PENN NATIONAL GAMING, INC.
                         Wyomissing Professional Center
                       825 Berkshire Boulevard, Suite 203
                              Wyomissing, PA 19610




                                November 2, 1998

Hal Handel, President
Greenwood New Jersey, Inc.
3001 Street Road
P. O. Box 1000
Bensalem, PA 19020-8512


Re:      Joint Venture Agreement relating to New Jersey Assets


Dear Mr. Handel:

         In connection with our Joint Venture  Agreement entered into on Friday,
October 30, 1998, we have further reviewed our memorandum of understanding  with
Lincoln Property Company ("Lincoln") referred to in our Joint Venture Agreement.
For a variety of reasons,  including  the fact that our joint  venture  does not
preclude Lincoln from obtaining the economic benefit sought in our memorandum of
understanding,  the fact that the joint proposal of Lincoln and Penn National to
ITB has  not  been  accepted  by ITB,  and  other  factors,  Penn  National  has
determined that it does not require the prior consent of Lincoln to proceed with
the joint venture with Greenwood New Jersey.

         Therefore,  we are  hereby  eliminating  as a  condition  of our  Joint
Venture Agreement the approval of Lincoln, or any action by Lincoln to enable us
to proceed with the joint venture with you.

         We  understand  that you have had no prior  agreement  with Lincoln and
that Penn National  Gaming,  Inc. shall remain  responsible  for any liabilities
associated with its prior arrangements with Lincoln. Specifically, Penn National
will indemnify  Greenwood New Jersey and its affiliates from any and all claims,
liabilities,  losses, damages, costs and expenses,  including reasonable counsel
fees and costs  related  thereto,  arising  from any claim  related to the prior
arrangements  between  Penn  National  and  Lincoln  relating  to the New Jersey
assets.

         Assuming that the  foregoing is acceptable to you, we would  appreciate
your  signing  below and  faxing  to us a copy of this  letter  containing  your
signature.

         We look forward to proceeding with our joint venture.

                                                     Very truly yours,

                                                     /S/ WILLIAM J. BORK
                                                     William J. Bork, President

Agreed to, this 2nd day of November, 1998.

                                                     GREENWOOD NEW JERSEY, INC.

                                                     By:    /S/ HAL HANDEL 
                                                     Hal Handel, President
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