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September 2, 2010

Mr. Lyn Shenk

Branch Chief

United States Securities and
Exchange Commission

Division of Corporation Finance

100F Street, N.E.

Washington, DC 20549

Re:                             Comment Letter Dated August 13, 2010
(received via fax on August 18, 2010)

Penn National Gaming, Inc.

Form 10-K For the Fiscal
Year Ended December 31, 2009

Filed on February 26, 2010

File No. 000-24206

Form 10-Q: For the Quarter
Ended March 31, 2010

Filed on May 7, 2010

File No. 000-24206

Form 8-K

Filed on April 27, 2010

File No. 000-24206

Schedule 14A

Filed on April 30, 2010

File No. 000-24206

Dear Mr. Shenk:

We have received and reviewed the
referenced comment letter.  We appreciate
your efforts to assist our compliance with the applicable disclosure
requirements and to enhance the overall disclosure in our filings.

Our responses to the Staff’s
comments are contained below and keyed to the numbered comments in the comment
letter.

1

In the following responses, except
where indicated otherwise, the terms “we”, “our”, “Company” and “Penn” shall
mean Penn National Gaming, Inc. and its consolidated subsidiaries.  In providing our response to your comments,
we acknowledge:

·                  we are
responsible for the adequacy and accuracy of the disclosure in our filings;

·                  staff
comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to our filings;
and

·                  we may not
assert staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.

Responses to Comments

Form 10-K: For the Year
Ended December 31, 2009

Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

Goodwill and other intangible
assets, page 39

Comment No 1:

We note your significant impairment
charges in 2009 and 2008.  To address the
known uncertainty that exists when material goodwill is allocated to a reporting
unit that is at risk of failing step one of an impairment test, please revise
to disclose the:

·                  Percentage
by which fair value exceeded carrying value as of the most recent step-one test

·                  Amount of
goodwill allocated to the unit

·                  Description
of key assumptions that drive fair value

·                  The
uncertainty associated with the key assumptions and any potential events and/or
circumstances that could have a negative effect

Response:

In future filings we will expand our
disclosure in critical accounting policies to provide additional information
regarding our impairment testing policy.
Below, please find an example of our proposed goodwill and other
intangible asset disclosures (commencing with our Form 10-K for the year
ended December 31, 2010 or our next quarterly 10-Q filing if we have an
interim event triggering a goodwill impairment test), giving specific
consideration to the points raised by the comment as well as the Company’s
concern over providing goodwill information on our individual business lines.  We expect to provide additional information
regarding our impairment testing and policy, more detail on the key assumptions
that drive the fair value determination, and the risks associated with the key
assumptions.

We note that we caution investors of
various risks related to our business in Item 1A, “Risk Factors” in our 2009 Form 10-K.

The following will be modified in
our disclosure, items in italics are the
changes we are proposing to the existing language as if the disclosure was
being prepared for the 2009 Form 10-K:

2

At December 31, 2009, we had
$1,380.0 million in goodwill and $377.0 million in other intangible
assets within our consolidated balance sheet, representing 29.3% and 8.0% of
total assets, respectively, resulting from our acquisition of other businesses
and payment for gaming licenses and racing permits. Two issues arise with
respect to these assets that require significant management estimates and
judgment: (i) the valuation in connection with the initial purchase price
allocation; and (ii) the ongoing evaluation for impairment.

In connection with our acquisitions,
valuations are completed to determine the allocation of the purchase prices.
The factors considered in the valuations include data gathered as a result of
our due diligence in connection with the acquisitions, projections for future
operations, and data obtained from third-party valuation specialists as deemed
appropriate.  Goodwill is tested annually, or more
frequently if indicators of impairment exist, for impairment by comparing the
fair value of the reporting units to their carrying amount. If the carrying
amount of a reporting unit exceeds its fair value in step 1 of
the impairment test, then step 2 of the  impairment
test is performed to determine the implied value of goodwill for
that reporting unit. If the implied value of goodwill is less than the goodwill
allocated for that reporting unit, an impairment loss is recognized.

In accordance with Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
350, “Intangibles-Goodwill and Other,” the Company considers its gaming
license, racing permit and trademark intangible assets as indefinite-life
intangible assets that do not require amortization. Rather, these intangible
assets are tested for impairment annually, or more frequently if indicators of
impairment exist, by comparing the fair value of the recorded assets to their
carrying amount. If the carrying amounts of the gaming license, racing permit
and trademark intangible assets exceed their fair value, an impairment loss is
recognized.

The evaluation of goodwill and
indefinite-life intangible assets requires the use of estimates about future
operating results of each reporting unit to determine their estimated fair
value. The Company uses a market approach model, which includes the use of adjusted EBITDA (earnings before interest, taxes, charges
for stock compensation, depreciation and amortization, gain or loss on disposal
of assets, and certain other income and expenses, and inclusive of loss from
joint venture) multiples, as the Company believes that adjusted
EBITDA is a widely-used measure of performance in the gaming industry and as
the Company uses adjusted EBITDA as the primary
measurement of the operating performance of its properties (including the
evaluation of operating personnel). In addition, the Company believes that an
EBITDA multiple is the principal basis for the valuation of gaming companies.
Changes in the estimated EBITDA multiples or forecasted operations can
materially affect these estimates.

Forecasted adjusted EBITDA levels can be
significantly impacted by the local economy in which our reporting units
operate.  For example, increases in
unemployment rates can result in decreased customer visitations and/or lower
customer spend per visit.  In addition,
the impact of new legislation which approves gaming in nearby jurisdictions or
further expands gaming in jurisdictions where we currently operate can result
in opportunities for the Company to expand its operations.  However, it also has the impact of increasing
competition for our established properties which generally will have a negative
effect on those locations’ profitability once competitors become established as
a certain level of cannibalization occurs absent an overall increase in
customer visitations.  Lastly, increases
in gaming taxes approved can negatively impact forecasted adjusted EBITDA.

3

EBITDA multiples can be significantly
impacted by a Company’s present and future cost of capital, the future growth
opportunities for the industry as well as for the Company itself, general
market sentiment, investors perceptions of senior management’s effectiveness at
deploying capital and managing overall operations, as well as pending or
recently completed merger transactions.

Assumptions and estimates about future
adjusted EBITDA levels and multiples by individual reporting units are complex
and subjective.  They are sensitive to
changes in underlying assumptions and can be affected by a variety of factors,
including external factors, such as industry and economic trends, and internal
factors, such as changes in our business strategy, which may reallocate capital
and resources to different or new opportunities which management believes will
enhance the overall value of the Company but may be to the detriment of an
individual reporting unit.  As a result,
there can be no assurance that the estimates and assumptions made for purposes
of the impairment test will prove to be accurate predictions of the
future.  Although management believes the
assumptions and estimates made are reasonable and appropriate, different
assumptions and estimates could materially impact the reported financial
results.

As of the Company’s most recent impairment
analysis test performed on October 1, 2009, we applied an estimated market
EBITDA multiple ranging between 5.6 and 8.4 to the individual reporting unit’s
projected adjusted EBITDA.  With the exception
of Lawrenceburg, this resulted in each of our reporting units having a fair
value in excess of its carrying value by approximately 8% or more.  We feel that the majority of our reporting
units may be vulnerable to impairment as they have recently taken an impairment
charge and there is now much less excess of fair value over carrying value than
there had been historically and because of the external factors discussed
throughout our 10-K (competition and risk factors) that may materially impact our
business.  For example, a new license
being awarded (Illinois and Louisiana), the threat of smoking bans in certain
jurisdictions, the continued growth of gaming in the United States including
the recent approval of new states allowing gaming such as Kansas, Ohio, and
Maryland as well as stock price or general stock market volatility.

2009 impairment analysis — The 2009 annual impairment was performed
for all reporting units on October 1, 2009.  Our analysis indicated that there were no
indicators of impairment at our reporting units with the exception of our
Lawrenceburg, Indiana reporting unit (Hollywood Casino Lawrenceburg).  This was because in November 2009, the “Ohio
Jobs and Growth Plan,” a casino ballot proposal calling for an amendment to
Ohio’s Constitution to authorize casinos in the state’s four largest cities,
Cincinnati, Cleveland, Columbus and Toledo, was approved.  Because of the close proximity of
Lawrenceburg, Indiana to Ohio and in particular Cincinnati, and as we
believe that it is highly likely that these projects will be financed and
constructed, we anticipate that our Hollywood Casino Lawrenceburg reporting
unit will be negatively impacted which caused a reduction in the estimated fair
value of that reporting unit. As a result, we recorded a goodwill and other
intangible asset impairment charge of $520.5 million in the fourth quarter of
2009.  It should also be noted that the
Company will benefit from future operations in Columbus and Toledo and therefore
were supporters of the Ohio casino ballot proposal.

Results of Operations - Gaming
Revenue, page 43

Comment No 2:

We note that you discuss certain
factors to which changes are attributable, but you do not quantify some of
these factors.  For example, you state
that gaming revenue at Hollywood Casino Lawrenceburg decreased by $11.4 million
in 2009, primarily due to new competitive pressures, the reduced capacity of,

4

and subsequent temporary closure of,
the casino as part of the transition to the new casino riverboat, and decreases
in consumer spending on gaming activities caused by current economic
conditions, all of which were partially offset by an increase due to the
opening of the new casino riverboat in late June 2009, but you do not
quantify each of the different factors.
In future filings please ensure that all material factors are analyzed
and quantified to the extent practicable.

Response:

In future filings we will, to the
extent practicable, analyze and quantify all material factors related to
variances within gaming revenue.  The
Company does believe that, in certain situations, the quantification of
competition and consumer spending trends would be impracticable.

Liquidity and Capital Resources, page 53

Comment No 3:

Please revise to discuss cash
provided by operating activities in terms of cash.  For example, discuss cash received from
customers, cash paid to suppliers, etc.
Please refer to section IV.B.1 of FR-72 for guidance.

Response:

In future filings we will, to the
extent practicable, analyze and quantify all material factors impacting cash
provided by operations.  It should be
noted that as a service business, the majority of our revenues are received in
cash at the time of service.  We intend
to discuss adjusted EBITDA (earnings before interest, taxes, charges for stock
compensation, depreciation and amortization, gain or loss on disposal of
assets, and certain other income and expenses, and inclusive of loss from joint
venture), as an indicator of cash from operations.  We will also provide the necessary
reconciliation to GAAP income from operations.
We will also discuss the significant variances of the periods presented.  The following will be modified in our
disclosure, items in italics are
the changes we are proposing to the existing language:

Example

Net cash provided by operating
activities was $338.2 million, $420.5 million and $431.2 million
for the years ended December 31, 2009, 2008 and 2007, respectively.  Net cash provided by operating
activities for the year ended December 31, 2009 is comprised primarily of
$565.8 million in adjusted EBITDA (earnings before interest, taxes, charges for
stock compensation, depreciation and amortization, gain or loss on disposal of
assets, and certain other income and expenses, and inclusive of loss from joint
venture), offset by interest and taxes paid of $125.0 million and $109.2
million, respectively.  The decrease from
the prior year is primarily the result of a one-time merger termination payment
received in 2008, and lower adjusted EBITDA, partially offset by lower interest
and taxes paid in 2009.

Comment No. 4:

With regard to your debt
obligations, please revise to discuss, to the extent known, your currently
anticipated plan for meeting your current and long-term contractual
obligations.

5

Response:

Although the Company relies on a
significant amount of debt financing to fund its operations, we believe that
based on our strong history of operating cash flows and the relative stability
of the gaming operations in the regional locations in which we operate, we will
be able to access the capital markets in order to refinance our
indebtedness.  For example, in September 2009,
the Company was able to successfully extend the maturity date of its revolving
credit facility which was set to mature in October 2010 and obtained a
$640.6 million revolving credit facility to provide borrowing capacity through July 2012.

We would like to note to the Staff
that we do not operate gaming facilities in Las Vegas, Nevada or Atlantic City,
New Jersey and as such have not experienced as significant declines in the cash
flows generated by our casino properties as some of our competitors that are
reliant on these locations.  Additionally,
our Company maintains significantly less leverage than our competitors.  Our debt to adjusted EBITDA multiple at June 30,
2010 was 3.5X compared to our peers averaging 8.4X. Furthermore, we anticipate
generating approximately $250 million of free cash flow in 2010.

We note that we caution investors of
various risks related to our capital structure in Item 1A, “Risk Factors” in
our 2009 Form 10-K.

In future filings, we will disclose
our