 1350 Certification of Chief Financial Officer (filed herewith).

70