AMENDMENT TO EMPLOYMENT AGREEMENT

This AMENDMENT TO EMPLOYMENT  AGREEMENT  ("Amendment"),  effective as of the 1st
day of June,  1999, by and between PENN NATIONAL  GAMING,  INC., a  Pennsylvania
corporation,  with its principal offices at 825 Berkshire Boulevard,  Suite 200,
Wyomissing,  Pennsylvania 19160 (the "Company") and Peter M. Carlino, individual
residing at 3 Open Hearth Drive, Reading, Pennsylvania 19607 (the "Employee").


                               B A C K G R O U N D

Company and Employee are parties to an  Employment  Agreement  dated as of April
12,  1994 (the  "Employment  Agreement")  and  desire  to amend  the  Employment
Agreement  as set forth in this  Amendment.  In  consideration  of their  mutual
promises and  covenants  set forth  herein,  and  intending to be legally  bound
hereby, Company and Employee agree as follows:

     1.  Paragraphs 2, 3 and 10 of the  Employment  Agreement be and the same is
hereby amended and restated in its entirety as follows:

2. Term. The term of this  Agreement  shall continue from year to year or sooner
terminated in accordance with the provisions of Paragraph 11 of this Agreement.

3.  Compensation.  For all services  rendered by Employee under this  Agreement,
Company agrees to pay Employee a salary at the annual rate of $380,000  ("Annual
Salary"), payable in weekly installments,  plus such additional compensation and
bonuses  as may be  awarded  from  time to  time to  Employee  by the  Board  of
Directors of Company.

10.  Death.  In the event of the death of the  Employee  during the term of this
Agreement,  this  Agreement  shall  terminate  effective  as of the  date of the
Employee's  death,  and the  Company  shall not have any further  obligation  or
liability  hereunder except that the Company shall pay to Employee's  designated
beneficiary  or, if none, his estate (i) the portion,  if any, of the Employee's
Annual Salary, and any reimbursements, for the period up to the end of the month
of  Employee's  date of death  which  remains  unpaid,  and (ii) the  amount  of
Employee's  Annual  Salary in effect at the time of his  death,  for a period of
twenty four months  following  the date of Employee's  death in equal  bi-weekly
installments,  which death  benefit  shall be in addition to any life  insurance
carried or paid for by Company on the life of Employee.

2. The Employment  Agreement,  except as amended hereby,  shall continue in full
force and effect in accordance with the terms and provisions thereof.

IN WITNESS  WHEREOF,  this  Amendment has been executed by the parties as of the
date first above written.
                                PENN NATIONAL GAMING, INC.


                                BY:      /s/ William J. Bork
                                WILLIAM J. BORK,
                                President and COO


                                /s/ Peter M. Carlino
                                PETER M. CARLINO

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