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October 7, 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 September 15, 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

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.

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 response to our prior
comment one.  However, it appears that
you have only partially addressed our comment.
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:

·                  amount
of goodwill allocated to the unit

·                  description
of key assumptions that drive fair value such as the growth rate

Response:

We have incorporated additional
information related to the key assumptions that drive the fair value of our
reporting units and have also included a table which indicates the amount of
goodwill allocated to our reporting units.
We considered whether disclosing the relationship of our reporting units
fair value and carrying value would be meaningful to the readers of our financial
statements.  We believe that inclusion of
this information would not be meaningful and could be potentially misleading
because it may not be an accurate predictor of the likelihood of future
impairment charges or the potential magnitude of such charges.  This is because the revenue and earning
streams in our industry can vary significantly based on various circumstances,
which in many cases are outside of the Company’s control, and as such are
extremely difficult to predict and quantify.
We have disclosed several of these circumstances in the risk factors
section of our Form 10-K.  For
instance, changes in legislation that approves gaming in nearby jurisdictions
or further expands gaming in jurisdictions where we currently operate or new
state legislation that requires the implementation of smoking bans at our
casinos or any other events outside of our control that make the customer
experience less desirable can result in sudden, dramatic and in some cases
permanent declines in customer visitations.
As such, we believe at this time all of our reporting units are at risk
of goodwill impairment charges in future periods regardless of the margin by
which the current fair value of our reporting unit exceeds its carrying value
and that such margin cannot and should not be relied upon to predict which
properties are most at risk for future impairment charges.

The following will be modified in
our disclosure, items in italics are the changes we are proposing from our
first response in order to address your comments above.

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 forecasted 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) and adjusted EBITDA 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 adjusted EBITDA multiple is the
principal basis for the valuation of gaming companies. Changes in the estimated
adjusted EBITDA multiples or forecasted
operations can materially affect these estimates.

Forecasted adjusted EBITDA levels (based on our annual operating plan as determined in the fourth
quarter) 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.

The adjusted EBITDA multiple utilized by the
Company in its goodwill impairment valuation methodology was determined based
on the Company’s current enterprise value, increased for a control
premium.  The control premium assumption
was based on acquisitions of precedent transactions of comparable businesses.  In evaluating the estimates derived by the
market based approach, management assesses the relevance and reliability of the
multiples by considering factors unique to its reporting units, including
recent operating results, business plans, economic projections, anticipated
future cash flows, and other market data.
These considerations can lead the Company to modify its individual
reporting units adjusted EBITDA multiple.  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.

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,
each of our reporting units had 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.

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 at each individual
reporting unit are reasonable and appropriate as we
reconciled the total fair value of our reporting units to the Company’s
enterprise value, different assumptions and estimates could
materially impact the reported financial results resulting in
additional goodwill and other intangible asset impairment charges in future
periods.

The Company’s goodwill and other intangible
assets by reporting unit at December 31, 2009 is shown below.

  Remaining Goodwill and

  other intangible assets

  Reporting Unit

  at December 31, 2009

  Hollywood
  Casino Lawrenceburg

  $

  364,074

  Hollywood
  Casino Aurora

  351,691

  Empress
  Casino Hotel

  265,871

  Argosy
  Casino Riverside

  159,416

  Black
  Gold Casino at Zia Park

  147,053

  Argosy
  Casino Alton

  135,656

  Argosy
  Casino Sioux City

  92,837

  Hollywood
  Casino Baton Rouge

  85,785

  Others

  154,532

  Total

  $

  1,756,915

Results of Operations

Gaming Revenue, page 43

Comment No 2:

We note your response to our prior
comment two.  You state that
quantification of competition and consumer spending trends would be
impracticable in certain situations.  For
factors for which the effect is not quantifiable, please disclose this fact,
the basis for your belief for the cited factor, and that such factors are
listed in what you believe to be the order of their importance.  So that we may understand how you plan to
revise your disclosure in response to this comment and our prior comment two,
please provide us with a copy of your intended revised disclosure.

Response:

In our business, revenue is driven
by discretionary consumer spending and we do not have a mechanism for
determining what drives consumer behavior.
As a result, changes in revenue as it relates to a specific factor or
condition cannot generally be quantified.
For example, we do not conduct surveys on a regular basis to determine
why our Customers are not coming to our casinos or why they are spending less
per visit (ie. whether they are going to a competitor or whether they have lost
their job and as a result have reduced their discretionary entertainment
spending).  The Company does not track
customer visitation at all of its jurisdictions and as such it is difficult for
us to track the precise amount of revenue declines that are attributable to
changes in customer spending habits compared with customers taking their
business to competitor properties.  As
requested by the Staff, attached is an example of a revised disclosure for our
Lawrenceburg property for the year ended December 31, 2009 compared to the
prior year.

Gaming revenue at Hollywood Casino
Lawrenceburg decreased $11.4 million compared to the prior year.  Although customer visits increased in 2009
following the opening of our new vessel at the end of the second quarter,
average gaming revenue per customer visit declined. Our results in the first
half of 2009 were negatively impacted by the recessionary environment at the
time which led to a significant contraction in consumer spending throughout the
United States and to a lesser extent new competition entering this market in
the second half of 2008.

In addition to the foregoing, we
will include the following paragraph as part of our introductory language to the
revenue analysis:

In our business, revenue is driven by
discretionary consumer spending which has been adversely impacted by weakened
general economic conditions and factors such as, but not limited to, high
unemployment levels, low levels of consumer confidence, weakness in the housing
market and increa