10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number 033-80655

MOHEGAN TRIBAL GAMING AUTHORITY

(Exact name of registrant as specified in its charter)

Connecticut	06-1436334
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
One Mohegan Sun Boulevard, Uncasville, CT	06382
(Address of principal executive offices)	(Zip Code)

(860) 862-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934):    Yes  ¨    No  x

MOHEGAN TRIBAL GAMING AUTHORITY

INDEX TO FORM 10-Q

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2005 and September 30, 2004 (unaudited)	1
	Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended June 30, 2005 and 2004 (unaudited)	2
	Condensed Consolidated Statements of Changes in Capital for the Three Months and Nine Months Ended June 30, 2005 and 2004 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2005 and 2004 (unaudited)	4
	Notes to the Condensed Consolidated Financial Statements	5-23
	Report of Independent Registered Public Accounting Firm	24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25-48
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48-49
Item 4.	Controls and Procedures	49
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 6.	Exhibits	50
Signatures.	Mohegan Tribal Gaming Authority	51

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

	June 30, 2005			September 30, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	77,596		$	60,794
Receivables, net		16,578			13,230
Inventories		16,010			15,181
Other current assets		12,919			9,185
Total current assets		123,103			98,390
Non-current assets:
Property and equipment, net		1,328,853			1,328,132
Goodwill		39,459			—
Other intangible assets, net		340,578			127,550
Notes receivable from affiliate, net		8,155			2,760
Other assets, net		29,077			22,873
Total assets	$	1,869,225		$	1,579,705
LIABILITIES AND CAPITAL
Current liabilities:
Current portion of long-term debt	$	36,699		$	23,272
Current portion of relinquishment liability		98,496			88,530
Trade payables		21,504			25,710
Accrued interest payable		33,982			18,504
Other current liabilities		106,378			96,142
Total current liabilities		297,059			252,158
Non-current liabilities:
Long-term debt, net of current portion		1,230,235			1,003,051
Relinquishment liability, net of current portion		350,041			383,493
Other long-term liabilities		183			197
Total liabilities		1,877,518			1,638,899
Minority interest		2,100			1,845
Commitments and contingencies (Note 6)
Capital:
Retained deficit		(10,393	)		(61,039	)
Total capital		(10,393	)		(61,039	)
Total liabilities and capital	$	1,869,225		$	1,579,705

The accompanying notes are an integral part of these condensed consolidated financial statements

1

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands)

(unaudited)

	For the Three Months Ended June 30, 2005			For the Three Months Ended June 30, 2004			For the Nine Months Ended June 30, 2005			For the Nine Months Ended June 30, 2004
Revenues:
Gaming	$	309,325		$	280,274		$	881,917		$	828,234
Food and beverage		23,650			22,267			66,812			66,213
Hotel		12,845			12,857			36,330			37,812
Retail, entertainment and other		29,380			24,062			79,378			69,830
Gross revenues		375,200			339,460			1,064,437			1,002,089
Less-Promotional allowances		(32,677	)		(27,561	)		(89,841	)		(79,665	)
Net revenues		342,523			311,899			974,596			922,424
Operating costs and expenses:
Gaming		174,268			156,442			502,595			464,601
Food and beverage		10,958			10,790			32,806			32,045
Hotel		4,249			3,615			11,780			11,047
Retail, entertainment and other		9,825			8,565			24,247			30,973
Advertising, general and administrative		49,369			45,845			141,860			132,022
Corporate expenses		2,847			860			8,310			3,348
Depreciation and amortization		22,307			24,301			65,877			71,302
Total operating costs and expenses		273,823			250,418			787,475			745,338
Income from operations		68,700			61,481			187,121			177,086
Other income (expense):
Accretion of discount to the relinquishment liability		(6,867	)		(7,485	)		(20,600	)		(22,455	)
Interest income		189			23			416			174
Interest expense		(23,423	)		(20,407	)		(64,875	)		(60,076	)
Loss on early extinguishment of debt		—			—			(280	)		(248	)
Other expense, net		(325	)		(797	)		(1,140	)		(845	)
Total other expense		(30,426	)		(28,666	)		(86,479	)		(83,450	)
Income before minority interest		38,274			32,815			100,642			93,636
Minority interest		237			—			432			—
Net income	$	38,511		$	32,815		$	101,074		$	93,636

The accompanying notes are an integral part of these condensed consolidated financial statements

2

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(in thousands)

(unaudited)

	Retained Deficit			Accumulated Other Comprehensive Loss			Total Capital
Balances, March 31, 2005	$	(31,831	)	$	—		$	(31,831	)
Net income		38,511						38,511
Distributions to Tribe		(17,073	)					(17,073	)
Balances, June 30, 2005	$	(10,393	)	$	—		$	(10,393	)
Balances, September 30, 2004	$	(61,039	)	$	—		$	(61,039	)
Net income		101,074						101,074
Distributions to Tribe		(50,428	)					(50,428	)
Balances, June 30, 2005	$	(10,393	)	$	—		$	(10,393	)
	Retained Deficit			Accumulated Other Comprehensive Loss			Total Capital
Balances, March 31, 2004	$	(70,175	)	$	—		$	(70,175	)
Net income		32,815						32,815
Distributions to Tribe		(16,306	)					(16,306	)
Balances, June 30, 2004	$	(53,666	)	$	—		$	(53,666	)
Balances, September 30, 2003	$	(98,592	)	$	(303	)	$	(98,895	)
Net income		93,636						93,636
Reclassification of derivative instrument losses to earnings					303			303
Total comprehensive income								93,939
Distributions to Tribe		(48,710	)					(48,710	)
Balances, June 30, 2004	$	(53,666	)	$	—		$	(53,666	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

MOHEGAN TRIBAL GAMING AUTHORITY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Nine Months Ended
	June 30, 2005			June 30, 2004
Cash flows provided by (used in) operating activities:
Net income	$	101,074		$	93,636
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization		65,877			71,302
Accretion of discount to the relinquishment liability		20,600			22,455
Cash paid for accretion of discount to the relinquishment liability		(17,785	)		(19,625	)
Loss on early extinguishment of debt		280			248
Payment of tender costs		—			(229	)
Net loss on disposition of assets		1,145			845
Provision for losses on notes and accounts receivable		2,008			489
Amortization of debt issuance costs		2,351			4,854
Amortization of net deferred (gain) loss on settlement of derivative instruments		609			(276	)
Reclassification of derivative instrument losses to earnings		—			303
Minority interest		(432	)		—
Changes in operating assets and liabilities:
(Increase) decrease in receivables		(4,057	)		2,905
Increase in inventories		(764	)		(1,039	)
Increase in other assets		(3,543	)		(358	)
Decrease in trade payables		(5,487	)		(3,553	)
Increase in other current liabilities		19,944			8,119
Net cash flows provided by operating activities		181,820			180,076
Cash flows provided by (used in) investing activities:
Purchases of property and equipment, net of change in construction payables of $774 and $(741), respectively		(34,736	)		(26,187	)
Acquisition of Pocono Downs, net of cash acquired of $875		(280,114	)		—
Proceeds from asset sales		165			82
Increase in notes receivable from affiliate		(4,800	)		—
Issuance of third-party loans		(1,600	)		(654	)
Payments received on third-party loans		343			147
Net cash flows used in investing activities		(320,742	)		(26,612	)
Cash flows provided by (used in) financing activities:
Bank Credit Facility borrowings—revolving loan		680,000			62,000
Bank Credit Facility repayments—revolving loan		(764,000	)		(121,000	)
Bank Credit Facility borrowings—term loan		58,333			—
Bank Credit Facility repayments—term loan		(150,000	)		(8,334	)
Line of credit borrowings		339,360			99,000
Line of credit repayments		(325,290	)		(99,000	)
Proceeds from the issuance of long-term debt		400,000			—
Payments on long-term debt		(2,000	)		(6,241	)
Minority interest contribution		229			—
Principal portion of relinquishment liability payments		(26,301	)		(22,602	)
Distributions to Tribe		(50,428	)		(48,710	)
Capitalized debt issuance costs		(7,764	)		(39	)
Proceeds (payments) from the settlement of derivative instruments		3,598			(5,147	)
Decrease in other long-term liabilities		(13	)		(11	)
Net cash flows provided by (used in) financing activities		155,724			(150,084	)
Net increase in cash and cash equivalents		16,802			3,380
Cash and cash equivalents at beginning of period		60,794			73,264
Cash and cash equivalents at end of period	$	77,596		$	76,644
Supplemental disclosures:
Cash paid during the period for interest	$	47,403		$	46,242
Acquisition: Pocono Downs
Fair value of assets acquired, including cash of $875	$	285,915		$	—
Cash paid		280,989			—
Fair value of liabilities assumed	$	4,926		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements

4

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION:

The Mohegan Tribe of Indians of Connecticut (the “Tribe”) established the Mohegan Tribal Gaming Authority (the “Authority”) in July 1995 with the exclusive power to conduct and regulate gaming activities for the Tribe on Tribal lands and the non-exclusive authority to conduct such activities elsewhere. The Tribe is a federally recognized Indian tribe with an approximately 405-acre reservation located in southeastern Connecticut. Under the Indian Gaming Regulatory Act of 1988, federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal land, subject to, among other things, the negotiation of a compact with the affected state. The Tribe and the State of Connecticut have entered into such a compact (the “Mohegan Compact”), which has been approved by the United States Secretary of the Interior. The Authority is primarily engaged in the ownership, operation and development of gaming facilities. On October 12, 1996, the Authority opened a casino known as the Mohegan Sun Casino (“Mohegan Sun”). On January 25, 2005, the Authority purchased Pocono Downs, a harness racing facility, and five off-track wagering (“OTW”) facilities located in Pennsylvania. In July 2005, the harness racing facility was renamed Mohegan Sun at Pocono Downs (“Pocono Downs”). The Authority is governed by a nine-member Management Board, consisting of the same nine members as those of the Mohegan Tribal Council (the governing body of the Tribe). Any change in the composition of the Tribal Council results in a corresponding change in the Authority’s Management Board.

As of June 30, 2005, the Authority has the following wholly owned subsidiaries: Mohegan Basketball Club LLC (“MBC”), Mohegan Ventures-Northwest, LLC (“Mohegan Ventures-NW”), Mohegan Commercial Ventures PA, LLC (“MCV-PA”), Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P., and Northeast Concessions, L.P. MBC owns and operates a professional basketball team in the Women’s National Basketball Association (“WNBA”), the Connecticut Sun, and owns approximately 3.9% of the membership interests in WNBA, LLC. Mohegan Ventures-NW holds a 54.15% membership interest in Salishan-Mohegan LLC (“Salishan-Mohegan”), formed with an unrelated third party to participate in the development and management of a casino to be owned by the Cowlitz Indian Tribe and located in Clark County, Washington (the “Cowlitz Project”). MCV-PA holds a 0.01% general partnership interest in Downs Racing, L.P., Backside, L.P., Mill Creek Land, L.P., and Northeast Concessions, L.P. (collectively, the “Pocono Downs entities”), while the Authority holds the remaining 99.99% limited partnership interest. The Pocono Downs entities own and operate the Pocono Downs harness racing and OTW facilities in Pennsylvania. The Authority views Mohegan Sun and properties owned by the Pocono Downs entities as separate operating segments.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In accordance with Rule 10-01, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair statement of the results for the interim period have been included. Operating results for the quarter and the nine months ended June 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2005.

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Authority’s Annual Report on Form 10-K for

5

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

the year ended September 30, 2004. In addition, certain amounts in the 2004 condensed consolidated financial statements have been reclassified to conform to the 2005 presentation.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Authority and its wholly owned subsidiaries. In accordance with the Financial Accounting Standard Board (“FASB”) Interpretation No. 46, “Consolidation of Variable Interest Entities—an interpretation of ARB No. 51” (“FIN 46”), the accounts of Salishan-Mohegan are consolidated into the accounts of Mohegan Ventures-NW as it is deemed to be the primary beneficiary. In consolidation, all intercompany balances and transactions have been eliminated.

New Accounting Pronouncements

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets—an amendment of APB Opinion No. 29” (“FAS 153”). FAS 153 amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. FAS 153 is effective for fiscal years beginning after June 15, 2005. The Authority does not believe the adoption of this standard will have a material impact on the Authority’s financial position, results of operations or cash flows.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3” (“FAS 154”). FAS 154 requires retrospective application of changes in accounting principles to prior periods’ financial statements, subject to certain practicability provisions, but does not change the guidance in APB Opinion No. 20 for reporting the correction of an error in previously issued financial statements and a change in accounting estimate. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Authority does not believe the adoption of this standard will have a material impact on the Authority’s financial position, results of operations or cash flows.

NOTE 3—ACQUISITION OF POCONO DOWNS ENTITIES

On January 25, 2005, the Authority and its wholly owned subsidiary, MCV-PA, completed their acquisition of all the partnership interests in the Pocono Downs entities for approximately $281.0 million in cash. The Pocono Downs entities own Pocono Downs, a harness racing facility in Plains, Pennsylvania, and five OTW facilities also located in Pennsylvania. The results of operations for the Pocono Downs entities are included in the accompanying condensed consolidated financial statements from the date of acquisition through June 30, 2005.

As a result of the acquisition of the harness racing facility, the Authority has the right to apply for a Pennsylvania Category One Slot Machine License, which, if approved, would initially permit the installation and operation of up to 3,000 slot machines at Pocono Downs. The purchase agreement for the Pocono Downs entities includes a provision that would generally require the seller to repurchase all the partnerships interests in the entities, at the election of the Authority, if a Category One license has not been issued or has been denied to the Authority by July 1, 2006 as a result of the conduct of the seller or if no conditional or permanent licenses have been issued in Pennsylvania by July 1, 2006.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition, which were estimated by management with assistance from a third party valuation firm. The right to obtain a Category One Slot Machine License was determined to be an intangible asset with an indefinite life

6

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

apart from goodwill. Certain other intangible assets were identified in the valuation process, but were not separated from goodwill due to immateriality of the amounts. The goodwill and intangible asset noted below, which are not subject to amortization, will be assessed periodically for impairment pursuant to FASB Statement No. 142, “Goodwill and Other Intangible Assets.”

	At January 25, 2005
	(in thousands)
Current assets	$	1,086
Property and equipment		31,370
Right to obtain a Category One slot license		214,000
Goodwill		39,459
Total assets acquired		285,915
Current liabilities		(4,926	)
Total liabilities assumed		(4,926	)
Net assets acquired	$	280,989

Unaudited financial information for the three months ended June 30, 2005 and pro forma financial information for the three months ended June 30, 2004 and nine months ended June 30, 2005 and 2004, as though the acquisition of the Pocono Downs entities had occurred on October 1, 2004, is as follows:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2005		2004		2005		2004
	(in thousands)				(in thousands)
Net revenues	$	342,523	$	321,931	$	983,266	$	947,327
Net income		38,511		33,939		101,162		95,211

NOTE 4—FINANCING FACILITIES:

Financing facilities, as described below, consist of the following (in thousands):

	June 30, 2005			September 30, 2004
Bank Credit Facility	$	4,000		$	179,667
1999 8 1/8% Senior Notes		13,970			13,970
2005 6 1/8% Senior Notes		250,000			—
2001 8 3/8% Senior Subordinated Notes		16,345			16,345
2002 8% Senior Subordinated Notes		250,000			250,000
2003 6 3/8% Senior Subordinated Notes		330,000			330,000
2004 7 1/8% Senior Subordinated Notes		225,000			225,000
2005 6 7/8% Senior Subordinated Notes		150,000			—
WNBA Promissory Note		6,000			7,000
Line of Credit		19,155			5,086
Mortgage—Salishan-Mohegan		2,550			2,550
Note Payable—Salishan-Mohegan		—			1,000
Subtotal		1,267,020			1,030,618
Net deferred loss on derivative instruments sold		(86	)		(4,295	)
Total debt	$	1,266,934		$	1,026,323

7

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Bank Credit Facility

The Authority has a loan agreement for up to $450.0 million from a syndicate of financial institutions and commercial banks, with Bank of America, N.A. serving as administrative agent (the “Bank Credit Facility”). The Bank Credit Facility is comprised of a revolving loan of up to $450.0 million, which matures on March 31, 2008. The maximum aggregate principal amount available for borrowing includes amounts under certain letters of credit. As of June 30, 2005, the amount under these letters of credit totaled $334,070, of which no amount was drawn (refer to “Letters of Credit” below). The revolving loan has no mandatory amortization provisions and is payable in full at maturity. The Authority had $445.7 million available for borrowing under the Bank Credit Facility as of June 30, 2005 (without taking into account covenants under the Line of Credit described below).

The Bank Credit Facility is collateralized by a lien on substantially all of the Authority’s assets, including the assets of the Pocono Downs entities, and a leasehold mortgage on the land and improvements which comprise Mohegan Sun. The Authority will also be required to pledge additional assets as collateral for the Bank Credit Facility as it or its guarantor subsidiaries acquire them. The Authority’s obligations under the Bank Credit Facility are guaranteed by MBC, MCV-PA and the Pocono Downs entities. The Bank Credit Facility subjects the Authority to a number of restrictive covenants, including financial covenants. These financial covenants relate to, among other things, its permitted total debt and senior debt leverage ratios, its minimum fixed charge coverage ratio and the Authority’s maximum capital expenditures. The Bank Credit Facility includes non-financial covenants by the Authority and the Tribe of the type customarily found in loan agreements for similar transactions including requirements that:

• the Tribe preserve its existence as a federally recognized Indian tribe;

• the Tribe cause the Authority to continually operate Mohegan Sun in compliance with all applicable laws; and

• except under specific conditions, limit the Authority from selling or disposing of its assets, limit the transfer of the Authority’s assets to non-guarantor subsidiaries, limit the incurrence by the Authority of other debt or contingent obligations and limit the Authority’s ability to extend credit, make investments or commingle its assets with assets of the Tribe.

As of June 30, 2005, the Authority and the Tribe were in compliance with all of their respective covenant requirements in the Bank Credit Facility.

At the Authority’s option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month London Inter-Bank Offered Rate (“LIBOR”), plus in either case, the applicable spread at the time each loan is made. The Authority also pays commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the applicable spread for commitment fees times the average daily unused commitment for that calendar quarter. Applicable spreads are based on the Authority’s Total Leverage Ratio, as defined in the Bank Credit Facility. The applicable spread for base rate advances is between 0.50% and 1.25%, and the applicable spread for LIBOR rate advances is between 1.75% and 2.50%. The applicable spread for commitment fees is between 0.375% and 0.50%. The base rate is the higher of Bank of America’s announced prime rate or the federal funds rate plus 0.50%. Interest on LIBOR loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears. As of June 30, 2005, the Authority had $4.0 million in base rate loans and no LIBOR rate loans outstanding. The base rate loans outstanding at June 30, 2005 were based on the bank’s prime rate of 6.25% plus an applicable spread of 1.25%. The applicable spread for commitment fees was 0.50% as of June 30, 2005. Accrued interest, including commitment fees, on the Bank Credit Facility was $186,000 as of September 30, 2004. There was no accrued interest on the Bank Credit Facility as of June 30, 2005.

8

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

1999 8 ¹/8% Senior Notes

In March 1999, the Authority issued $200.0 million Senior Notes with fixed interest payable at a rate of 8.125% per annum (the “1999 Senior Notes”). The proceeds from this financing were used to extinguish or defease existing debt, pay transaction costs and fund initial costs related to the major expansion of Mohegan Sun known as Project Sunburst. Interest on the 1999 Senior Notes is payable semi-annually on January 1 and July 1. The 1999 Senior Notes mature on January 1, 2006. The 1999 Senior Notes are uncollateralized general obligations of the Authority and rank pari passu in right of payment with all current and future uncollateralized senior indebtedness of the Authority. Borrowings under the Bank Credit Facility and any capital lease obligations are collateralized by first priority liens on substantially all of the assets of the Authority. As a result, upon any distribution to creditors in a bankruptcy, liquidation or reorganization or similar proceeding relating to the Authority or the Tribe, the holders of collateralized debt may be paid in full in cash before any payment may be made with respect to the 1999 Senior Notes. The 1999 Senior Notes rank equally in right of payment with the 2005 Senior Notes and 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing, and rank senior to the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing, the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, MCV-PA and the Pocono Downs entities are guarantors of the 1999 Senior Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiaries.

In August 2004, the Authority completed a cash tender offer and consent solicitation to repurchase any or all of its outstanding 1999 Senior Notes. As part of the tender offer, the Authority solicited and received requisite consents to certain proposed amendments to the indentures governing the 1999 Senior Notes which eliminated substantially all of the restrictive covenants thereunder. The aggregate principal amount of 1999 Senior Notes tendered was $186.0 million. An aggregate principal amount of $14.0 million of the 1999 Senior Notes remain outstanding as of June 30, 2005. As of June 30, 2005 and September 30, 2004, accrued interest on the 1999 Senior Notes was $567,000 and $200,000, respectively.

2005 6 ¹/8% Senior Notes

On February 8, 2005, the Authority issued $250.0 million Senior Notes with fixed interest payable at a rate of 6.125% per annum (the “2005 Senior Notes”). The net proceeds from this financing were used to repay amounts outstanding under the Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Notes mature on February 15, 2013. The first call date for the 2005 Senior Notes is February 15, 2009. Interest on the 2005 Senior Notes is payable semi-annually on February 15 and August 15, with the first interest payment scheduled for August 15, 2005. The 2005 Senior Notes are uncollateralized general obligations of the Authority, which are effectively subordinated to all of the existing and future senior secured indebtedness of the Authority, including the Bank Credit Facility. The 2005 Senior Notes rank equally in right of payment with the 1999 Senior Notes and 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing, and rank senior to the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing, the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes and the 2005 Senior Subordinated Notes. MBC, MCV-PA and the Pocono Downs entities are guarantors of the 2005 Senior Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiaries. As of June 30, 2005, accrued interest on the 2005 Senior Notes was $6.0 million.

9

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

2001 8 ³/8% Senior Subordinated Notes

In July 2001, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.375% per annum (the “2001 Senior Subordinated Notes”). The proceeds from this financing were used to pay transaction costs, pay down $90.0 million on the prior bank credit facility and fund costs related to Project Sunburst. Interest on the 2001 Senior Subordinated Notes is payable semi-annually on January 1 and July 1. The 2001 Senior Subordinated Notes mature on July 1, 2011. The first call date for the 2001 Senior Subordinated Notes is July 1, 2006. The 2001 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 1999 Senior Notes, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2001 Senior Subordinated Notes rank equally with the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, MCV-PA and the Pocono Downs entities are guarantors of the 2001 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiaries.

In August 2004, the Authority completed a cash tender offer and consent solicitation to repurchase any or all of its outstanding 2001 Senior Subordinated Notes. As part of the tender offer, the Authority solicited and received requisite consents to certain proposed amendments to the indentures governing the 2001 Senior Subordinated Notes, which eliminated substantially all of the restrictive covenants thereunder. The aggregate principal amount of 2001 Senior Subordinated Notes tendered was $133.7 million. An aggregate principal amount of $16.3 million of the 2001 Senior Subordinated Notes remain outstanding as of June 30, 2005. Accrued interest on the 2001 Senior Subordinated Notes was $684,000 and $280,000, as of June 30, 2005 and September 30, 2004, respectively.

2002 8% Senior Subordinated Notes

In February 2002, the Authority issued $250.0 million Senior Subordinated Notes with fixed interest payable at a rate of 8.0% per annum (the “2002 Senior Subordinated Notes”). The proceeds from this financing were used to pay transaction costs and pay down $243.0 million on the prior bank credit facility. Interest on the 2002 Senior Subordinated Notes is payable semi-annually on April 1 and October 1. The 2002 Senior Subordinated Notes mature on April 1, 2012. The first call date for the 2002 Senior Subordinated Notes is April 1, 2007. The 2002 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 1999 Senior Notes, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2002 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, MCV-PA and the Pocono Downs entities are guarantors of the 2002 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiaries. As of June 30, 2005 and September 30, 2004, accrued interest on the 2002 Senior Subordinated Notes was $5.0 million and $10.0 million, respectively.

2003 6 ³/8% Senior Subordinated Notes

In July 2003, the Authority issued $330.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.375% per annum (the “2003 Senior Subordinated Notes”). The proceeds from this financing were used

10

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

to repurchase substantially all of the outstanding $300.0 million 8.75% Senior Subordinated Notes issued in March 1999 and to pay fees and expenses associated with the issuance. Interest on the 2003 Senior Subordinated Notes is payable semi-annually on January 15 and July 15. The 2003 Senior Subordinated Notes mature on July 15, 2009. The 2003 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 1999 Senior Notes, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2003 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2004 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, MCV-PA and the Pocono Downs entities are guarantors of the 2003 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiaries. As of June 30, 2005 and September 30, 2004, accrued interest on the 2003 Senior Subordinated Notes was $9.6 million and $4.4 million, respectively.

2004 7 ¹/8% Senior Subordinated Notes

In August 2004, the Authority issued $225.0 million Senior Subordinated Notes with fixed interest payable at a rate of 7.125% per annum (the “2004 Senior Subordinated Notes”). The net proceeds from this financing, together with $130.0 million of availability under the Bank Credit Facility, were used to repurchase the outstanding 2001 Senior Subordinated Notes and the outstanding 1999 Senior Notes tendered in the tender offers described above and to pay fees and expenses associated with the issuance. The 2004 Senior Subordinated Notes mature on August 15, 2014. The first call date for the 2004 Senior Subordinated Notes is August 15, 2009. Interest on the 2004 Senior Subordinated Notes is payable semi-annually on February 15 and August 15, with the first interest payment made on February 15, 2005. The 2004 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 1999 Senior Notes, the 2005 Senior Notes and, in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2004 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes, the 2005 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, MCV-PA and the Pocono Downs entities are guarantors of the 2004 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiaries. As of June 30, 2005 and September 30, 2004, accrued interest on the 2004 Senior Subordinated Notes was $6.1 million and $2.6 million, respectively.

2005 6 ⁷/8% Senior Subordinated Notes

On February 8, 2005, the Authority issued $150.0 million Senior Subordinated Notes with fixed interest payable at a rate of 6.875% per annum (the “2005 Senior Subordinated Notes”). The net proceeds from this financing were used to repay amounts outstanding under the Bank Credit Facility and to pay fees and expenses associated with the issuance. The 2005 Senior Subordinated Notes mature on February 15, 2015. The first call date for the 2005 Senior Subordinated Notes is February 15, 2010. Interest on the 2005 Senior Subordinated Notes is payable semi-annually on February 15 and August 15, with the first interest payment scheduled for August 15, 2005. The 2005 Senior Subordinated Notes are uncollateralized general obligations of the Authority and are subordinated to the Bank Credit Facility, the 1999 Senior Notes, the 2005 Senior Notes and in a liquidation, bankruptcy or similar proceeding, 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. The 2005 Senior Subordinated Notes rank equally with the 2001 Senior Subordinated Notes, the 2002 Senior Subordinated Notes, the 2003 Senior Subordinated Notes,

11

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

the 2004 Senior Subordinated Notes and the remaining 50% of the Authority’s payment obligations under the Relinquishment Agreement that are then due and owing. MBC, MCV-PA and the Pocono Downs entities are guarantors of the 2005 Senior Subordinated Notes. Refer to Note 9 for condensed consolidating financial information of the Authority, its guarantor subsidiaries and its non-guarantor subsidiaries. As of June 30, 2005, accrued interest on the 2005 Senior Subordinated Notes was $4.0 million.

The senior and senior subordinated note indentures contain certain financial and non-financial covenants with which the Authority and the Tribe must comply. The financial covenants include, among other things, limitations on restricted payments and the incurrence of indebtedness, while the non-financial covenants include, among other things, reporting obligations, compliance with laws and regulations and the Authority’s continued existence. As of June 30, 2005, both the Authority and the Tribe were in compliance with all of their respective covenant requirements in the senior and senior subordinated note indentures.

WNBA Promissory Note

The Authority and MBC are parties to a Membership Agreement with WNBA, LLC (the “Membership Agreement”). The Membership Agreement sets forth the terms and conditions pursuant to which MBC acquired a membership in the WNBA and the right to own and operate a professional basketball team in the WNBA. The Authority guaranteed the obligations of MBC under the Membership Agreement.

In consideration for this acquisition, MBC paid $2.0 million (with funds advanced from the Authority) and issued a promissory note to the WNBA (the “WNBA Note”) for $8.0 million that accrues interest at an annual rate equal to three-month LIBOR plus 1.5%. The Authority guaranteed the obligations of MBC under the WNBA Note. Pursuant to the WNBA Note, principal payments of $1.0 million, subject to adjustment for certain revenue thresholds, and interest payments are required to be paid to the WNBA on each anniversary of the WNBA Note. As of June 30, 2005 and September 30, 2004, accrued interest on the WNBA Note was $114,000 and $134,000, respectively.

Line of Credit

The Authority has a $25.0 million revolving loan agreement with Bank of America (formerly Fleet National Bank) (the “Line of Credit”). Each advance accrues interest on the basis of one-month LIBOR, plus the applicable spread, determined at the time the advance is made on the basis of the Authority’s Leverage Ratio as defined in the Line of Credit. Borrowings under the Line of Credit are uncollateralized obligations of the Authority. The Line of Credit expires in March 2006. The Line of Credit subjects the Authority to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under the Bank Credit Facility. As of June 30, 2005, the Authority was in compliance with all covenant requirements in the Line of Credit. As of June 30, 2005, the Authority had $5.8 million available for borrowing under the Line of Credit. The interest rate in effect at June 30, 2005 on the outstanding $19.2 million principal balance on the Line of Credit was 4.78%, comprised of a one-month LIBOR of 3.28%, plus an applicable spread of 1.50%.

Note and Mortgage Payables

In July 2004, the Authority’s wholly owned subsidiary, Mohegan Ventures-NW, formed a limited liability company, Salishan-Mohegan, with Salishan Company, LLC (“Salishan Company”), an unrelated third party. Upon formation of Salishan-Mohegan, Salishan Company contributed, among other things, land with a mortgage payable of $2.6 million and land purchase options with a note payable of $1.0 million. The mortgage payable bears interest due on a monthly basis at an annual rate of 9.5%, with the principal balance payable in full on March 28, 2006. The note payable, including accrued interest of $150,000, was repaid at maturity on

12

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

December 31, 2004. There was no accrued interest on the mortgage payable as of June 30, 2005 and September 30, 2004. Any and all amounts paid by Salishan-Mohegan, including interest payments, pursuant to these agreements are reimbursable by the Cowlitz Indian Tribe provided certain events occur, as prescribed in the development agreement between Salishan-Mohegan and the Cowlitz Indian Tribe.

Derivative Instruments

The Authority is considered an “end user” of derivative instruments and engages in derivative transactions from time to time for risk management purposes only.

On March 10, 2005, the Authority entered into two interest rate swap agreements, each based on six-month LIBOR plus a spread of 116 basis points and each hedging $50 million of the 2005 Senior Notes. On March 23, 2005, the Authority entered into three additional interest rate swap agreements, which were also based on LIBOR plus spreads of 87 to 91 basis points and hedging $50.0 million, $75.0 million and $25.0 million of the 2005 Senior Notes. Under these agreements, the Authority would have made payments on the variable interest rate provided by the derivative instrument and received payments equal to the fixed interest rate on the debt being hedged. These interest rate swap agreements qualified for hedge accounting in accordance with SFAS 133, as amended, and were designated as fair value hedges. In the quarter ended June 30, 2005, the Authority terminated these instruments for an aggregate gain of $3.6 million. The $3.6 million gain was deferred and added to the carrying value of the 2005 Senior Notes being hedged and is being amortized and recorded as an offset to interest expense over the remaining term of the 2005 Senior Notes. For the quarter and nine months ended June 30, 2005, the Authority recorded amortization of $47,000 on the deferred gain to interest expense. The Authority expects to record $466,000 as an offset to interest expense over the next twelve months.

In July 2003, the Authority entered into four interest rate swap agreements, each based on six-month LIBOR plus spreads of 297 to 298 basis points and each hedging $82.5 million of the 2003 Senior Subordinated Notes. Also in July 2003, the Authority entered into two other interest rate swap agreements, each based on six month LIBOR plus spreads of 363 to 364 basis points and each hedging $35.0 million of the 2001 Senior Subordinated Notes. These interest rate swap agreements qualified for hedge accounting in accordance with SFAS 133, as amended, and were designated as fair value hedges. In the quarter ended March 31, 2004, the Authority sold these instruments for an aggregate loss of $5.1 million. The $5.1 million loss was deferred and added to the carrying value of the respective notes being hedged and is being amortized and recorded in interest expense over the remaining term of the respective notes, as adjusted for the tender of substantially all of the 2001 Senior Subordinated Notes in August 2004. For the quarter and nine months ended June 30, 2005, the Authority recorded amortization of $234,000 and $701,000, respectively, on the deferred loss to interest expense. The Authority expects to record $935,000 to interest expense over the next twelve months.

In February 2003, the Authority entered into two interest rate swap agreements, each based on six-month LIBOR plus spreads of 388 basis points and 387.5 basis points, respectively, and each hedging $75.0 million of the 2001 Senior Subordinated Notes. These interest rate swap agreements qualified for hedge accounting and were designated as fair value hedges. In March 2003, the Authority sold these instruments for a gain of $1.1 million. The $1.1 million gain was deferred and added to the carrying value of the 2001 Senior Subordinated Notes and is being amortized and recorded as a reduction in interest expense over the remaining term of the 2001 Senior Subordinated Notes, as adjusted for the tender of substantially all of the 2001 Senior Subordinated Notes in August 2004. For the quarter and nine months ended June 30, 2005, the Authority recorded amortization of $4,000 and $11,000, respectively, on the deferred gain to interest expense and expects to record $14,000 over the next twelve months as an offset to interest expense.

13

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

In August 2002, the Authority entered into three interest rate swap agreements, each based on six-month LIBOR plus a spread of 437 basis points with one instrument hedging $100.0 million of the 1999 Senior Notes and two instruments each hedging $50.0 million of the 1999 Senior Notes. These interest rate swap agreements qualified for hedge accounting and were designated as fair value hedges. During September 2002, the Authority sold these agreements for a gain of $2.2 million. The $2.2 million gain was deferred and added to the carrying value of the 1999 Senior Notes and is being amortized and recorded as a reduction to interest expense over the remaining term of the 1999 Senior Notes, as adjusted for the tender of substantially all of the 1999 Senior Notes in August 2004. For the quarter and nine months ended June 30, 2005, the Authority recorded amortization of $12,000 and $35,000, respectively, as an offset to interest expense and expects to record approximately $23,000 as an offset to interest expense over the next six months.

Letters of Credit

The Authority maintains uncollateralized letters of credit to satisfy potential workers’ compensation liabilities, overdue amounts for purses due to horsemen at Pocono Downs and overdue pari-mutuel wagering tax liabilities that may arise. The letters of credit expire on August 31, 2005, November 15, 2005 and January 25, 2006, respectively. As of June 30, 2005, no amounts were drawn on the letters of credit.

NOTE 5—RELATED PARTY TRANSACTIONS:

The Tribe provides governmental and administrative services to the Authority in conjunction with the operation of Mohegan Sun. During the quarters ended June 30, 2005 and 2004, the Authority incurred $4.3 million and $3.8 million, respectively, and for the nine months ended June 30, 2005 and 2004, incurred $12.8 million and $11.5 million, respectively, of expenses for such services. The Tribe, either through itself or one of its limited liability companies, has entered into various land lease agreements with the Authority for access, parking and related purposes for Mohegan Sun. The Authority expensed $65,000 for each of the quarters ended June 30, 2005 and 2004, respectively, relating to these land lease agreements. For the nine months ended June 30, 2005 and 2004, expenses for the land lease agreements totaled $196,000 respectively.

The Authority purchases the majority of its utilities, including electricity, gas, water and sewer, from an instrumentality of the Tribe, the Mohegan Tribal Utility Authority. The Authority incurred costs of $3.9 million and $4.0 million for such utilities during the quarters ended June 30, 2005 and 2004, respectively. For each of the nine months ended June 30, 2005 and 2004, the Authority incurred costs of $12.4 million and $12.6 million, respectively.

NOTE 6—COMMITMENTS AND CONTINGENCIES:

The Mohegan Compact

In May 1994, the Tribe and the State of Connecticut entered into a Memorandum of Understanding (“MOU”) which sets forth certain matters regarding implementation of the Mohegan Compact. The MOU stipulates that a portion of the revenues earned on slot machines must be paid to the State of Connecticut (“Slot Win Contribution”). The Slot Win Contribution payments will not be required if the State of Connecticut legalizes any other gaming operations with slot machines or other commercial casino table games within Connecticut, except those consented to by the Tribe and the Mashantucket Pequot Tribe. For each 12-month period commencing July 1, 1995, the Slot Win Contribution shall be the lesser of (a) 30% of gross revenues from slot machines, or (b) the greater of (i) 25% of gross revenues from slot machines or (ii) $80.0 million.

The Authority reflected expenses associated with the Slot Win Contribution totaling $55.1 million and $52.2 million for each of the quarters ended June 30, 2005 and 2004, respectively. For the nine months ended June 30,

14

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

2005 and 2004, the expenses associated with the Slot Win Contribution totaled $157.4 million and $152.7 million, respectively. As of June 30, 2005 and September 30, 2004, outstanding Slot Win Contribution payments to the State of Connecticut totaled $17.6 million and $17.8 million, respectively.

Priority Distribution Agreement

In August 2001, the Authority and the Tribe entered into an agreement (the “Priority Distribution Agreement”), which obligates the Authority to make monthly payments to the Tribe to the extent of the Authority’s net cash flow, as defined in the Priority Distribution Agreement. The Priority Distribution Agreement, which has a perpetual term, also clarifies and records the terms pursuant to which the Authority made such payments to the Tribe prior to the effective date of the Priority Distribution Agreement. The Priority Distribution Agreement limits the maximum aggregate payments by the Authority to the Tribe in each calendar year to $14.0 million, as adjusted annually in accordance with the formula specified in the Priority Distribution Agreement to reflect the effects of inflation. However, payments pursuant to the Priority Distribution Agreement do not reduce the Authority’s obligations to make payments to reimburse the Tribe for governmental services provided by the Tribe or any payments under any other agreements with the Tribe. The monthly payments under the Priority Distribution Agreement are limited obligations of the Authority and are not secured by a lien or encumbrance on any assets or property of the Authority. The Authority’s condensed consolidated financial statements reflect payments associated with the Priority Distribution Agreement of $4.0 million and $3.9 million for the quarters ended June 30, 2005 and 2004, respectively. For the nine months ended June 30, 2005 and 2004, these payments totaled $11.8 million and $11.6 million, respectively.

ACLS of New England, Inc.

The Authority has a 10-year laundry services agreement with ACLS of New England, Inc. (“ACLS”). The Authority has an option to renew the agreement for one additional 10-year term after its expiration in October 2012. Under the laundry services agreement, the Authority will pay an agreed upon rate for laundry services, adjusted annually for the Consumer Price Index and unusual increases in energy costs. Additionally, the Authority has made a $500,000 loan to ACLS to develop the laundry service facility. Pursuant to the terms of the loan, interest may accrue based on the exercise of the renewal options or other certain circumstances. In the event that circumstances occur where interest will be accrued, interest shall accrue commencing from the date of the advance at an annual rate of five percent.

The Authority also entered into a co-investment and escrow agreement with the Mashantucket Pequot Tribal Nation (“MPTN”) and ACLS. Under the terms of those agreements, the Authority and MPTN may, under certain circumstances, become the joint owners of the laundry facility and be jointly and severally obligated to repay a term loan which is secured by a mortgage on the laundry facility. The term of the agreements is for ten years and, if the Authority and MPTN become obligated to repay the term loan, the maximum potential future payments (undiscounted) the Authority and MPTN could be required to make is approximately $6.4 million.

Land Purchase Options

Upon formation of Salishan-Mohegan, Salishan Company contributed land purchase options related to property to be assigned to the Cowlitz Indian Tribe for purposes of the Cowlitz Project, upon (1) receipt of necessary financing for the development of the proposed casino and (2) the underlying property being taken into trust by the United States Department of the Interior. Pursuant to amendments made to the option agreements in May 2005, the land purchase options permit Salishan-Mohegan to purchase land at specified closing dates no later than December 2005 and April 2006 for remaining payments of $7.5 million and $3.2 million, respectively.

15

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

Under the option agreements, Salishan-Mohegan also is required to make extension payments on the aggregate agreed-upon net purchase price at an annual rate of 6.5%, with applicable portions payable on the respective closing dates or termination of the option agreements.

Environmental Contingencies

Prior to acquiring the Pocono Downs entities, the Authority conducted an extensive environmental investigation of the Pocono Downs facilities. In the course of that work, the Authority identified several recognized environmental conditions at the Pocono Downs facility for which corrective actions are necessary to bring the property into compliance with applicable laws and regulations. The Authority has prepared and begun to implement a comprehensive plan to mitigate and resolve these conditions. Under the terms of the corrective action plans and as included in the Pocono Downs Purchase Agreement, the sellers will be responsible for the costs of the remedial actions up to $1.0 million, and the Authority will be responsible for all environmental costs in excess of $1.0 million but less than or equal to $2.0 million. The sellers also have agreed to indemnify the Authority for up to $10.0 million of additional costs in excess of $2.0 million that the Authority may incur as a result of the environmental condition of the Pocono Downs properties prior to closing. The total cost of remediation is estimated to be approximately $1.6 million at June 30, 2005.

Horsemen’s Agreement

On January 25, 2005, Downs Racing, L.P. entered into an agreement with the Pennsylvania Harness Horsemen’s Association Inc. (“PHHA”), which represents owners, trainers and drivers at the Pocono Downs harness racing facility. The agreement governs all harness racing events and simulcasting and account wagering conducted at Pocono Downs and the five OTW facilities through December 31, 2010.

Among other things, the agreement provides for the payment of 4.3% of all pari-mutuel wagering on racing events held at Pocono Downs to PHHA. This amount comprises the payment of $420,000 in certain operating costs and expenses for the PHHA, with the remainder allocated to purses owed to the horsemen for each racing event. Pocono Downs is also required to distribute to PHHA 2.5% and 1.1% in fees earned on live races at Pocono Downs simulcast to wagering locations inside and outside Pennsylvania, respectively.

Erie OTW Settlement Agreement

As of December 31, 2004, Penn National Gaming Inc., the former owner of the Pocono Downs entities, entered into an agreement to sell all of the assets associated with the OTW facility located in Erie, Pennsylvania to MTR Gaming Group, Inc. (“MTR”) and Presque Isle Downs Inc. (“PID” and collectively with MTR, “Presque Isle”) for $7.0 million. Penn National Gaming Inc. assigned its rights under this agreement to the Authority’s subsidiary, Downs Racing, L.P., upon the Authority’s acquisition of the Pocono Downs entities. Accordingly, Downs Racing, L.P. will be required to convey the Erie OTW facility for such price if and when either of the following two conditions occur: (1) there is commencement by any of the Presque Isle entities of pari-mutuel wagering in Erie, Pennsylvania or (2) there is receipt by any Presque Isle entity of revenue from slot machine operations in Erie, Pennsylvania.

Litigation

The Authority is a defendant in certain litigation incurred in the normal course of business. In the opinion of management, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on the Authority’s financial position, results of operations or cash flows.

16

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 7—TCA AGREEMENTS:

Relinquishment Agreement

In February 1998, the Authority and Trading Cove Associates (“TCA”) entered into an agreement (the “Relinquishment Agreement”). Effective January 1, 2000 (the “Relinquishment Date”), the Relinquishment Agreement superseded a then existing management agreement with TCA. The Relinquishment Agreement provides, among other things, that the Authority will make certain payments to TCA out of, and determined as a percentage of, Revenues (as defined in the Relinquishment Agreement) generated by Mohegan Sun over a 15-year period commencing on the Relinquishment Date. The payments (“Senior Relinquishment Payments” and “Junior Relinquishment Payments”) have separate schedules and priority. Senior Relinquishment Payments commenced on April 25, 2000, twenty-five days following the end of the first three-month period after the Relinquishment Date and continue at the end of each three-month period thereafter until January 25, 2015. Junior Relinquishment Payments commenced on July 25, 2000, twenty-five days following the end of the first six-month period after the Relinquishment Date and continue at the end of each six-month period thereafter until January 25, 2015. Each Senior Relinquishment Payment and Junior Relinquishment Payment is an amount equal to 2.5% of the Revenues generated by Mohegan Sun over the immediately preceding three-month or six-month payment period, as the case may be. “Revenues” are defined in the Relinquishment Agreement as gross gaming revenues (other than Class II gaming revenue) and all other facility revenues (including, without limitation, hotel revenues, room service, food and beverage sales, ticket revenues, fees or receipts from convention/events center and all rental or other receipts from lessees and concessionaires, but not the gross receipts of such lessees, licenses and concessionaires).

In the event of any bankruptcy, liquidation or reorganization or similar proceeding relating to the Authority, the Relinquishment Agreement provides that each of the Senior and Junior Relinquishment Payments then due and owing are subordinated in right to payment of senior secured obligations, which include the Bank Credit Facility and capital lease obligations, and that the Junior Relinquishment Payments then due and owing are further subordinated to payment of all other senior obligations, including the Authority’s 1999 Senior Notes and 2005 Senior Notes. The Relinquishment Agreement also provides that all relinquishment payments are subordinated in right of payment to the minimum priority distribution payments, which are monthly payments required to be made by the Authority to the Tribe, to the extent then due. The Authority, in accordance with SFAS 5, “Accounting for Contingencies,” has recorded a relinquishment liability of the estimated present value of its obligations under the Relinquishment Agreement.

A relinquishment liability of $549.1 million was established at September 30, 1998 based on the present value of the estimated future Mohegan Sun revenues utilizing the Authority’s risk-free investment rate. At June 30, 2005, the carrying amount of the relinquishment liability was $448.5 million as compared to $472.0 million at September 30, 2004. The decrease during the nine months ended June 30, 2005 is due to $44.1 million in relinquishment payments, offset by $20.6 million for the accretion of discount to the relinquishment liability. Of the $44.1 million in relinquishment payments, $26.3 million represents payment of principal and $17.8 million represents payment of the accretion of discount to the relinquishment liability. During the nine months ended June 30, 2004, the Authority paid $42.2 million in relinquishment payments, consisting of $22.6 million in principal amounts and $19.6 million for the payment of the accretion of discount to the relinquishment liability. The accretion of discount to the relinquishment liability resulted from the impact of the discount for the time value of money. At June 30, 2005 and September 30, 2004, relinquishment payments earned but unpaid were $26.5 million and $18.3 million, respectively.

17

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 8—SEGMENT REPORTING

The Authority currently owns and operates the Mohegan Sun property in Connecticut and, after the acquisition of the Pocono Downs entities in January 2005, operates the harness racetrack at Pocono Downs and five OTW facilities in Pennsylvania. All of the Authority’s revenues are derived from these operations. The Authority’s executive officers review and assess the performance of the operating results and determine the proper allocation of resources to Mohegan Sun and the Pocono Downs entities on a separate basis. The Authority, therefore, believes that it has two operating segments, one comprised solely of Mohegan Sun and another, referred to as “Pocono Downs” herein, comprised of the operations of the Pocono Downs entities. The two operating segments are also separate reporting segments due to the differing nature of their operations. The following tables provide financial information on each segment (in thousands):

	For the Three Months Ended June 30,						For the Nine Months Ended June 30,
	2005			2004			2005			2004
Net revenues:
Mohegan Sun	$	332,215		$	311,899		$	958,044		$	922,424
Pocono Downs		10,308			—			16,552			—
Total	$	342,523		$	311,899		$	974,596		$	922,424
Income from operations:
Mohegan Sun	$	71,338		$	62,341		$	195,040		$	180,434
Pocono Downs		209			—			391			—
Corporate expenses		(2,847	)		(860	)		(8,310	)		(3,348	)
Total		68,700			61,481			187,121			177,086
Accretion of discount to the relinquishment liability		(6,867	)		(7,485	)		(20,600	)		(22,455	)
Interest income		189			23			416			174
Interest expense		(23,423	)		(20,407	)		(64,875	)		(60,076	)
Loss on early extinguishment of debt		—			—			(280	)		(248	)
Other expense, net		(325	)		(797	)		(1,140	)		(845	)
Income before minority interest		38,274			32,815			100,642			93,636
Minority interest		237			—			432			—
Net income	$	38,511		$	32,815		$	101,074		$	93,636
	For the Nine Months Ended June 30,
	2005			2004
Capital expenditures:
Mohegan Sun	$	33,411		$	25,446
Pocono Downs		2,099			—
Total	$	35,510		$	25,446
	June 30, 2005			September 30, 2004
Total assets:
Mohegan Sun	$	1,568,217		$	1,571,215
Pocono Downs (including goodwill of $39,459)		287,103			—
Other		13,905			8,490
	$	1,869,225		$	1,579,705

18

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 9—CONDENSED CONSOLIDATING FINANCIAL STATEMENT INFORMATION:

The Authority’s outstanding public debt, comprised of substantially all of its senior and senior subordinated notes, is fully and unconditionally guaranteed by MBC, MCV-PA and the Pocono Downs entities. Separate financial statements and other disclosures concerning MBC, MCV-PA and the Pocono Downs entities are not presented below because the Authority believes that they are not material to investors. Condensed consolidating financial statement information for the Authority, MBC, MCV-PA, the Pocono Downs entities and the non-guarantor subsidiaries as of June 30, 2005 and September 30, 2004 and for the quarter and nine months ended June 30, 2005 and 2004, is as follows (in thousands):

CONDENSED CONSOLIDATING BALANCE SHEETS

	As of June 30, 2005
	Authority			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating/ Eliminating Adjustments			Consolidated Total
ASSETS
Property and equipment, net	$	1,292,473		$	32,530		$	3,850		$	—		$	1,328,853
Intercompany receivables		305,283			—			—			(305,283	)		—
Other intangible assets, net		119,691			220,887			—						340,578
Other assets, net		148,666			41,095			10,033			—			199,794
Total assets	$	1,866,113		$	294,512		$	13,883		$	(305,283	)	$	1,869,225
LIABILITIES AND CAPITAL
Total current liabilities	$	282,956		$	9,317		$	4,786		$	—		$	297,059
Long-term debt, net of current portion		1,225,235			5,000			—			—			1,230,235
Relinquishment liability, net of current portion		350,041			—			—			—			350,041
Intercompany payables		—			297,316			7,967			(305,283	)		—
Other long-term liabilities		183			—			—			—			183
Investment in subsidiaries		17,723			—			—			(17,723	)		—
Total liabilities		1,876,138			311,633			12,753			(323,006	)		1,877,518
Minority interest in subsidiary		—			—			2,100			—			2,100
Total capital		(10,025	)		(17,121	)		(970	)		17,723			(10,393	)
Total liabilities and capital	$	1,866,113		$	294,512		$	13,883		$	(305,283	)	$	1,869,225
	As of September 30, 2004
	Authority			MBC			Non- Guarantor Subsidiaries			Consolidating/ Eliminating Adjustments			Consolidated Total
ASSETS
Property and equipment, net	$	1,324,106		$	176		$	3,850		$	—		$	1,328,132
Intercompany receivables		8,930			—			—			(8,930	)		—
Other assets, net		238,383			8,550			4,640			—			251,573
Total assets	$	1,571,419		$	8,726		$	8,490		$	(8,930	)	$	1,579,705
LIABILITIES AND CAPITAL
Total current liabilities	$	245,848		$	2,021		$	4,289		$	—		$	252,158
Long-term debt, net of current portion		997,051			6,000			—			—			1,003,051
Relinquishment liability, net of current portion		383,493			—			—			—			383,493
Intercompany payables		—			6,206			2,724			(8,930	)		—
Other long-term liabilities		197			—			—			—			197
Investment in subsidiaries		5,553			—			—			(5,553	)		—
Total liabilities		1,632,142			14,227			7,013			(14,483	)		1,638,899
Minority interest in subsidiary		—			—			1,845			—			1,845
Total capital		(60,723	)		(5,501	)		(368	)		5,553			(61,039	)
Total liabilities and capital	$	1,571,419		$	8,726		$	8,490		$	(8,930	)	$	1,579,705

19

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

	For the Three Months ended June 30, 2005
	Authority			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	331,131		$	11,698		$	—		$	(306	)	$	342,523
Operating costs and expenses:
Gaming & other operations		190,816			8,790			—			(306	)		199,300
Advertising, general and administrative		48,733			2,767			716			—			52,216
Depreciation and amortization		21,080			1,227			—			—			22,307
Total operating costs and expenses		260,629			12,784			716			(306	)		273,823
Income (loss) from operations		70,502			(1,086	)		(716	)		—			68,700
Accretion of discount to the relinquishment liability		(6,867	)		—			—			—			(6,867	)
Interest expense		(18,180	)		(5,243	)		—			—			(23,423	)
Loss on interests in subsidiaries		(6,613	)		—			—			6,613			—
Other income (expense), net		(331	)		1			194			—			(136	)
Income (loss) before minority interest		38,511			(6,328	)		(522	)		6,613			38,274
Minority interest		—						237			—			237
Net income (loss)	$	38,511		$	(6,328	)	$	(285	)	$	6,613		$	38,511
	For the Nine Months ended June 30, 2005
	Authority			Guarantor Subsidiaries (1)			Non-Guarantor Subsidiaries			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	956,675		$	18,326		$	—		$	(405	)	$	974,596
Operating costs and expenses:
Gaming & other operations		558,011			13,822			—			(405	)		571,428
Advertising, general and administrative		143,808			4,912			1,450			—			150,170
Depreciation and amortization		63,715			2,162			—			—			65,877
Total operating costs and expenses		765,534			20,896			1,450			(405	)		787,475
Income (loss) from operations		191,141			(2,570	)		(1,450	)		—			187,121
Accretion of discount to the relinquishment liability		(20,600	)		—			—			—			(20,600	)
Interest expense		(55,812	)		(9,063	)		—			—			(64,875	)
Loss on early extinguishment of debt		(280	)		—			—			—			(280	)
Loss on interests in subsidiaries		(12,231	)		—			—			12,231			—
Other income (expense), net		(1,142	)		2			416			—			(724	)
Income (loss) before minority interest		101,074			(11,629	)		(1,034	)		12,231			100,642
Minority interest		—						432			—			432
Net income (loss)	$	101,074		$	(11,629	)	$	(602	)	$	12,231		$	101,074

(1) Period from date of inception (January 25, 2005) to June 30, 2005 for Pocono Downs entities and MCV-PA.

20

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

	For the Three Months ended June 30, 2004
	Authority			MBC			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	310,530		$	1,581		$	(212	)	$	311,899
Operating costs and expenses:
Gaming & other operations		178,465			1,159			(212	)		179,412
Advertising, general and administrative		45,796			909			—			46,705
Depreciation and amortization		23,061			1,240			—			24,301
Total operating costs and expenses		247,322			3,308			(212	)		250,418
Income (loss) from operations		63,208			(1,727	)		—			61,481
Accretion of discount to the relinquishment liability		(7,485	)		—			—			(7,485	)
Interest expense		(20,360	)		(47	)		—			(20,407	)
Loss on interests in subsidiaries		(1,774	)		—			1,774			—
Other expense, net		(774	)		—			—			(774	)
Net income (loss)	$	32,815		$	(1,774	)	$	1,774		$	32,815
	For the Nine Months ended June 30, 2004
	Authority			MBC			Consolidating/ Eliminating Adjustments			Consolidated Total
Net revenues	$	921,044		$	1,599		$	(219	)	$	922,424
Operating costs and expenses:
Gaming & other operations		537,312			1,573			(219	)		538,666
Advertising, general and administrative		133,872			1,498			—			135,370
Depreciation and amortization		69,597			1,705			—			71,302
Total operating costs and expenses		740,781			4,776			(219	)		745,338
Income (loss) from operations		180,263			(3,177	)		—			177,086
Accretion of discount to the relinquishment liability		(22,455	)		—			—			(22,455	)
Interest expense		(59,925	)		(151	)		—			(60,076	)
Loss on early extinguishment of debt		(248	)		—			—			(248	)
Loss on interests in subsidiaries		(3,327	)		—			3,327			—
Other income (expense), net		(672	)		1			—			(671	)
Net income (loss)	$	93,636		$	(3,327	)	$	3,327		$	93,636

21

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

	For the Nine Months Ended June 30, 2005
	Authority			Guarantor Subsidiaries (1)			Non- Guarantor Subsidiaries			Consolidating/ Eliminating Adjustments		Consolidated Total
Net cash flows provided by operating activities	$	179,014		$	2,720		$	86		$	—	$	181,820
Purchase of property and equipment		(32,561	)		(2,175	)		—			—		(34,736	)
Acquisition of Pocono Downs		—			(280,114	)		—			—		(280,114	)
Other cash flows provided by (used in) investing activities		(1,102	)		10			(4,800	)		—		(5,892	)
Net cash flows used in investing activities		(33,663	)		(282,279	)		(4,800	)		—		(320,742	)
Cash flows provided by (used in) financing activities:
Bank Credit Facility borrowings—revolving loan		680,000			—			—			—		680,000
Bank Credit Facility repayments—revolving loan		(764,000	)		—			—			—		(764,000	)
Bank Credit Facility borrowings—term loan		58,333			—			—			—		58,333
Bank Credit Facility repayments—term loan		(150,000	)		—			—			—		(150,000	)
Line of credit borrowings		339,360			—			—			—		339,360
Line of credit repayments		(325,290	)		—			—			—		(325,290	)
Proceeds from the issuance of long-term debt		400,000			—			—			—		400,000
Distributions to Tribe		(50,428	)		—			—			—		(50,428	)
Principal portion of relinquishment liability payments		(26,301	)		—			—			—		(26,301	)
Other cash flows provided by (used in) financing activities		(290,665	)		280,001			4,714			—		(5,950	)
Net cash flows provided by (used in) financing activities		(128,991	)		280,001			4,714			—		155,724
Net decrease in cash and cash equivalents		16,360			442			—			—		16,802
Cash and cash equivalents at beginning of period		60,406			388			—			—		60,794
Cash and cash equivalents at end of period	$	76,766		$	830		$	—		$	—	$	77,596

(1) Period from date of inception (January 25, 2005) to June 30, 2005 for Pocono Downs entities and MCV-PA.

22

MOHEGAN TRIBAL GAMING AUTHORITY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

	For the Nine Months Ended June 30, 2004
	Authority			MBC			Consolidating/ Eliminating Adjustments		Consolidated Total
Net cash flows provided by (used in) operating activities	$	181,450		$	(1,374	)	$	—	$	180,076
Purchases of property and equipment		(26,150	)		(37	)		—		(26,187	)
Other cash flows used in investing activities		(425	)		—			—		(425	)
Net cash flows used in investing activities		(26,575	)		(37	)		—		(26,612	)
Cash flows provided by (used in) financing activities:
Bank Credit Facility borrowings—revolving loan		62,000			—			—		62,000
Bank Credit Facility repayments—revolving loan		(121,000	)		—			—		(121,000	)
Bank Credit Facility repayments—term loan		(8,334	)		—			—		(8,334	)
Line of credit borrowings		99,000			—			—		99,000
Line of credit repayments		(99,000	)		—			—		(99,000	)
Distributions to Tribe		(48,710	)		—			—		(48,710	)
Principal portion of relinquishment liability payments		(22,602	)		—			—		(22,602	)
Other cash flows provided by (used in) financing activities		(12,288	)		850			—		(11,438	)
Net cash flows provided by (used in) financing activities		(150,934	)		850			—		(150,084	)
Net increase (decrease) in cash and cash equivalents		3,941			(561	)		—		3,380
Cash and cash equivalents at beginning of period		72,690			574			—		73,264
Cash and cash equivalents at end of period	$	76,631		$	13		$	—	$	76,644

23

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Management Board of the

Mohegan Tribal Gaming Authority:

We have reviewed the accompanying condensed consolidated balance sheet of the Mohegan Tribal Gaming Authority and its subsidiaries (the “Authority”) as of June 30, 2005, and the related condensed consolidated statements of income and of changes in capital for each of the three-month and nine-month periods ended June 30, 2005 and 2004 and the condensed consolidated statements of cash flows for the nine-month periods ended June 30, 2005 and 2004. These interim financial statements are the responsibility of the Authority’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of September 30, 2004, and the related consolidated statements of income, of changes in capital and of cash flows for the year then ended (not presented herein), and in our report dated November 10, 2004 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of September 30, 2004, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut

August 5, 2005

24

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Some information included in this Quarterly Report on Form 10-Q and other materials filed by us with the Securities and Exchange Commission, or the SEC, contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements include information relating to business development activities, as well as capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and increased competition. These statements can sometimes be identified by our use of forward-looking words such as “may,” “will,” “anticipate,” “estimate,” “expect,” or “intend” and similar expressions. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of us. These risks and uncertainties include, but are not limited to, those relating to increased competition (including the legalization or expansion of gaming in New England, New York, New Jersey and Pennsylvania), the financial performance of Mohegan Sun, Pocono Downs and the off-track wagering facilities (OTWs), dependence on existing management, potential adverse changes in local, regional, national or global economic climates, our leverage and ability to meet our debt service obligations, changes in federal or state tax laws or the administration of such laws, changes in gaming laws or regulations (including the limitation, denial or suspension of licenses required under gaming laws and regulations), and the continued availability of financing. Additional information concerning potential factors that could affect our financial results is included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2004, as well as our other reports and filings with the SEC. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. We can not assure you that projected results or events will be achieved or will occur.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes beginning on page 1 of this Quarterly Report on Form 10-Q.

Overview

The Tribe and the Authority

The Mohegan Tribe of Indians of Connecticut, or the Tribe, is a federally recognized Indian tribe with an approximately 405-acre reservation situated in southeastern Connecticut, adjacent to Uncasville, Connecticut. Under the Indian Gaming Regulatory Act of 1988, federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal lands, subject to, among other things, the negotiation of a gaming compact with the state in which they operate. The Tribe and the State of Connecticut have entered into such a compact, the Mohegan Compact, which has been approved by the United States Secretary of the Interior. We were established as an instrumentality of the Tribe, with the exclusive power to conduct and regulate gaming activities on tribal lands and the nonexclusive authority to conduct such activities elsewhere. Our gaming operation at Mohegan Sun is one of only two legally authorized gaming operations in New England offering traditional slot machines and table games. Through our subsidiary, Downs Racing L.P., we also own Mohegan Sun at Pocono Downs as announced in July 2005, or Pocono Downs, a harness racing facility located in Plains, Pennsylvania, as well as five Pennsylvania OTW facilities. We are governed by a nine-member Management Board, whose members also comprise the Mohegan Tribal Council (the governing body of the Tribe). Any change in the composition of the Mohegan Tribal Council results in a corresponding change in our Management Board.

Mohegan Sun

In October 1996, we opened a gaming and entertainment complex known as Mohegan Sun. Mohegan Sun is located on a 240-acre site on the Tribe’s reservation overlooking the Thames River with direct access from Interstate 395 and Connecticut Route 2A via a four-lane access road constructed by us. Mohegan Sun is

25

approximately 125 miles from New York City and approximately 100 miles from Boston, Massachusetts. In fiscal year 2002, we completed a major expansion of Mohegan Sun known as Project Sunburst. The first phase of Project Sunburst, the Casino of the Sky, which included increased gaming, restaurant and retail space and an entertainment arena, opened in September 2001. The remaining components, including an approximately 1,200-room luxury hotel and approximately 100,000 square feet of convention space, were fully opened in June 2002.

Mohegan Sun operates in an approximately 3.0 million square foot facility, which includes the following two casinos:

Casino of the Earth

The Casino of the Earth has approximately 179,500 square feet of gaming space and offers:

• approximately 3,810 slot machines and 200 table games (including blackjack, roulette, craps and baccarat);

• food and beverage amenities, including the Uncas American Indian Grill, a 300-seat full-service restaurant and bar opened in July 2005, three full-service themed fine dining restaurants, with a fourth area featuring cuisine from all three themes, a 610-seat buffet, a ten-station food court featuring international and domestic cuisine and multiple service bars, all operated by us, for a current total of approximately 1,700 restaurant seats;

• an approximately 10,000 square foot, 410-seat lounge featuring live entertainment seven days a week;

• an approximately 11,000 square foot simulcasting race book facility; and

• five retail shops providing shopping opportunities ranging from Mohegan Sun logo souvenirs to cigars.

Casino of the Sky

The Casino of the Sky has approximately 119,000 square feet of gaming space and offers:

• approximately 2,400 slot machines and 105 table games (including blackjack, roulette, craps and baccarat);

• food and beverage amenities, including two full-service restaurants, two quick-service restaurants, a 24-hour coffee shop, a 320-seat buffet, a six station food court featuring international and domestic cuisine and five lounges and bars operated by us, as well as four full-service and three quick-service restaurants operated by third parties, for a total of approximately 2,600 restaurant seats;

• Mohegan After Dark, consisting of a nightclub, a lounge and a pub, which are all operated by a third party;

• the Mohegan Sun Arena with seating for up to 10,000;

• a 350-seat Cabaret;

• the Shops at Mohegan Sun containing 29 different retail shops, six of which we own;

• an approximately 1,200-room luxury hotel with room service;

• an approximately 20,000 square foot spa operated by a third party;

• approximately 100,000 square feet of convention space; and

• a child care facility and an arcade style recreation area operated by a third party.

Mohegan Sun has parking spaces for approximately 13,000 guests and 3,100 employees. In addition, we operate the Mohegan Sun gasoline and convenience center, an approximately 4,000 square foot, 20-pump facility located adjacent to Mohegan Sun.

26

Connecticut Sun

In January 2003, we formed a wholly owned subsidiary, the Mohegan Basketball Club LLC, or MBC, for the purpose of holding a membership in the Women’s National Basketball Association, or WNBA, and owning and operating a professional basketball team in the WNBA. MBC entered into a membership agreement with the WNBA permitting it to operate the Connecticut Sun basketball team. The team plays its home games in the Mohegan Sun Arena.

Mohegan Sun at Pocono Downs

On January 25, 2005, we and our wholly owned subsidiary, Mohegan Commercial Ventures PA, LLC, acquired all of the partnership interests in Downs Racing, L.P., Mill Creek Land, L.P., Backside, L.P. and Northeast Concessions, L.P., or the Pocono Downs entities from subsidiaries of Penn National Gaming, Inc. Downs Racing, L.P. owns Pocono Downs, a harness racing facility located on approximately 400 acres in Plains, Pennsylvania as well as five Pennsylvania OTW’s located in Carbondale, East Stroudsburg, Erie, Hazleton and Lehigh Valley (Allentown). The Pocono Downs harness racing facility is currently one of only two harness racetracks in Pennsylvania and one of only four thoroughbred and harness racing facilities in the state. It has a 5/8 mile all-weather, lighted track with seating for approximately 3,500 and parking capacity for approximately 6,500. Harness racing has been conducted at Pocono Downs since 1965, and in 2005, the track is scheduled to hold 143 live racing days. The Lehigh Valley (Allentown) OTW is a 28,000 square-foot facility and is the largest OTW in the state of Pennsylvania. The approximately $280 million purchase price was funded through draws on our bank credit facility.

We are continuing the harness racing activities at Pocono Downs, with the 2005 racing season continuing from April to November 2005, and the pari-mutuel wagering activities at the OTW facilities. In addition, as a result of our acquisition of Pocono Downs, we have the right to apply for a Pennsylvania Category One Slot Machine License, which, if approved, would initially permit the installation and operation of up to 3,000 slot machines at Pocono Downs. Upon receipt of such license, we would be required to pay a one-time $50 million fee to the Commonwealth of Pennsylvania.

A minimum of 1,500 slot machines are required, and a maximum of 3,000 slot machines are permitted, to be in operation within 18 months of the issuance of the slot machine license. Under certain circumstances, we may be permitted to install up to a total of 5,000 slot machines.

On June 22, 2005, the Pennsylvania Supreme Court unanimously upheld substantially all of the Pennsylvania Race Horse Development and Gaming Act, or the Pennsylvania Gaming Act. Following the Pennsylvania Supreme Court’s decision, the Pennsylvania Gaming Control Board, or the PGCB, has begun the process of issuing final licensing regulations and is expected to begin approving conditional Category One Slot Machine Licenses in early 2006.

On July 21, 2005, we announced plans for the development of a proposed 400,000 square foot gaming and entertainment facility to be constructed on the existing grounds of Pocono Downs. The plans include approximately 2,000 slot machines, 3 full-service restaurants, a 300 seat buffet, a 15,000 square foot food court, several bars and lounges, an 18,000 square foot nightclub, a “Kid’s Quest” center, 20,000 square feet of retail space, new parking facilities and an enhanced employee services area.

Construction of the new facility will begin upon the issuance of a conditional Category One Slot Machine License by the PGCB. The new facility is expected to open approximately 14 months from the beginning of construction. Estimated cost of construction for the new facility is between $140 and $160 million.

In addition to the development of the new gaming and entertainment facility, we plan to make significant improvements and additions to the existing Pocono Downs clubhouse and grandstand, including a new simulcast

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facility, improvements to the grandstand to include approximately 1,000 slot machines (to be operated upon the approval of our conditional Category One Slot Machine License) and a new 10,000 square foot food court. These improvements are estimated to cost up to $47 million with construction scheduled to begin in September 2005. Construction is estimated to take approximately six months to complete.

We expect to draw the bulk of our customers at the slot machine facility from the 50-mile radius surrounding Pocono Downs. As a result, as more fully described below under “Competition from Other Gaming Operations”, we anticipate our primary competition for customers will come from other potential slot machine operations in Pennsylvania and potential Indian Gaming operations in southeastern New York, primarily in the Catskill Mountain region.

Other Diversification Projects

The Tribe has determined that it is in its long-term best interest to pursue diversification of its business interests, both directly and through us. As a result, from time to time, we and the Tribe receive and evaluate various business opportunities. These opportunities primarily include the management or ownership of, or investment in, other gaming enterprises through direct investments, acquisitions, joint venture arrangements and loan transactions. In addition to the developments described below, we and the Tribe are currently exploring other opportunities, although there is no assurance that we or the Tribe will continue to pursue any of these other opportunities or that any of them will be consummated.

Cowlitz Project

In July 2004, we formed Mohegan Ventures-Northwest, LLC, or Mohegan Ventures-NW, one of two members in Salishan-Mohegan LLC, or Salishan-Mohegan. Salishan-Mohegan was formed to participate in the development and management of a casino to be located in Clark County, Washington, or the Cowlitz Project. The proposed casino will be owned by the Cowlitz Indian Tribe. Both Mohegan Ventures-NW and Salishan-Mohegan were designated as our unrestricted subsidiaries, which are not required to be guarantors of our debt obligations.

In September 2004, Salishan-Mohegan entered into development and management agreements with the Cowlitz Indian Tribe regarding the Cowlitz Project. Under the terms of the development agreement, Salishan-Mohegan administers and oversees the planning, designing, development, construction, and furnishing, as well as providing assistance with the financing, of the Cowlitz Project. The development agreement provides for certain development fees of 3% of total Project Costs, as defined in the development agreement. The management agreement is for a period of seven years during which Salishan-Mohegan will manage, operate and maintain the planned casino. The management agreement provides for a management fee of 24% of Net Revenues, as defined in the management agreement, which approximates income from operations earned from the Cowlitz Project. Development of the Cowlitz Project is subject to certain governmental and regulatory approvals, including, but not limited to, negotiating a gaming compact with the State of Washington and the United States Department of the Interior accepting land into trust on behalf of the Cowlitz Indian Tribe. The management agreement is subject to approval by the National Indian Gaming Commission, or the NIGC.

Menominee Project

In October 2004, we entered into a management agreement with the Menominee Indian Tribe of Wisconsin, or the Menominee Tribe, and the Menominee Kenosha Gaming Authority. According to the management agreement, we were granted the exclusive right and obligation to manage, operate and maintain a planned casino and destination resort to be located in Kenosha, Wisconsin, or the Menominee Project, for a period of seven years in consideration of a management fee of 13.4% of Net Revenues, as defined in the management agreement, which approximates income from operations earned from the Menominee Project. The management agreement is subject to approval by the NIGC.

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Competition from Other Gaming Operations

Our gaming operation at Mohegan Sun is one of only two legally authorized gaming operations in New England offering traditional slot machines and table games, with the other operation being our sole gaming competitor in Connecticut, Foxwoods Resort Casino, or Foxwoods. We also currently face competition from several casinos and gaming facilities located on Indian tribal lands in the state of New York and racinos in the state of Rhode Island, as well as potential competition from planned casino projects announced by other Indian tribes and non-Indians in the northeastern United States. Following our acquisition of the Pocono Downs entities in January 2005, we now also face existing and potential competition in the Pennsylvania gaming market. Please refer to “Part I. Item 1. Business—Market and Competition from Other Gaming Operations” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2004 for further detail regarding our current and projected competition from other gaming operations.

Recent Competitive Developments

The following discussion highlights changes in our competitive landscape that have occurred since September 30, 2004. Based on our internal preliminary estimates, we do not anticipate that any of the following developments will have a material impact on our revenues for the near future.

Connecticut

In February 2005, the Mashantucket Pequot Tribe announced its plans to undertake a three-year, $700.0 million expansion at Foxwoods, which will add over two million square feet to the facility and is expected to include an 825-room hotel tower, a 21,000 square foot spa, a 5,000-seat theater, a 50,000 square foot ballroom, a 2,900 car parking garage, 145,000 square feet of meeting and convention space, four retail stores, two nightclubs, three lounges, four restaurants and additional business meeting and reception space. In addition, the expansion is expected to include 50,000 square feet of gaming space and to accommodate an additional 1,500 slot machines and 45 table games. The project is expected to begin in the summer of 2005, and the facility is scheduled to open in the summer of 2008.

In May 2005, the Mashantucket Pequot Tribe completed the construction of two golf courses and a 50,000 square foot clubhouse and is continuing construction on eight golf villas and a golf academy, which are expected to be completed later in 2005.

On May 13, 2005, the United States Interior Board of Indian Appeals, or IBIA, overturned the federal recognition of the Historic Eastern Pequot Tribe and the Schaghticoke Tribe of Kent, Connecticut. Reports indicate the IBIA noted several irregularities in the decision made by the Bureau of Indian Affairs, or BIA, including the use of state recognition to fulfill criteria in the tribal petitions. The recognition decisions have been remanded to the United States Secretary of the Interior for reconsideration. A decision by the BIA on the recognition of the tribes is expected no later than October 2005. The Historic Eastern Pequot Tribe and the Schaghticoke Tribe had announced intentions to develop casinos in southeastern and western Connecticut, respectively.

Rhode Island

On July 19, 2005, BLB investors, LLC, or BLB, announced the completion of its acquisition of Lincoln Park in Lincoln, Rhode Island. In addition, BLB reached an agreement with the State of Rhode Island that, among other things, guaranteed their tax rate for up to 15 years. An announced $125.0 million expansion is expected to add approximately 175,000 square feet to increase video slot machines at the site from 3,000 to 4,750, which has been approved by the Rhode Island legislature.

In addition to approving the increase in video slots machines at Lincoln Park, the Rhode Island legislature has approved the addition of 800 video slot machines and guaranteed the tax rate for up to 10 years at Newport

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Grand Jai Alai. In order to gain the approval for the additional video slot machines, among other things, Newport Grand Jai Alai must complete a $20.0 million project for improvements and expansion to the current facilities, including a 90-room hotel.

In 2005, the Narragansett Tribe and an affiliate of Harrah’s Entertainment announced their continued pursuit of a license to operate a casino in West Warwick, Rhode Island. At this time, it is unclear if such efforts will meet with success.

New York

The New York state legislature passed a law in October 2001 authorizing as many as six gaming operations by Indian tribes in New York. Three of these operations may be located in the Catskill Mountains in Ulster County and/or Sullivan County. However, a 2005 United States Supreme Court decision has called into question the viability of certain Indian land claims in New York.

In June 2005, Governor George Pataki submitted a bill to the New York State Legislature that would approve the terms of a land claim settlement agreement between the state and the Akwesasne Mohawk Indian Tribe and permit the development of a casino in Monticello, New York. The bill included a settlement with the tribe that would allow the St. Regis Akwesasne Mohawks and Caesar’s Entertainment Inc. to build a 742-room hotel and 134,000 square foot casino at the Kutsher’s Sports Academy property in the Catskills. At this time, the bill has not yet been approved by the legislature.

On June 28, 2005, the U.S. Court of Appeals for the Second Circuit overturned a $247.9 million judgment jointly awarded to the Cayuga Indian Nation of New York and the Seneca-Cayuga Tribe of Oklahoma and dismissed the Cayuga Indian land claim, ruling that the tribes waited too long to reclaim title to 64,015 acres of ancestral land that rim the north end of Cayuga Lake. According to published reports, the ruling jeopardizes both tribes’ attempts to proceed with casino deals in the Catskills.

In June 2005, MGM Mirage announced a definitive agreement to develop and manage a slot parlor at the Aqueduct horse racing track in Queens, New York, to open by mid-2006. The facility will have approximately 4,500 video lottery terminals. The agreement is subject to state approval. Also, in June 2005, Yonkers Raceway began a significant renovation and expansion expected to be completed in 10 to 12 months, which will feature approximately 5,500 video slot machines.

Pennsylvania

In July 2004, Pennsylvania Governor Ed Rendell signed legislation permitting up to 61,000 slot machines at 14 locations throughout the state. The legislation authorized slot machines at seven harness and thoroughbred racetracks, and five stand-alone slot facilities. Each of the facilities may initially install up to 3,000 slot machines and can be expanded to up to 5,000 slot machines after six months of operation and upon gaining the approval of the PGCB. In addition, the legislation authorized two resort facilities with up to 500 slot machines. The legislation also includes prohibitions against locating facilities in close proximity to other operations, including, among other things, a prohibition against locating another harness or thoroughbred facility with slots or a standalone slot facility within 20 linear miles of Pocono Downs, and a prohibition against locating a resort facility within 15 linear miles of Pocono Downs.

In addition to Pocono Downs, there are two thoroughbred racetracks, Philadelphia Park located in Bensalem (approximately 115 miles southeast of Pocono Downs) and Penn National Race Course in Grantville (located approximately 85 miles southwest of Pocono Downs), and one harness racetrack, the Meadows located in Meadow Lands, near Pittsburgh (approximately 325 miles from Pocono Downs), currently operating. In addition, the Pennsylvania State Horse Racing Commission has approved a racing license for MTR Gaming to build a thoroughbred racetrack in Summit Township, near Erie (approximately 325 miles from Pocono Downs) and the

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Pennsylvania State Harness Racing Commission has approved a harness racing license for Harrah’s Entertainment, Inc, which has partnered with Chester Downs and Marina, LLC, to build a harness racetrack in Chester, approximately 115 miles from Pocono Downs. The Harness Racing Commission also has conducted hearings on competing proposals for a license for a new harness racetrack in Mahoning Township and South Beaver Township (approximately 280 and 300 miles from Pocono Downs, respectively). It has been reported that the Horse Racing Commission has received as many as five applications from proposed developers/property owners for the fourth and final new racing license permitted in Pennsylvania. However, under the Pennsylvania Gaming Act unless the developer of a proposed horse racetrack had received approval for a racing license within the 18 months immediately preceding the passage of the Pennsylvania Gaming Act, the licensee would not be permitted to obtain a Category One Slot Machine License.

Under the Pennsylvania Gaming Act, the PGCB will select the location of the five stand-alone slot facilities, so long as at least two of the stand-alone slot parlors are located in Philadelphia and one is located in Pittsburgh. The remaining two facilities will be selected by the PGCB from the list of applicants who submit applications for a slot license. There have been several reports of proposed locations for the two remaining stand-alone slot facilities, outside of Philadelphia and Pittsburgh. We cannot predict which owners of any of these proposed sites will receive slot machine licenses or, accordingly, where any of the licensed facilities will be located or what impact, if any, they will have on our future Pocono Downs operations.

The reports include the following proposed locations:

• In December 2004, businessman Louis DeNaples purchased Mount Airy Lodge in Mount Pocono for approximately $25 million. The property is the location of a former resort facility and includes approximately 210 acres of land, which it has been reported will be used for a new resort and casino complex. Although we are not aware of any official announcement from Mr. DeNaples regarding the proposed use or development of the property, newspaper reports have indicated that the site could be a potential location for a stand-alone slot facility with 2,400 to 3,000 machines and 200 hotel rooms. If approved, reported plans call for the facility to open in late 2006 or early 2007. Mount Pocono is an approximately 40 mile drive from Pocono Downs.

• BethWorks Now, a Pittsburgh-based group, has partnered with Las Vegas Sands, Inc, owners of the Venetian Resort and Casino in Las Vegas to acquire 135 acres of property in Bethlehem. The group has indicated that the plans for the property include a casino, 400,000-600,000 square feet of retail space and between 1,000-2,000 homes. The property is located approximately 70 miles from Pocono Downs.

• Dr. Joseph Mattioli, owner of Pocono Raceway, a NASCAR racetrack located approximately 35 miles from Pocono Downs in Long Pond, has announced his intentions to seek one of the available licenses to operate a stand-alone slot facility. Dr. Mattioli has reportedly proposed a $300 million casino complex on the Pocono Raceway property that would include a slot parlor, convention hall, shops and restaurants adjacent to the racetrack. It also has been reported that if Dr. Mattioli is unable to obtain a stand-alone slot license, he will seek a resort license and will scale back the development plans for the Long Pond property.

• Isle of Capri Casinos, Inc. of Biloxi Miss., operators of, among other things, casinos and riverboats in Mississippi, Iowa, Nevada, Missouri, Colorado and Louisiana, has reportedly been looking at sites in Lehigh Valley to locate a stand-alone slot facility. These sites are located approximately 60 miles from Pocono Downs.

• The Mashantucket Pequot Tribe is reportedly working with a local developer on a proposal for its own Pennsylvania slot facility to be located near the interchange of Interstate 78 and Pennsylvania Route 412 in Bethlehem. Bethlehem is located approximately 70 miles from Pocono Downs.

• Caesars Pocono Resorts, owned by Starwood Hotels, which operates four resorts in the Pocono Mountains, also has reportedly expressed an interest in one of the two slot licenses available for resort facilities. The closest of the four Caesars resorts is 40 miles from Pocono Downs.

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• On July 15, 2005, Matzel Development, a New Jersey developer, announced that it has agreed with Pocono Manor to develop 3,000 acres around the Pocono Manor resort in Monroe County, with plans to build a $1.5 billion slots parlor complex complete with a water park, shopping center and a train station for service to New York City. The deal is contingent on the granting to Matzel Development of a stand-alone slot license for up to 5,000 slot machines. Pocono Manor is located approximately 40 miles from Pocono Downs.

In addition to the other slot facilities in Pennsylvania, Pocono Downs may face competition from full scale casino gaming operations by Indian Tribes in the Catskill Mountains of New York. The Catskills are approximately 90 miles from Pocono Downs.

Explanation of Key Financial Statement Captions

Gross revenues

Our gross revenues are derived primarily from the following four sources:

• gaming revenues, which include revenues from slot machines, table games, keno, live harness racing at Pocono Downs and racebook (including pari-mutuel wagering revenues from our racebook at Mohegan Sun and our Pennsylvania OTW’s acquired on January 25, 2005);

• food and beverage revenues;

• hotel revenues; and

• retail, entertainment and other revenues, which include revenues from the Mohegan Sun managed retail shops and the Mohegan Sun Arena.

Our largest component of revenues is gaming revenues, which is recognized as gaming wins less gaming losses, and is comprised primarily of revenues from our slot machines and table games at Mohegan Sun. Revenues from slot machines are the largest component of our gaming revenues. Gross slot revenues, also referred to as gross slot win, represent all amounts played in the slot machines reduced by both (1) the winnings paid out and (2) all amounts we deposit into the slot machines to ensure sufficient coins in each machine to pay out the winnings. Pursuant to the Mohegan Compact, we report gross slot revenues and other statistical information related to slot machine operations to the State of Connecticut. On a monthly basis, we also post this information on our website at www.mohegansun.com.

Other commonly used terms in the discussion of revenues from slot machines include progressive slot machines, progressive jackpots, net slot revenues, slot handle, gross slot hold percentage and net slot hold percentage. Progressive slot machines retain a portion of each amount wagered and aggregate these amounts with similar amounts from other slot machines in order to create one-time winnings that are substantially larger than those paid in the ordinary course of play. We refer to such aggregated amounts as progressive jackpots. Wide-area progressive jackpot amounts are paid by a third party vendor and we remit a weekly payment to the vendor based on a percentage of the slot handle for each wide-area progressive slot machine. We accrue in-house progressive jackpot amounts until paid, and such accrued amounts are deducted from gross slot revenues, along with wide-area progressive jackpot amounts, to arrive at net slot revenues, also referred to as net slot win. Net slot revenues are included in gaming revenues in the accompanying condensed consolidated statements of income. Slot handle is the total amount wagered by patrons on slot machines during the period. Gross slot hold percentage is the gross slot win as a percentage of slot handle. Net slot hold percentage is the net slot win as a percentage of slot handle.

Commonly used terms in the discussion of revenues from table games include table games revenues, table games drop and table games hold percentage. Table games revenues represents the closing table games inventory plus table games drop and credit slips for coins, chips or tokens returned to the casino cage, less opening table

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games inventory, discounts provided on patron losses, free bet coupons and chip fills to the tables. Table games drop is the total amount of cash, free bet coupons, cash advance drafts, customer deposit withdrawals, safekeeping withdrawals and credit issued at the table contained in the locked container at each gaming table. Table games hold percentage is the table games revenues as a percentage of table games drop.

Revenues from food and beverages, hotel, retail, entertainment events and other services are recognized at the time the service is performed. Minimum rental revenues that we receive pursuant to our rental lease agreements for the Shops at Mohegan Sun are recognized on a straight-line basis over the terms of the leases. Percentage rents are recognized in the period in which the tenants exceed their respective percentage rent thresholds.

Promotional allowances

We operate a voluntary program for our guests at Mohegan Sun, without membership fees, called the Mohegan Sun Player’s Club. This program provides complimentary food, beverages, hotel, retail, entertainment and other services to guests based on points that are awarded for guests’ gaming activities. These points may be used to purchase, among other things, items at the retail stores and restaurants located within Mohegan Sun, including the Shops at Mohegan Sun and the Mohegan Sun gasoline and convenience center. Points also may be used to purchase hotel services and tickets to entertainment events held at Mohegan Sun facilities. The retail value of points are included in gross revenues when redeemed at Mohegan Sun operated facilities and then deducted as promotional allowances to arrive at net revenues.

We also have ongoing promotional programs which offer coupons to our guests for the purchase of food, beverage, hotel and retail amenities offered within Mohegan Sun. The retail value of items or services purchased with coupons at Mohegan Sun operated facilities is included in gross revenues and the respective coupon value is deducted as promotional allowances to arrive at net revenues.

Gaming expenses

The largest component of gaming expenses is the portion of gross slot revenues which must be paid to the State of Connecticut. We refer to this payment as the slot win contribution. For each 12-month period commencing July 1, 1995, the slot win contribution is the lesser of (a) 30% of gross slot revenues, or (b) the greater of (i) 25% of gross slot revenues or (ii) $80.0 million. Gaming expenses also include, among other things, expenses associated with operation of slot machines, table games, keno, live harness racing at Pocono Downs and racebook, certain marketing expenses, and promotional expenses for the Mohegan Sun Player’s Club points and coupons redeemed at the hotel, restaurants and retail outlets owned by Mohegan Sun, as well as third party tenant restaurants and the Shops at Mohegan Sun.

Income from operations

We calculate income from operations as net revenues less total operating costs and expenses. Income from operations represents only those amounts that relate to our consolidated operations and excludes minority interest, accretion of discount to the relinquishment liability, interest income, interest expense, loss on early extinguishment of debt and other non-operating income and expenses.

Accretion of discount to the relinquishment liability and reassessment of relinquishment liability

In February 1998, we entered into a relinquishment agreement with TCA. The relinquishment agreement provides that we will make certain payments to TCA out of, and determined as a percentage of, revenues (as defined in the relinquishment agreement) generated by Mohegan Sun over a 15-year period. In accordance with Statement of Financial Accounting Standards, or SFAS, No. 5 “Accounting for Contingencies,” or SFAS 5, we have recorded a relinquishment liability of the estimated present value of our obligations under the

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relinquishment agreement. We reassess projected revenues (and consequently the relinquishment liability) (i) annually in conjunction with our budgeting process and (ii) when necessary to account for material increases or decreases in projected revenues over the relinquishment period. Further, we record a quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimates and judgments used with respect to calculating the relinquishment liability, future events that affect such estimates and judgments may cause the actual relinquishment liability to differ significantly from the estimate. In addition, we have capitalized $130.0 million of this relinquishment liability in connection with the trademark value of the Mohegan Sun brand name. Under SFAS No. 142 “Goodwill and Other Intangible Assets,” or SFAS 142, the Mohegan Sun trademark is no longer subject to amortization because it has been deemed to have an indefinite useful life. SFAS 142, however, requires the trademark to be evaluated at least annually for impairment by applying a fair-value test and, if impairment occurs, the amount of impaired trademark must be written off immediately. Refer to Note 7 to our condensed consolidated financial statements for a further discussion of how we account for the relinquishment liability.

Results of Operations

Summary Operating Results

We currently own and operate the Mohegan Sun property in Connecticut and, after the acquisition of the Pocono Downs properties in January 2005, a harness racetrack at Pocono Downs and five OTW facilities in Pennsylvania. All of our revenues are derived from these operations. Our executive officers review and assess the performance of the operating results and determine the proper allocation of resources to Mohegan Sun and the Pocono Downs entities on a separate basis. We, therefore, believe that we have two operating segments, one comprised solely of Mohegan Sun and another, referred to as “Pocono Downs” herein, comprised of the operations of the Pocono Downs entities. The two operating segments are also separate reporting segments due to the differing nature of their operations. The following tables summarize our results from operations on a property basis (in thousands):

	For the Three Months Ended June 30,											For the Nine Months Ended June 30,
	2005			2004			Dollar Variance			Percentage Variance		2005			2004			Dollar Variance			Percentage Variance
Net revenues:
Mohegan Sun	$	332,215		$	311,889		$	20,326		6.5	%	$	958,044		$	922,424		$	35,620		3.9	%
Pocono Downs		10,308			—			10,308		—			16,552			—			16,552		—
Total	$	342,523		$	311,889		$	30,634		9.8	%	$	974,596		$	922,424		$	52,172		5.7	%
Income from operations:
Mohegan Sun	$	71,338		$	62,341		$	8,997		14.4	%	$	195,040		$	180,434		$	14,606		8.1	%
Pocono Downs		209			—			209		—			391			—			391		—
Corporate expenses		(2,847	)		(860	)		(1,987	)	231.0	%		(8,310	)		(3,348	)		(4,962	)	148.2	%
Total	$	68,700		$	61,481		$	7,219		11.7	%	$	187,121		$	177,086		$	10,035		5.7	%
Net income	$	38,511		$	32,815		$	5,696		17.4	%	$	101,074		$	93,636		$	7,438		7.9	%

The important factors and trends at Mohegan Sun which most contributed to our operating performance for the quarter and nine month periods ended June 30, 2005 and 2004 are as follows:

• the strengthening of the Mohegan Sun brand awareness in the Northeast gaming market, which is reflected in our table games and slot revenue growth rates for the quarter and nine months ended June 30, 2005;

• successful marketing programs and promotional events designed to increase targeted patron visitation;

• efficiencies achieved through the optimization of the Mohegan Sun labor force; and

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• the continuation of a cost reduction program initiated in fiscal year 2004 which targets expenditures that grow at substantially faster rates than net revenues, such as employee medical insurance costs.

Net revenues for the quarter and nine months ended June 30, 2005 increased primarily as a result of the continued growth in gaming revenues at Mohegan Sun and the addition of $9.0 million and $14.6 million in harness racing and off-track wagering revenues for the quarter and nine months ended June 30, 2005, respectively, as a result of the operations of Pocono Downs and the OTW facilities acquired in January 2005. The increase in revenues was partially offset by an increase in promotional allowances discussed below for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year.

Income from operations for the quarter and nine months ended June 30, 2005 increased as compared to the same periods in the prior year, primarily as a result of the growth in net revenues. These increases were partially offset by increases in operating costs and expenses of 9.3% and 5.7% for the quarter and nine months ended June 30, 2005, respectively. These increases in operating costs and expenses were due primarily to the increases in gaming expenses and advertising, general and administrative expenses discussed below. Our operating margin, or income from operations as a percentage of net revenues, improved to 20.1% for the quarter ended June 30, 2005 from 19.7% for the same period in the prior year, due partially to the increases in productivity and implementation of cost reduction programs at Mohegan Sun mentioned above.

Net income for the quarter and nine months ended June 30, 2005 increased primarily due to the increase in income from operations offset by an increase in interest expense as a result of the increase in weighted average outstanding debt compared to the same period in the prior year.

Gross Revenues

Gross revenues consisted of the following (in thousands):

	For the Three Months Ended June 30,									For the Nine Months Ended June 30,
	2005		2004		Dollar Variance			Percentage Variance		2005		2004		Dollar Variance			Percentage Variance
Gaming	$	309,325	$	280,274	$	29,051		10.4	%	$	881,917	$	828,234	$	53,683		6.5	%
Food and beverage		23,650		22,267		1,383		6.2	%		66,812		66,213		599		0.9	%
Hotel		12,845		12,857		(12	)	-0.1	%		36,330		37,812		(1,482	)	-3.9	%
Retail, entertainment and other		29,380		24,062		5,318		22.1	%		79,378		69,830		9,548		13.7	%
Total	$	375,200	$	339,460	$	35,740		10.5	%	$	1,064,437	$	1,002,089	$	62,348		6.2	%

The table below summarizes the percentage of gross revenues from each of our four revenue sources:

	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2005		2004		2005		2004
Gaming	82.5	%	82.5	%	82.8	%	82.6	%
Food and beverage	6.3	%	6.6	%	6.3	%	6.6	%
Hotel	3.4	%	3.8	%	3.4	%	3.8	%
Retail, entertainment and other	7.8	%	7.1	%	7.5	%	7.0	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

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The following table presents data related to our gaming revenues (in millions, except where noted):

	For the Three Months Ended June 30,											For the Nine Months Ended June 30,
	2005			2004			Dollar Variance			Percentage Variance		2005			2004			Dollar Variance			Percentage Variance
Slot handle	$	2,536		$	2,578		$	(42	)	-1.6	%	$	7,434		$	7,519		$	(85	)	-1.1	%
Gross slot revenues	$	220		$	209		$	11		5.3	%	$	629		$	611		$	18		2.9	%
Net slot revenues	$	214		$	203		$	11		5.4	%	$	611		$	593		$	18		3.0	%
Weighted average number of slot machines (in units)		6,213			6,252			(39	)	-0.6	%		6,242			6,216			26		0.4	%
Gross slot hold percentage		8.7	%		8.1	%		0.6	%	7.4	%		8.5	%		8.1	%		0.4	%	4.9	%
Gross slot win per unit per day (in dollars)	$	390		$	367		$	23		6.3	%	$	370		$	359		$	11		3.1	%
Table games drop	$	505		$	472		$	33		7.0	%	$	1,525		$	1,441		$	84		5.8	%
Table games revenues	$	84		$	75		$	9		12.0	%	$	249		$	228		$	21		9.2	%
Weighted average number of table games (in units)		295			292			3		1.0	%		291			283			8		2.8	%
Table games hold percentage (1)		16.5	%		15.9	%		0.6	%	3.8	%		16.3	%		15.8	%		0.5	%	3.2	%
Table games revenue per unit per day (in dollars)	$	3,114		$	2,815		$	299		10.6	%	$	3,126		$	2,943		$	183		6.2	%

(1) Table games hold percentage is relatively predictable over long periods of time, but can fluctuate significantly over shorter periods.

Gaming revenues for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year increased primarily due to continued growth in table games revenues and net slot revenues and the addition of $9.0 million and $14.6 million in harness racing and off-track wagering revenues, respectively, as a result of the operations of Pocono Downs and the OTW facilities acquired in January 2005. The increase in table games revenues and net slot revenues resulted primarily from the strengthened awareness of the Mohegan Sun brand in the Northeast United States gaming market.

Food and beverage revenues for the quarter ended June 30, 2005 compared to the same period in the prior year increased as a result of a 2.6% increase in the number of meals served, or food covers, at Mohegan Sun despite the closure of two restaurants in the Casino of the Earth (subsequently replaced with the new Uncas American Indian Grill, which opened in July 2005). The addition of food and beverage revenues associated with the operation of the food and beverage outlets at the Pocono Downs properties also contributed to the increase for the quarter. This increase was offset by a decrease in the average price per meal at Mohegan Sun to $12.98 for the quarter ended June 30, 2005 from $13.16 for the quarter ended June 30, 2004.

Food and beverage revenues for the nine months ended June 30, 2005 increased slightly as a result of an increase in the average price per meal to $13.19 for the nine months ended June 30, 2005 from $13.15 for the nine months ended June 30, 2004, as well as the addition of food and beverage revenues associated with the operation of the food and beverage outlets at the Pocono Downs properties. These increases were offset by a 2.1% decrease in food covers at Mohegan Sun due to a shift in patron visitation to our tenant outlets from outlets owned by Mohegan Sun during the first two quarters of fiscal 2005 and the closure of two Mohegan Sun owned restaurants in the Casino of the Earth as described above.

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The following table presents data related to our hotel revenues:

	For the Three Months Ended June 30,											For the Nine Months Ended June 30,
	2005			2004			Dollar Variance			Percentage Variance		2005			2004			Dollar Variance			Percentage Variance
Rooms occupied		102,796			92,199			10,597		11.5	%		292,902			272,769			20,133		7.4	%
Average daily room rate (ADR)	$	117		$	131		$	(14	)	-10.7	%	$	117		$	131		$	(14	)	-10.7	%
Occupancy rate		96.1	%		86.2	%		9.9	%	11.5	%		91.2	%		84.7	%		6.5	%	7.7	%
Revenue per available room (REVPAR)	$	112		$	113		$	(1	)	-0.9	%	$	107		$	111		$	(4	)	-3.6	%

Hotel revenues decreased for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year as a result of a decrease in ADR partially offset by an increase in occupancy rate. The increase in occupancy rate for the quarter and nine months ended June 30, 2005 was due primarily to a higher utilization of the Mohegan Sun hotel by Player’s Club members. The Player’s Club program extended to casino patrons provides lower room rates, which is reflected in the decrease in REVPAR and an 11.7% and 11.5% decrease in ADR for rooms provided to these patrons in the quarter and nine months ended June 30, 2005, respectively. The increased hotel occupancy tends to contribute to growth in gaming, food and beverage and retail, entertainment and other revenues that more than offsets the declines in ADR and REVPAR.

Retail, entertainment and other revenues increased for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year primarily as a result of increased retail and other revenues of 28.9%, or $4.6 million for the quarter ended June 30, 2005 and 22.1%, or $10.6 million, for the nine months ended June 30, 2005. Retail and other revenues increased due to increases in the price per gallon of gasoline and number of gallons of gasoline sold at the Mohegan Sun gasoline and convenience center, as well as increases in retail revenues from our stores and rental revenues associated with third party tenant outlets at Mohegan Sun. The increase in retail and other revenues for the nine months ended June 30, 2005 is partially offset by a decrease in entertainment revenues of 4.7%, or $1.0 million, due to a decrease of 5.1% in the average price per ticket to Mohegan Sun Arena events.

Promotional Allowances

The retail value of providing promotional allowances at Mohegan Sun is included in revenues as follows (in thousands):

	For the Three Months Ended June 30,								For the Nine Months Ended June 30,
	2005		2004		Dollar Variance		Percentage Variance		2005		2004		Dollar Variance		Percentage Variance
Food and beverage	$	11,725	$	10,776	$	949	8.8	%	$	32,214	$	31,812	$	402	1.3	%
Hotel		4,103		3,314		789	23.8	%		11,694		10,340		1,354	13.1	%
Retail, entertainment and other		16,849		13,471		3,378	25.1	%		45,933		37,513		8,420	22.4	%
Total	$	32,677	$	27,561	$	5,116	18.6	%	$	89,841	$	79,665	$	10,176	12.8	%

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The estimated cost of providing promotional allowances at Mohegan Sun is included in operating costs and expenses, primarily gaming, as follows (in thousands):

	For the Three Months Ended June 30,								For the Nine Months Ended June 30,
	2005		2004		Dollar Variance		Percentage Variance		2005		2004		Dollar Variance		Percentage Variance
Food and beverage	$	11,646	$	10,747	$	899	8.4	%	$	32,857	$	31,432	$	1,425	4.5	%
Hotel		1,993		1,363		630	46.2	%		5,656		4,366		1,290	29.5	%
Retail, entertainment and other		13,454		10,230		3,224	31.5	%		35,390		28,820		6,570	22.8	%
Total	$	27,093	$	22,340	$	4,753	21.3	%	$	73,903	$	64,618	$	9,285	14.4	%

Promotional allowances for the quarter and nine months ended June 30, 2005 increased primarily due to the increase in redemption of retail, entertainment and other complimentaries at Mohegan Sun. The increase in retail, entertainment and other promotional allowances was due primarily to increases in Player’s Club points and coupons redeemed at Mohegan Sun managed retail outlets, including the Mohegan Sun gasoline and convenience center.

Operating Costs and Expenses

Operating costs and expenses consisted of the following (in thousands):

	For the Three Months Ended June 30,									For the Nine Months Ended June 30,
	2005		2004		Dollar Variance			Percentage Variance		2005		2004		Dollar Variance			Percentage Variance
Gaming	$	174,268	$	156,442	$	17,826		11.4	%	$	502,595	$	464,601	$	37,994		8.2	%
Food and beverage		10,958		10,790		168		1.6	%		32,806		32,045		761		2.4	%
Hotel		4,249		3,615		634		17.5	%		11,780		11,047		733		6.6	%
Retail, entertainment and other		9,825		8,565		1,260		14.7	%		24,247		30,973		(6,726	)	-21.7	%
Advertising, general and administrative		49,369		45,845		3,524		7.7	%		141,860		132,022		9,838		7.5	%
Corporate expenses		2,847		860		1,987		231.0	%		8,310		3,348		4,962		148.2	%
Depreciation and amortization		22,307		24,301		(1,994	)	-8.2	%		65,877		71,302		(5,425	)	-7.6	%
Total	$	273,823	$	250,418	$	23,405		9.3	%	$	787,475	$	745,338	$	42,137		5.7	%

Gaming costs and expenses increased for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year primarily as a result of increased costs related to a higher amount of complimentaries provided to casino patrons, which results in a higher amount of expenses allocated to gaming from the other cost centers, the reimbursement of gift cards and complimentaries redeemed at tenant retail outlets and the addition of gaming expenses associated with harness racing and OTW operations at the Pocono Downs properties.

Food and beverage costs and expenses increased slightly for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year due to the addition of expenses associated with the operation of the food and beverage outlets at the Pocono Downs properties, offset by a decrease in food and beverage expenses at Mohegan Sun due to a higher amount of food and beverage costs allocated to gaming costs and expenses for food and beverage complimentaries provided to casino patrons.

Hotel costs and expenses increased for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year primarily as a result of higher operating costs related to the increase in rooms

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occupied and hotel beautification projects, partially offset by increased hotel complimentaries for the quarter and nine months ended June 30, 2005 resulting in a higher amount of hotel costs and expenses being recorded in gaming costs and expenses than in the quarter and nine months ended June 30, 2004.

Retail, entertainment and other costs and expenses increased for the quarter ended June 30, 2005 compared to the same period in the prior year primarily due to an increase in the cost of gasoline and number of gallons of gasoline sold at the Mohegan Sun gasoline and convenience center and an increase in entertainment expenses associated with the nature of events at the Mohegan Sun Arena during the quarter, offset by higher entertainment complimentaries and a gas coupon program provided to patrons at Mohegan Sun for the quarter ended June 30, 2005, resulting in a higher amount of retail, entertainment and other costs and expenses being recorded in gaming costs and expenses than in the quarter ended June 30, 2004.

Retail, entertainment and other costs and expenses decreased for the nine months ended June 30, 2005 compared to the same period in the prior year primarily due to a decrease in entertainment expenses associated with a change in the mix of Arena events and an increase in retail and entertainment complimentaries provided to patrons at Mohegan Sun for the nine months ended June 30, 2005, resulting in a higher amount of retail, entertainment and other costs and expenses being recorded in gaming costs and expenses than in the nine months ended June 30, 2004, offset by an increase in the cost of gasoline and number of gallons of gasoline sold at the Mohegan Sun gasoline and convenience center.

Advertising, general and administrative costs and expenses increased for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year primarily as a result of increased labor costs, approximately $2.0 million in one-time expenses relating to the release of a new series of television commercials that began airing in the northeastern market during the second quarter of fiscal 2005 and the addition of advertising, general and administrative costs and expenses associated with the operation of our Pocono Downs properties.

Corporate costs and expenses increased for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year primarily as a result of increased labor and professional costs related to our new corporate function and expenses incurred in complying with the Sarbanes-Oxley Act of 2002.

Depreciation and amortization for the quarter and nine months ended June 30, 2005 decreased primarily due to an increase in fully depreciated assets and the timing of placement of new capital assets into service.

Other Income (Expense)

Other income (expense) consisted of the following (in thousands):

	For the Three Months Ended June 30,											For the Nine Months Ended June 30,
	2005			2004			Dollar Variance			Percentage Variance		2005			2004			Dollar Variance			Percentage Variance
Accretion of discount to the relinquishment liability (1)	$	(6,867	)	$	(7,485	)	$	618		-8.3	%	$	(20,600	)	$	(22,455	)	$	1,855		-8.3	%
Interest income		189			23			166		721.7	%		416			174			242		139.1	%
Interest expense		(23,423	)		(20,407	)		(3,016	)	14.8	%		(64,875	)		(60,076	)		(4,799	)	8.0	%
Loss on early extinguishment of debt		—			—			—		—			(280	)		(248	)		(32	)	12.9	%
Other expense, net (2)		(325	)		(797	)		472		-59.2	%		(1,140	)		(845	)		(295	)	34.9	%
Total	$	(30,426	)	$	(28,666	)	$	(1,760	)	6.1	%	$	(86,479	)	$	(83,450	)	$	(3,029	)	3.6	%

(1) Our accretion of the discount to the relinquishment liability reflects the impact of the time value of money, discounted to present value.

(2) Represents primarily our net loss on disposal of property and equipment.

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Interest expense increased for the quarter and nine months ended June 30, 2005 compared to the same period in the prior year primarily as the result of an increase in weighted average outstanding debt. Weighted average outstanding debt increased to $1.29 billion from $1.07 billion for the quarter ended June 30, 2005, and $1.19 billion from $1.10 billion for the nine months ended June 30, 2005, due to the acquisition of Pocono Downs for approximately $280.0 million in January 2005. The weighted average interest rate for the quarter ended June 30, 2005 was 7.3% compared to 7.6% for the quarter ended June 30, 2004. The weighted average interest rate was 7.3% for the nine months ended June 30, 2005 and 2004, respectively. The decrease in our weighted average interest rate for the quarter ended June 30, 2005 was primarily the result of lower interest rates on our fixed rate debt.

Loss on early extinguishment of debt associated with the repayment of our term loan under the bank credit facility was $280,000 for the nine months ended June 30, 2005. Loss on early extinguishment of debt associated with the tender of our remaining $5.2 million 8 ³/4% senior subordinated notes was $248,000 in the nine months ended June 30, 2004.

Seasonality

The gaming industry in Connecticut is seasonal in nature, with the heaviest gaming activity often occurring at Mohegan Sun between May and August. Additionally, live harness racing activity at Pocono Downs is seasonal, with the racing season commencing in April and closing in November. Accordingly, the results of operations for the quarter and nine months ended June 30, 2005 are not necessarily indicative of the operating results for other interim periods or a full fiscal year.

Liquidity, Capital Resources and Capital Spending

Our cash flows consisted of the following (in thousands):

	For the Nine Months Ended June 30,
	2005			2004			Dollar Variance			Percentage Variance
Net cash provided by operating activities	$	181,820		$	180,076		$	1,744		1.0	%
Net cash used in investing activities		(320,742	)		(26,612	)		(294,130	)	1,105.3	%
Net cash provided by (used in) financing activities		155,724			(150,084	)		305,808		-203.8	%
Net increase in cash and cash equivalents	$	16,802		$	3,380		$	13,422		397.1	%

As of June 30, 2005 and September 30, 2004, we held cash and cash equivalents of $77.6 million and $60.8 million, respectively. Due to the cash-based nature of our business, operating cash flow levels tend to follow trends in our operating income excluding the effects of non-cash charges, such as depreciation and amortization. The increase in cash provided by operating activities for the nine months ended June 30, 2005 is attributable primarily to the increase in operating income after adjustments for non-cash items.

Operating activities are a significant source of our cash flows. We use our cash flows provided by operating activities primarily to meet our working capital requirements, reduce our debt and provide distributions to the Tribe. While we do not believe that there is any trend or a likely event that would adversely impact the level of our cash flows provided by operating activities, there are numerous potential factors which may cause a substantial reduction in the amount of such cash flows, including, but not limited to, the following:

• increased competition in the gaming industry, including the legalization or expansion of gaming in New England, New York, New Jersey and Pennsylvania, which may result in a substantial decrease in revenue;

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• downturn in the economy and lack of consumer confidence, which would result in reduced spending on discretionary items such as gaming activities;

• an infrastructure or transportation disruption, such as the closure of Interstate 95 through Connecticut, for an extended period of time; and

• an act of terrorism in the United States of America.

In addition to cash generated by operating activities, we have relied on external sources of liquidity to meet our investing requirements. The increase in cash provided by financing activities for the nine months ended June 30, 2005 is attributable primarily to the issuance of debt to fund the approximately $281.0 million in acquisition costs for the Pocono Downs entities. The increase in cash used in investing activities for the nine months ended June 30, 2005 is attributable primarily to the acquisition of the Pocono Downs entities for $280.1 million, net of cash received of $875,000.

External Sources of Liquidity

Notes. We financed the purchase of the Pocono Downs entities and previously financed much of the costs of construction of Mohegan Sun with the net proceeds raised from the issuance of notes and borrowings under our bank credit facilities. As of June 30, 2005, we had $14.0 million outstanding in 8 ¹/8% senior notes due January 1, 2006, or the 1999 senior notes; $16.3 million outstanding in 8 ³/8% senior subordinated notes due July 1, 2011 and first callable July 1, 2006, or the 2001 senior subordinated notes; $250.0 million outstanding in 8% senior subordinated notes due April 1, 2012 and first callable April 1, 2007, or the 2002 senior subordinated notes; $330.0 million outstanding in 6 ³/8% senior subordinated notes due July 15, 2009 and callable at any time, or the 2003 senior subordinated notes; $225.0 million outstanding in 7 ¹/8% senior subordinated notes due August 15, 2014 and first callable on August 15, 2009, or the 2004 senior subordinated notes; $250.0 million outstanding in 6 ¹/8% senior notes due February 15, 2013 and first callable February 15, 2009, or the 2005 senior notes; and $150.0 million outstanding in 6 ⁷/8% senior subordinated notes due February 15, 2015 and first callable February 15, 2010, or the 2005 senior subordinated notes. MBC, MCV-PA and the Pocono Downs entities are guarantors of each of these notes. Refer to Note 4 to our condensed consolidated financial statements in this Form 10-Q for a further discussion of these notes.

On February 8, 2005, we issued $250.0 million senior notes with fixed interest payable at a rate of 6 ¹/8% per annum. The net proceeds from this financing were used to repay amounts outstanding under the bank credit facility and to pay fees and expenses associated with the issuance. The 2005 senior notes mature on February 15, 2013. The first call date for the 2005 senior notes is February 15, 2009. Interest on the 2005 senior notes is payable semi-annually on February 15 and August 15, with the first interest payment scheduled for August 15, 2005. The 2005 senior notes are our uncollateralized general obligations, which are effectively subordinated to all of our existing and future senior secured indebtedness, including the bank credit facility. The 2005 senior notes rank equally in right of payment with the 1999 senior notes and 50% of our payment obligations under the relinquishment agreement that are then due and owing, and rank senior to the remaining 50% of our payment obligations under the relinquishment agreement that are then due and owing, the 2001 senior subordinated notes, the 2002 senior subordinated notes, the 2003 senior subordinated notes, the 2004 senior subordinated notes and the 2005 senior subordinated notes (as referred to below).

On February 8, 2005, we issued $150.0 million senior subordinated notes with fixed interest payable at a rate of 6 ⁷/8% per annum. The net proceeds from this financing were used to repay amounts outstanding under the bank credit facility and to pay fees and expenses associated with the issuance. The 2005 senior subordinated notes mature on February 15, 2015. The first call date for the 2005 senior subordinated notes is February 15, 2010. Interest on the 2005 senior subordinated notes is payable semi-annually on February 15 and August 15, with the first interest payment scheduled for August 15, 2005. The 2005 senior subordinated notes are our uncollateralized general obligations and are subordinated to the bank credit facility, the 1999 senior notes, the 2005 senior notes and in a liquidation, bankruptcy or similar proceeding, 50% of our payment obligations under

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the relinquishment agreement that are then due and owing. The 2005 senior subordinated notes rank equally with the 2001 senior subordinated notes, the 2002 senior subordinated notes, the 2003 senior subordinated notes, the 2004 senior subordinated notes and the remaining 50% of our payment obligations under the relinquishment agreement that are then due and owing.

Bank Credit Facility. We have a loan agreement for up to $450.0 million from a syndicate of financial institutions and commercial banks, with Bank of America, N.A. serving as administrative agent, or the bank credit facility. The bank credit facility is comprised of a revolving loan of up to $450.0 million which matures on March 31, 2008. The maximum aggregate principal amount available for borrowing includes amounts under certain letters of credit. As of June 30, 2005, the amount under these letters of credit totaled $334,070, of which no amount was drawn. The revolving loan has no mandatory amortization provisions and is payable in full on March 31, 2008. We have $445.7 million available for borrowing under the bank credit facility as of June 30, 2005 (without taking into account covenants under the line of credit discussed below).

The bank credit facility is collateralized by a lien on substantially all of our assets, including the assets of the Pocono Downs entities, and a leasehold mortgage on the land and improvements which comprise Mohegan Sun. We will also be required to pledge additional assets as we or our restricted subsidiaries acquire them. In addition, our obligations under the bank credit facility are guaranteed by MBC, MCV-PA and the Pocono Downs entities. The bank credit facility subjects us to a number of restrictive covenants, including financial covenants. These financial covenants relate to, among other things, our permitted total debt and senior debt leverage ratios, our minimum fixed charge coverage ratio and our maximum capital expenditures. The bank credit facility includes non-financial covenants by us and the Tribe of the type customarily found in loan agreements for similar transactions including requirements that:

• the Tribe preserve its existence as a federally recognized Indian tribe;

• the Tribe cause us to continually operate Mohegan Sun in compliance with all applicable laws; and

• except under specific conditions, limit us from selling or disposing of our assets, limit the transfer of the Authority’s assets to non-guarantor subsidiaries, limit the incurrence by us of other debt or contingent obligations and limit our ability to extend credit, make investments or commingle our assets with assets of the Tribe.

As of June 30, 2005, we and the Tribe were in compliance with all of our and their respective covenant requirements in the bank credit facility.

At our option, each advance of loan proceeds accrues interest on the basis of a base rate or on the basis of a one-month, two-month, three-month, six-month or twelve-month London Inter-Bank Offered Rate (“LIBOR”), plus in either case, the applicable spread at the time each loan is made. We also pay commitment fees for the unused portion of the revolving loan on a quarterly basis equal to the applicable spread for commitment fees times the average daily unused commitment for that calendar quarter. Applicable spreads are based on our total leverage ratio, as defined in the bank credit facility. The applicable spread for base rate advances is between 0.50% and 1.25%, and the applicable spread for LIBOR rate advances is between 1.75% and 2.50%. The applicable spread for commitment fees is between 0.375% and 0.50%. The base rate is the higher of Bank of America’s announced prime rate or the federal funds rate plus 0.50%. Interest on LIBOR loans is payable at the end of each applicable interest period or quarterly in arrears, if earlier. Interest on base rate advances is payable quarterly in arrears. As of June 30, 2005, we had $4.0 million in base rate loans and no amounts outstanding in LIBOR rate loans. The base rate loans outstanding at June 30, 2005 were based on the bank’s prime rate of 6.25% plus an applicable spread of 1.25%. The applicable spread for commitment fees was 0.50% as of June 30, 2005.

Line of Credit. We have a $25.0 million revolving loan agreement with Bank of America (formerly Fleet National Bank), or the line of credit. Each advance accrues interest on the basis of one-month LIBOR, plus the

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applicable spread, determined at the time the advance is made on the basis of the Authority’s Leverage Ratio, as defined in the Line of Credit. Borrowings under the line of credit are our uncollateralized obligations. The line of credit expires in March 2006. The line of credit subjects us to certain covenants, including a covenant to maintain at least $25.0 million available for borrowing under the bank credit facility. As of June 30, 2005, we were in compliance with all covenant requirements in the line of credit. The interest rate in effect at June 30, 2005 on the outstanding $19.2 million principal balance on the line of credit was 4.78%, comprised of a one-month LIBOR of 3.28%, plus an applicable spread of 1.50%. As of June 30, 2005, we had $5.8 million available for borrowing under the line of credit.

Capital Expenditures

Capital Expenditures Incurred

Capital expenditures totaled $35.5 million for the nine months ended June 30, 2005, compared to $25.4 million for the nine months ended June 30, 2004. These capital expenditures were an aggregate of the following:

• Property maintenance capital expenditures at Mohegan Sun totaled $33.4 million and $24.3 million for the nine months ended June 30, 2005 and 2004, respectively. For the nine months ended June 30, 2005, these expenditures were for the general maintenance of the Mohegan Sun facility and construction of the Uncas American Indian Grill discussed below. For the nine months ended June 30, 2004, these expenditures included $7.3 million in renovations and the purchase of equipment to add slot machines to gaming space formerly used for poker operations and the purchase of equipment to add slot machines to our keno gaming area and to add 14 new table games in the Casino of the Earth.

• Cumulative Project Sunburst capital expenditures totaled $1.06 billion, including $63.5 million in capitalized interest. During the quarter ended June 30, 2004 capital expenditures totaled $748,000, with no amounts recorded as capitalized interest. There were no capital expenditures relating to Project Sunburst in the nine months ended June 30, 2005.

• Capital expenditures for the Thames and Indian Summer parking garages totaled $359,000 for the nine months ended June 30, 2004. There were no capital expenditures relating to the Thames and Indian Summer parking garages in the nine months ended June 30, 2005.

• Capital expenditures at Pocono Downs totaled $2.1 million from the date of acquisition in January 2005 to June 30, 2005 and were comprised primarily of design fees for the planned slot machine facility.

Expected Future Capital Expenditures

We anticipate capital expenditures at Mohegan Sun to be approximately $52.0 million for the 2005 fiscal year, comprised of approximately $7.3 million for the construction of the Uncas American Indian Grill which was completed in July 2005 and maintenance capital expenditures. We also anticipate that we will spend up to $140.0 to $160.0 million on the construction, furnishing and equipping of a new slot machine facility at Pocono Downs and an additional $47.0 million on improvements and additions to the existing clubhouse and grandstand, in addition to paying a one-time $50.0 million fee to the Commonwealth of Pennsylvania upon receipt of a conditional Category One Slot Machine License. In fiscal year 2005, we expect to incur approximately $10.0 million in capital expenditures at Pocono Downs, comprised primarily of design and construction fees for the clubhouse and grandstand improvements and design fees for the planned slot machine facility.

Sources of Funding for Capital Expenditures

We will rely primarily on cash generated from operations to finance capital expenditures at Mohegan Sun. Capital expenditures for Pocono Downs, as described above, are expected to be funded through draws on our bank credit facility.

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Interest Expense

For the quarters ended June 30, 2005 and 2004, we incurred the following in interest expense (in thousands):

	For the Three Months Ended June 30,				For the Nine Months Ended June 30,
	2005		2004		2005		2004
Bank credit facility	$	956	$	1,424	$	6,528	$	4,989
1999 8 1/8% senior notes		284		4,063		935		12,187
2005 6 1/8% senior notes		3,828		—		5,997		—
1999 8 3/4% senior subordinated notes		—		—		—		134
2001 8 3/8% senior subordinated notes		342		3,141		1,089		9,422
2002 8% senior subordinated notes		5,000		5,000		15,000		15,000
2003 6 3/8% senior subordinated notes		5,259		5,259		15,720		15,778
2004 7 1/8% senior subordinated notes		4,008		—		12,023		—
2005 6 7/8% senior subordinated notes		2,578		—		4,039		—
WNBA note		69		47		194		151
Line of credit		167		20		390		86
Interest settlement—derivative instruments		13		—		—		(2,552	)
Reclassification of derivative instrument losses to earnings		—		—		—		303
Amortization of net deferred (gain) loss on sale of derivative instruments		172		40		609		(276	)
Amortization of debt issuance costs		747		1,413		2,351		4,854
Total interest expense	$	23,423	$	20,407	$	64,875	$	60,076

Sufficiency of Resources

We believe that existing cash balances, financing arrangements and operating cash flows will provide us with sufficient resources to meet our existing debt obligations, relinquishment payments, foreseeable capital expenditure requirements with respect to current operations and distributions to the Tribe for at least the next twelve months. Distributions to the Tribe are anticipated to total $67.5 million and $70.0 million for fiscal year 2005 and 2006, respectively. We expect future investments in Pocono Downs related to the payment of a one-time slot machine license fee, improvements to the existing facility and the development of a slot machine facility at Pocono Downs will be funded through our bank credit facility. As of June 30, 2005 we had $445.7 million available for borrowing under the bank credit facility (without taking into account covenants under the line of credit).

Contractual Obligations and Commitments

Our future payment obligations as of June 30, 2005 related to our material debt and certain other contractual obligations and the timing of those payments are set forth below.

	Payments due by period
Contractual Obligations (in thousands)	Total		Less than 1 year (1)		1-3 years		3-5 years		More than 5 years
Long-term debt (2)	$	1,267,020	$	19,155	$	18,520	$	336,000	$	893,345
Cowlitz Project obligations (3)		10,663		—		10,663		—		—
Pocono Downs obligation (4)		575		—		575		—		—
Total	$	1,278,258	$	19,155	$	29,758	$	336,000	$	893,345

(1) Amounts represent obligations expected to be incurred from July 1, 2005 to September 30, 2005.

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(2) Long-term debt includes maturities scheduled as of June 30, 2005 for our senior and senior subordinated notes, amounts required to be paid pursuant to the bank credit facility and our other debt agreements, but excludes interest payments. Refer to Note 4 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

(3) Cowlitz Project obligations include land purchase option payments of $10.7 million to be paid in the 2006 fiscal year, excluding interest payments. Refer to Note 6 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

(4) Pocono Downs obligations include a requirement under the purchase agreement dated October 14, 2004 to remediate certain environmental matters at the Pocono Downs racetrack site. The total cost of the remediation is estimated at $1.6 million, for which the former owner of Pocono Downs, Penn National Gaming, Inc., is liable for the first $1.0 million of the total cost. These costs are expected to be incurred in the 2006 fiscal year. Refer to Note 6 of the condensed consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion on these environmental matters.

In addition to the contractual obligations described above, we have certain other contractual commitments as of June 30, 2005 that require payments during the periods described below. The calculation of the estimated payments in the table below are based, in large part, on projections of future revenues over an extended period of time, as well as other factors which are indicated more fully in the footnotes to the following table. Since there are estimates and judgments used with respect to calculating these liabilities, future events that affect such estimates and judgments may cause the actual payments to differ from the estimates set forth below. The amounts included in the table are estimates and, while some agreements are perpetual in term, for the purposes of calculating these amounts, we have assumed that the table contains information for only ten years.

	Payments due by period
Contractual Commitments (in thousands)	Less than 1 year (1)		1-3 years		3-5 years		5-10 years
Slot Win Contribution (2)	$	220,818	$	435,573	$	337,684	$	884,492
Relinquishment commitments (3)		72,543		137,548		106,636		279,310
Priority distributions (4)		15,726		32,825		34,824		96,624
Town of Montville commitment (5)		500		1,000		1,000		2,500
Total	$	309,587	$	606,946	$	480,144	$	1,262,926

(1) Amounts represent payment commitments from October 1, 2004 to September 30, 2005.

(2) Slot win contributions are a portion of the gross slot revenues that must be paid by us to the State of Connecticut pursuant to the Mohegan Compact. The slot win contribution is the lesser of (a) 30% of gross slot revenues, or (b) the greater of (i) 25% of gross slot revenues or (ii) $80.0 million. The amounts shown in this table are estimates of the required payments for the next ten years, although the agreement is perpetual in term.

(3) Relinquishment payments are made by us to TCA under a relinquishment agreement. Relinquishment payments are five percent of revenues, as defined in the relinquishment agreement. The amounts shown in this table are estimates of the required payments for the next ten years and have been calculated in accordance with the relinquishment agreement. Refer to Note 7 to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q for a further discussion of how the relinquishment payments are calculated.

(4) Priority distributions are monthly payments required to be made by us to the Tribe pursuant to the priority distribution agreement. Refer to Note 6 to our condensed consolidated financial statements for a further discussion of the priority distribution agreement. The payments are calculated based on net cash flows and are limited to a maximum amount of $14.0 million pursuant to the priority distribution agreement, as adjusted annually based on the Consumer Price Index, or CPI. The amounts included in the table are estimates of the required payments for the next ten years and, while this agreement is perpetual in term, for the purposes of calculating these amounts, we have assumed that we will pay the maximum amount in each of the years covered by the table, as adjusted by an annual CPI adjustment of 2.30%.

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(5) We have an agreement with the town of Montville to pay the town an annual payment of $500,000 to minimize the impact on the town resulting from the decreased tax revenues on reservation land held in trust.

Critical Accounting Policies and Estimates

Management has identified the following critical accounting policies that affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements. The preparation of our condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, management evaluates those estimates, including those related to asset impairment, relinquishment liability, accruals for unredeemed Player’s Club points, self-insurance, compensation and related benefits, revenue recognition, allowance for doubtful accounts, contingencies and litigation. These estimates are based on the information that is currently available to us and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could vary from those estimates.

We believe that the following critical accounting policies affect significant judgments and estimates used in the preparation of our condensed consolidated financial statements:

Revenue Recognition

We recognize gaming revenues as gaming wins less gaming losses. Revenues from food and beverage, hotel, retail, entertainment and other services are recognized at the time the service is performed. Minimum rental revenues are recognized on a straight-line basis over the terms of the related leases. Percentage rents are recognized in the period in which the tenants exceed their respective percentage rent thresholds.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our patrons to make required payments, which results in bad debt expense. Management determines the adequacy of this allowance by continually evaluating individual patron receivables, considering the patron’s financial condition, credit history and current economic conditions. If the financial condition of patrons were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Unredeemed Player’s Club Points

We maintain an accrual for unredeemed Player’s Club points, as more fully described under “—Explanation of Key Financial Statement Captions—Promotional Allowances.” The accrual is based on the estimated cost of the points expected to be redeemed at each balance sheet date. Management determines the adequacy of this accrual by periodically evaluating the historical redemption experience and projected trends related to this accrual. Actual results could differ materially from those estimates.

Self-insurance Accruals

We are self-insured up to certain limits for costs associated with workers’ compensation and employee medical coverage. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates of incurred but not reported claims. In estimating these costs, we consider historical loss experience and make judgments about the expected levels of costs per claim. We also use information provided by independent consultants to assist in the determination of estimated accruals. These claims are accounted for based on estimates of the undiscounted claims, including those claims incurred but not reported. We believe the use of these estimates to account for these liabilities provides a consistent and effective way to

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measure these accruals; however, changes in health care costs, accident frequency and severity and other factors can materially affect the estimate for these liabilities. We continually monitor the potential changes in future estimates, evaluate insurance accruals and make adjustments when necessary.

Derivative Instruments

We use derivative instruments, including interest rate caps, collars and swaps in our strategy to manage interest rate risk associated with the variable interest rate on our bank credit facility and the fixed interest rates on our senior notes and senior subordinated notes. Our objective in managing interest rate risk is to achieve the lowest possible cost of debt and manage volatility in the effective cost of debt. We do not believe there is any material risk exposure with respect to the derivative instruments we currently hold. We continually monitor risk exposures from derivative instruments held and make the appropriate adjustments to manage these risks within management’s established limits. We account for our derivative instruments in accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities,” or SFAS 133, which requires that all derivative instruments be recorded on the consolidated balance sheet at fair value. In order to qualify for hedge accounting in accordance with SFAS 133, the underlying hedged item must expose us to risks associated with market fluctuations and the financial instrument used must be designated as a hedge and must reduce our exposure to market fluctuation throughout the hedge period. If these criteria are not met, a change in the market value of the financial instrument is recognized as a gain or loss and is recorded as a component to interest expense in the period of change. We exclude the change in the time value of money when assessing the effectiveness of the hedging relationship. All derivatives are evaluated quarterly.

Relinquishment Liability

In accordance with SFAS 5, we have recorded a relinquishment liability of the estimated present value of our obligations under the relinquishment agreement. We reassess the relinquishment liability (i) annually in conjunction with our budgeting process or (ii) when necessary to account for material increases or decreases in projected revenues over the relinquishment period. If the reassessment causes an overall increase to the projected revenues over the relinquishment period, the relinquishment liability will be increased by five percent of such increase in revenues, discounted at our risk-free rate of investment (an incremental layer). If the reassessment causes an overall decrease to the projected revenues over the relinquishment period, the relinquishment liability will be decreased by five percent of such decrease in revenues, discounted based upon a weighted-average discount rate (a decremental layer). The weighted-average discount rate is defined as the average discount rate used to discount all the previous incremental layers weighted by the amount of each such incremental layer. Further, we record a quarterly accretion to the relinquishment liability to reflect the impact of the time value of money. Since there is a high level of estimates and judgments used with respect to calculating this liability, future events that affect such estimates and judgments may cause the actual liability to differ significantly from the estimate.

Goodwill

In accordance with Financial Accounting Standards Board (“FASB”) Statement No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), the goodwill associated with the acquisition of the Pocono Downs entities is not subject to amortization but will be tested at least annually for impairment by comparing the fair value of the recorded assets to their carrying amount. If the carrying amount of the goodwill exceeds its fair value, an impairment loss will be recognized immediately.

Intangible Assets

Our trademark for Mohegan Sun is no longer subject to amortization as it has been deemed to have an indefinite useful life. The trademark is evaluated periodically for impairment by applying a fair-value based test and, if impairment occurs, the amount of impaired trademark will be written off immediately. The intangible

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assets associated with the acquisitions of the Pocono Downs entities and the WNBA franchise are assessed periodically for impairment pursuant to appropriate accounting standards.

Litigation

We are subject to various claims and legal actions in the ordinary course of business. Some of these matters relate to personal injuries to customers and damage to customers’ personal assets. Management estimates guest claims expense and accrues for such liabilities based upon historical experience in other current liabilities in our accompanying condensed consolidated balance sheets.

Impact of Inflation

Absent changes in competitive and economic conditions or in specific prices affecting the hospitality and gaming industry, we do not expect that inflation will have a significant impact on our operations. Changes in specific prices, such as fuel and transportation prices, relative to the general rate of inflation may have a material adverse effect on the hospitality and gaming industry in general.

New Accounting Pronouncements

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets—an amendment of APB Opinion No. 29” or FAS 153. FAS 153 amends Opinion 29 to eliminate the exception for on monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. FAS 153 is effective for fiscal years beginning after June 15, 2005. We do not believe the adoption of this standard will have a material impact on our financial position, results of operations or cash flows.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, “Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3” or FAS 154. FAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, subject to certain practicability provisions, but does not change the guidance in APB Opinion No. 20 for reporting the correction of an error in previously issued financial statements and a change in accounting estimate. FAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. We do not believe the adoption of this standard will have a material impact on our financial position, results of operations or cash flows.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our bank credit facility in which interest will accrue on the basis of a base rate formula or a LIBOR-based formula, plus applicable spreads. As of June 30, 2005, we had $4.0 million outstanding under the bank credit facility. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity, Capital Resources and Capital Spending—External Sources of Liquidity” for further information relating to the terms and conditions of the bank credit facility.

We attempt to manage our interest rate risk through a controlled mix of our long-term fixed rate borrowings and variable rate borrowings and the use of derivative instruments, including interest rate swaps, in accordance with established policies and procedures. We do not hold or issue financial instruments, including derivative instruments, for speculative or trading purposes.

On March 10, 2005, we entered into two interest rate swap agreements, each based on six-month LIBOR plus a spread of 116 basis points and each hedging $50 million of the 2005 senior notes. On March 23, 2005, we

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entered into three additional interest rate swap agreements, which also were based on six-month LIBOR plus spreads of 87 to 91 basis points and hedging $50 million, $75.0 million and $25.0 million of the 2005 senior notes. Under these agreements, we would have made payments on the variable interest rate provided by the derivative instrument and would have received payments equal to the fixed interest rate on the debt being hedged. These instruments were terminated during the quarter ended June 30, 2005.

The following table provides information as of June 30, 2005 about our current financial instruments (debt obligations) that are sensitive to changes in interest rates. For debt obligations, the table presents principal payments and related weighted-average interest rates by expected maturity dates. Weighted-average variable rates are based on implied forward rates in respective yield curves, which should not be considered to be precise indicators of actual future interest rates. Fair values for variable-rate debt instruments are considered to approximate their carrying amounts and fair values for fixed-rate debt instruments, which are publicly traded, are based on quoted market prices as of June 30, 2005.

Expected Maturity Date

	Remaining 2005			2006			2007			2008			2009			Thereafter			Total			Fair Value
	(in thousands)
Liabilities
Long-Term Debt (including current portion):
Fixed Rate	$	—		$	16,520		$	—		$	—		$	330,000		$	891,345		$	1,237,865		$	1,279,998
Average interest rate		—			8.3	%		—			—			6.4	%		7.1	%		6.9	%
Variable Rate	$	19,155		$	1,000		$	1,000		$	5,000		$	1,000		$	2,000		$	29,155		$	29,155
Average interest rate		4.8	%		5.2	%		5.9	%		6.7	%		6.1	%		6.2	%		5.3	%

Item 4. Control and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with, or furnished to, the SEC pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rule 13a-15(e) and 15d-15(e) of the Exchange Act.

As of June 30, 2005, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of disclosure controls and procedures. Based on the foregoing evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during our third fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

We are a defendant in litigation incurred in our normal course of business. We believe that, based on the advice of counsel, the aggregate liability, if any, arising from such litigation will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 6. Exhibits.

The exhibits to this Form 10-Q are listed on the exhibit index, which appears elsewhere herein and is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	MOHEGAN TRIBAL GAMING AUTHORITY
Date: August 10, 2005	By:	/s/    MARK F. BROWN
		Mark F. Brown
		Chairman and Member, Management Board
Date: August 10, 2005	By:	/s/    WILLIAM J. VELARDO
		William J. Velardo
		Chief Executive Officer,
		Mohegan Tribal Gaming Authority
		(Principal Executive Officer)
Date: August 10, 2005	By:	/s/    LEO M. CHUPASKA
		Leo M. Chupaska
		Chief Financial Officer,
		Mohegan Tribal Gaming Authority
		(Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Constitution of the Mohegan Tribe of Indians of Connecticut, as amended (filed as Exhibit 3.1 to the Authority’s Registration Statement on Form S-4, filed with the SEC on November 1, 2004 (the “2004 Form S-4”), and incorporated by reference herein).
3.2	Ordinance No. 95-2 of the Tribe for Gaming on Tribal Lands, enacted on July 15, 1995 (filed as Exhibit 3.2 to the Authority’s Amendment No. 1 to the Authority’s Registration Statement on Form S-1, filed with the SEC on February 29, 1996 (the “1996 Forms S-1”), and incorporated by reference herein).
3.3	Articles of Organization of Mohegan Basketball Club LLC, dated as of January 27, 2003 (filed as Exhibit 3.3 to the Authority’s Registration Statement on Form S-4, filed with the SEC on September 23, 2003 (the “2003 Form S-4”), and incorporated by reference herein).
3.4	Operating Agreement of Mohegan Basketball Club LLC, a Mohegan Tribe of Indians of Connecticut limited liability company, dated as of January 24, 2003 (filed as Exhibit 3.4 to the 2003 Form S-4, and incorporated by reference herein).
3.5	Certificate of Organization of Mohegan Commercial Ventures PA, LLC, dated as of January 6, 2005, as amended (filed as Exhibit 3.5 to the Authority’s Registration Statement on Form S-4, filed with the SEC on June 7, 2005 (the “2005 Senior Subordinated Form S-4”), and incorporated by reference herein).
3.6	Operating Agreement of Mohegan Commercial Ventures PA, LLC, a Commonwealth of Pennsylvania limited liability company, dated as of December 15, 2004 (filed as Exhibit 3.6 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.7	Certificate of Limited Partnership of Downs Racing, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.7 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.8	Amended and Restated Limited Partnership Agreement of Downs Racing, L.P., dated as of January 25, 2005 (filed as Exhibit 3.8 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.9	Certificate of Limited Partnership of Backside, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.9 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.10	Amended and Restated Limited Partnership Agreement of Backside, L.P., dated as of January 25, 2005 (filed as Exhibit 3.10 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.11	Certificate of Limited Partnership of Mill Creek Land, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.11 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.12	Amended and Restated Limited Partnership Agreement of Mill Creek Land, L.P., dated as of January 25, 2005 (filed as Exhibit 3.12 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.13	Certificate of Limited Partnership of Northeast Concessions, L.P., dated as of January 7, 2005, as amended (filed as Exhibit 3.13 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).
3.14	Amended and Restated Limited Partnership Agreement of Northeast Concessions, L.P., dated as of January 25, 2005 (filed as Exhibit 3.14 to the 2005 Senior Subordinated Form S-4, and incorporated by reference herein).

Exhibit No.	Description
4.1	Relinquishment Agreement, dated February 7, 1998, by and among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut and Trading Cove Associates (filed as Exhibit 10.14 to the Authority’s Form 10-K405 for the fiscal year ended September 30, 1998, filed with the SEC on December 29, 1998, and incorporated by reference herein).
4.2	Indenture, dated March 3, 1999, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and First Union National Bank, as Trustee, relating to the 8 1/8% Senior Notes Due 2006 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.3 to the Authority’s Registration Statement on Form S-4, filed with the SEC on April 21, 1999 (the “1999 Form S-4”), and incorporated by reference herein).
4.3	Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture) and Wachovia Bank, National Association (formerly known as First Union National Bank), as Trustee, relating to the 8 1/8% Senior Notes Due 2006 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.3 to the Authority’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed with the SEC on August 8, 2003 (the “June 2003 10-Q”), and incorporated by reference herein).
4.4	Second Supplemental Indenture, dated as of July 28, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC and Wachovia Bank, National Association (formerly known as First Union National Bank), as Trustee, relating to the 8 1/8% Senior Notes Due 2006 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.4 to the Authority’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, filed with the SEC on August 16, 2004 (the “June 2004 10-Q”), and incorporated by reference herein).
4.5	Form of Global 8 1/8% Senior Note Due 2006 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.3 to the 1999 Form S-4, and incorporated by reference herein).
4.6	Indenture, dated as of July 26, 2001, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.9 to the Authority’s Registration Statement on Form S-4, File No. 333-69472, filed with the SEC on September 14, 2001 (the “2001 Form S-4”), and incorporated by reference herein).
4.7	Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture) and the State Street Bank and Trust Company, as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the June 2003 10-Q, and incorporated by reference herein).
4.8	Second Supplemental Indenture, dated as of July 28, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (filed as exhibit 4.9 to the June 2004 10-Q and incorporated by reference herein).
4.9	Form of Global 8 3/8% Senior Subordinated Notes Due 2011 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.9 to the 2001 Form S-4, and incorporated by reference herein).
4.10	Indenture, dated as of February 20, 2002, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut and State Street Bank and Trust Company, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.12 to the Authority’s Registration Statement on Form S-4, filed with the SEC on March 27, 2002 (the “2002 Form S-4”), and incorporated by reference herein).

Exhibit No.	Description
4.11	Supplemental Indenture, dated as of January 27, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Basketball Club LLC, the other Subsidiary Guarantors (as defined in the Indenture) and the State Street Bank and Trust Company, as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the June 2003 10-Q, and incorporated by reference herein).
4.12	Amended and Restated Supplemental Indenture, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as exhibit 4.14 to the Authority’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2004, filed with the SEC on February 14, 2005 (the “December 2004 10-Q”), and incorporated by reference herein).
4.13	Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.15 to the December 2004 10-Q, and incorporated by reference herein).
4.14	Supplemental Indenture No. 3, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association (as successor to State Street Bank and Trust Company), as Trustee, relating to the 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.16 to the December 2004 10-Q, and incorporated by reference herein).
4.15	Form of Global 8% Senior Subordinated Notes Due 2012 of the Mohegan Tribal Gaming Authority (contained in the Indenture filed as Exhibit 4.12 to the 2002 Form S-4, and incorporated by reference herein).
4.16	Indenture, dated as of July 9, 2003, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 to the June 2003 10-Q, and incorporated by reference herein).
4.17	Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the December 2004 10-Q, and incorporated by reference herein).
4.18	Supplemental Indenture No. 2, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association, as Trustee, relating to the 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.21 to the December 2004 10-Q, and incorporated by reference herein).
4.19	Form of Global 6 3/8% Senior Subordinated Notes Due 2009 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2003 10-Q, and incorporated by reference herein).
4.20	Indenture, dated as of August 3, 2004, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, Mohegan Basketball Club LLC and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.19 to the June 2004 10-Q, and incorporated by reference herein).

Exhibit No.	Description
4.21	Supplemental Indenture No. 1, dated as of January 25, 2005, among the Mohegan Tribal Gaming Authority, the Subsidiary Guarantors (as defined in the Indenture), and U.S. Bank National Association, as Trustee, relating to the 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.25 to the December 2004 10-Q, and incorporated by reference herein).
4.22	Form of Global 7 1/8% Senior Subordinated Notes Due 2014 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.20 to the June 2004 10-Q, and incorporated by reference herein).
4.23	Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and U.S. Bank National Association, as Trustee, relating to the 6 7/8% Senior Subordinated Notes Due 2015 (filed as Exhibit 4.28 to the December 2004 10-Q, and incorporated by reference herein).
4.24	Form of Global 6 7/8% Senior Subordinated Notes Due 2015 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.29 to the December 2004 10-Q, and incorporated by reference herein).
4.25	Indenture, dated as of February 8, 2005, among the Mohegan Tribal Gaming Authority, The Mohegan Tribe of Indians of Connecticut, the Subsidiary Guarantors (as defined in the Indenture) and Wachovia Bank, National Association, as Trustee, relating to the 6 1/8% Senior Notes Due 2013 (filed as Exhibit 4.31 to the December 2004 10-Q, and incorporated by reference herein).
4.26	Form of Global 6 1/8% Senior Notes Due 2013 of the Mohegan Tribal Gaming Authority (filed as Exhibit 4.32 to the December 2004 10-Q, and incorporated by reference herein).
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith).
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith).
32.1	Section 1350 Certification of Chief Executive Officer (filed herewith).
32.2	Section 1350 Certification of Chief Financial Officer (filed herewith).

EX-31.1

Exhibit 31.1

CERTIFICATION

I, William J. Velardo, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended June 30, 2005 of the Mohegan Tribal Gaming Authority;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2005	/s/    WILLIAM J. VELARDO
	William J. Velardo
	Chief Executive Officer, Mohegan Tribal Gaming Authority

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Leo M. Chupaska, certify that:

1. I have reviewed this report on Form 10-Q for the quarter ended June 30, 2005 of the Mohegan Tribal Gaming Authority;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2005	/s/    LEO M. CHUPASKA
	Leo M. Chupaska
	Chief Financial Officer, Mohegan Tribal Gaming Authority

EX-32.1

Exhibit 32.1

Written Statement of Chief Executive Officer

Pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, the Chief Executive Officer of the Mohegan Tribal Gaming Authority (the “Authority”), hereby certifies that, to his knowledge, on the date hereof:

(a) the Quarterly Report on Form 10-Q of the Authority for the quarter ended June 30, 2005 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Authority.

/s/    WILLIAM J. VELARDO        

William J. Velardo

Chief Executive Officer

Mohegan Tribal Gaming Authority

August 10, 2005

A signed original of this written statement required by Section 906 has been provided to the Authority and will be retained by the Authority and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Written Statement of Chief Financial Officer

Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

The undersigned, the Chief Financial Officer of the Mohegan Tribal Gaming Authority (the “Authority”), hereby certifies that, to his knowledge, on the date hereof:

(a) the Quarterly Report on Form 10-Q of the Authority for the quarter ended June 30, 2005 filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Authority.

/s/    LEO M. CHUPASKA        

Leo M. Chupaska

Chief Financial Officer

Mohegan Tribal Gaming Authority

August 10, 2005

A signed original of this written statement required by Section 906 has been provided to the Authority and will be retained by the Authority and furnished to the Securities and Exchange Commission or its staff upon request.