SETTLEMENT AGREEMENT

     This settlement  agreement  ("Agreement")  is entered into this 11th day of
February,  2000 among AMTOTE INTERNATIONAL,  INC. ("AmTote"),  PNGI CHARLES TOWN
GAMING LIMITED LIABILITY COMPANY ("PNGI"), and PENN NATIONAL GAMING, INC. ("Penn
National").

                                     RECITAL

                  A.  AmTote sued PNGI and Penn  National  in the United  States
District Court for the Northern District of West Virginia for claims arising out
of  certain   contracts   relating  to  the  Charles  Town  Race  Track,   ("the
Litigation"). Judgment ("Judgment") was awarded in AmTote's favor.

     B. PNGI and Penn  National  have  filed an appeal  ("the  Appeal")  of that
Judgment  in the United  States  Court of Appeals  for the  Fourth  Circuit.  C.
AmTote,  PNGI and Penn National have reached an agreement with respect to all of
their  disputes  arising  from or relating to the  Litigation,  the Judgment and
Appeal and/or to operations at the Charles Town Race Track.

                  NOW  THEREFORE,   in  consideration  of  the  mutual  promises
contained  herein and other good an  valuable  consideration,  the  receipt  and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereto  agree as
follows:

                  1.  Penn   National   and  PNGI   shall  pay  AmTote  in  full
satisfaction of the Judgment the sum of  $1,500,000.00 on or before the close of
business on February  25,  2000 by wire  transfer to such  account as shall have
been designated by AmTote.

     2. PNGI and Penn National agree to dismiss with prejudice the Appeal,  with
each party to bear its own costs.

     3. AmTote, on behalf of itself, its predecessors, successors, and assignees
has released and discharged  and by these presents does hereby remise,  release,
acquit,  quit  claim  and  forever  discharge  PNGI  and  Penn  National,  their
predecessors, trustees, directors, officers, agents, representatives, employees,
shareholders,  attorneys,  successors  and  assigns,  as well as their  parents,
subsidiaries and affiliates of and from any and all claims,  demands,  causes of
action, suits in law or in equity,  judgments,  obligations,  debts, agreements,
covenants, liens, damages, expenses, losses and liabilities of whatever kind and
nature,  whether known or unknown,  which AmTote now owns or holds or has at any
other time  previously  owned or held or had which  refer,  relate or  otherwise
pertain to the  Litigation,  the  Judgment,  the Appeal or to Charles  Town Race
Track.

                  4. PNGI and Penn  National  on  behalf of their  predecessors,
trustees, directors, officers, agents, representatives, employees, shareholders,
attorneys,  successors and assigns,  as well as their parents,  subsidiaries and
affiliates  have  released  and  discharged  and by these  presents  does hereby
remise,   release,   acquit,  quit  claim  and  forever  discharge  AmTote,  its
predecessors, successors, and assignees of and from any and all claims, demands,
causes of action,  suits in law or in  equity,  judgments,  obligations,  debts,
agreements,  covenants,  liens,  damages,  expenses,  losses and  liabilities of
whatever  kind and nature,  whether  known or unknown,  which AmTote now owns or
holds or has at any other  time  previously  owned or held or had  which  refer,
relate or otherwise  pertain to the Litigation,  the Judgment,  the Appeal or to
Charles Town Race Track.

     5. This Agreement  represents a compromise of disputed claims and shall not
in any way be considered an admission of liability by any person or entity named
or described herein.

6. This Agreement is entered into without reliance upon any
statement,  representation,  promise,  inducement  or  agreement  not  expressly
contained herein, and constitutes the entire agreement between the parties,  and
supersedes  all prior oral or written  agreements  concerning  the settlement of
claims among them.

     7.  This  Agreement  shall  binding  upon and inure to the  benefit  of the
parties, their respective, heirs, beneficiaries, successors and assigns.
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8. This
Agreement may not be amended,  modified or supplemented  except by an instrument
in writing  signed by the parties  hereto.  9. Each party agrees to execute such
further and additional  documents,  instruments or writings as may be necessary,
proper, required, desirable or convenient for the purpose of fully effecting the
terms and  provisions  of this  agreement,  including but not limited to a paper
dismissing with prejudice the Appeal.

     10. This Agreement  shall be governed and construed in accordance  with the
laws of the State of Maryland.

       AMTOTE INTERNATIONAL, INC.

       By: /s/Edmund T. Mudge

             Edmund T. Mudge, IV, President

       PNGI CHARLES TOWN GAMING, LIMITED LIABILITY COMPANY,

       By:  Penn National Gaming of West Virginia, Inc., Managing Member

                By: /s/William J. Bork

                      William J. Bork, Vice President

       PENN NATIONAL GAMING, INC.


       By: /s/William J. Bork

             William J. Bork

            President and Chief Operating Officer

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THE DOWNS, INC.                             PENNSYLVANIA HARNESS
                                                    HORSEMEN'S ASSOCIATION, INC.



By: __/s/Joseph A. Lashinger Jr.         By: _____________________________
    ---------------------------
       Joseph A. Lashinger, Jr., Esq.                 President


By: _____________________________       By: _____________________________
       Secretary                                       Secretary


(Corporate Seal)                                 (Corporate Seal)




Attest: ___________________________     Attest: ___________________________


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