STATE ROUTE 2 SOUTH, P.O. BOX 356, CHESTER, WEST VIRGINIA 26034
(Address of principal executive offices)

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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

	March 31 2013			December 31 2012

	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	99,024		$	115,113
Restricted cash		6,883			4,088
Accounts receivable, net of allowance for doubtful accounts of $180 in 2013 and $350 in 2012		2,527			3,934
Amounts due from West Virginia Lottery Commission		17			17
Inventories		4,213			4,305
Deferred financing costs		1,642			1,642
Prepaid expenses and other current assets		5,944			5,582

Total current assets		120,250			134,681
Property and equipment, net		382,222			387,015
Other intangible assets		136,100			136,094
Deferred financing costs, net of current portion		7,997			8,407
Deposits and other		1,908			1,908
Non-operating real property		10,789			10,789
Assets of discontinued operations		181			181

Total assets	$	659,447		$	679,075

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	2,990		$	3,719
Accounts payable—gaming taxes and assessments		5,763			11,077
Accrued payroll and payroll taxes		5,831			5,776
Accrued interest		10,963			27,369
Accrued income taxes		669			743
Other accrued liabilities		16,191			13,579
Construction project and equipment liabilities		329			481
License fee payable		25,000			25,000
Deferred income taxes		1,472			1,472
Liabilities of discontinued operations		116			123

Total current liabilities		69,324			89,339
Long-term debt		557,245			556,716
Other regulatory gaming assessments		5,160			5,319
Long-term compensation		436			871
Deferred income taxes		13,472			12,620
Other long-term liabilities		462			517

Total liabilities		646,099			665,382

Stockholders' equity:
Common stock		—			—
Additional paid-in capital		64,253			63,822
Accumulated deficit		(50,798	)		(50,012	)
Accumulated other comprehensive loss		(331	)		(341	)

Total stockholders' equity of MTR Gaming Group, Inc.		13,124			13,469
Non-controlling interest of discontinued operations		224			224

Total stockholders' equity		13,348			13,693

Total liabilities and stockholders' equity	$	659,447		$	679,075

	Three Months Ended March 31

	2013			2012
Revenues:
Gaming	$	114,769		$	100,141
Pari-mutuel commissions		1,380			1,159
Food, beverage and lodging		9,488			7.874
Other		2,157			1,946

Total revenues		127,794			111,120
Less promotional allowances		(4,455	)		(3,170	)

Net revenues		123,339			107,950

Operating expenses:
Costs of operating departments:
Gaming
Operating		67,270			62,259
Other regulatory assessments		(49	)		(133	)
Pari-mutuel commissions		1,852			1,564
Food, beverage and lodging		7,519			5,774
Other		1,541			1,345
Marketing and promotions		4,223			3,073
General and administrative		15,977			13,197
Project-opening costs		—			259
Depreciation		7,544			6,238
Gain on the sale or disposal of property		(82	)		(5	)

Total operating expenses		105,795			93,571

Operating income		17,544			14,379
Other income (expense):
Interest income		14			80
Interest expense, net of amounts capitalized		(17,391	)		(17,020	)

Income (loss) before income taxes		167			(2,561	)
Provision for income taxes		(953	)		(630	)

Net loss	$	(786	)	$	(3,191	)

Net loss per common share:
Basic	$	(0.03	)	$	(0.11	)

Diluted	$	(0.03	)	$	(0.11	)

Weighted average number of shares outstanding:
Basic		28,137,030			27,960,030

Diluted		28,137,030			27,960,030

	Three Months Ended March 31

	2013			2012
Cash flows from operating activities:
Net loss	$	(786	)	$	(3,191	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		7,544			6,238
Amortization of deferred financing fees and accretion of original issue discount		939			948
Bad debt expense (recovery)		6			(8	)
Stock-based compensation expense		448			162
Change in fair value of acquisition related contingencies		19			—
Deferred income taxes		852			626
Gain on the sale or disposal of property		(82	)		(5	)
Change in operating assets and liabilities:
Accounts receivable		1,401			1,765
Other current assets		(270	)		33
Accounts payable		(6,033	)		(4,564	)
Accrued liabilities		(14,262	)		(13,137	)
Other regulatory gaming assessments		(169	)		(262	)
Long-term compensation		(44	)		115
Accrued income taxes		(74	)		(310	)

Net cash used in continuing operating activities		(10,511	)		(11,590	)
Net cash used in discontinued operating activities		(7	)		(7	)

Net cash used in operating activities		(10,518	)		(11,597	)

Cash flows from investing activities:
Increase in restricted cash		(2,795	)		(1,063	)
Decrease in funds held for construction project		—			13,144
Payment of Ohio video lottery terminal license fee		—			(10,000	)
Proceeds from the sale of property and equipment		127			5
Reimbursement of capital expenditures from West Virginia regulatory authorities		2			307
Capital expenditures		(2,905	)		(23,352	)

Net cash used in investing activities		(5,571	)		(20,959	)

Cash flows from financing activities:
Financing cost paid		—			(157	)

Cash used in financing activities		—			(157	)

Net decrease in cash and cash equivalents		(16,089	)		(32,713	)
Cash and cash equivalents, beginning of period		115,113			85,585

Cash and cash equivalents, end of period	$	99,024		$	52,872

Supplemental disclosure of cash flow information:
Interest paid	$	32,838		$	32,488

Income taxes paid	$	175		$	314

MTR Gaming Group, Inc. (the "Company" or "we"), a Delaware corporation, is a hospitality and gaming company that owns and operates racetrack, gaming and hotel properties in West Virginia, Pennsylvania and Ohio.

The Company, through its wholly-owned subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia ("Mountaineer"), Presque Isle Downs & Casino in Erie, Pennsylvania ("Presque Isle Downs"), and Scioto Downs in Columbus, Ohio. Scioto Downs, through its subsidiary RacelineBet, Inc., also operates Racelinebet.com, a national account wagering service that offers online and telephone wagering on horse races as a marketing affiliate of TwinSpires.com, an affiliate of Churchill Downs, Inc.

The accompanying unaudited consolidated financial statements of MTR Gaming Group, Inc. and Subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included herein. The results of operations for these interim periods are not necessarily indicative of the operating results for other quarters, for the full year or for any future period. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

There have been no significant changes in our significant accounting policies and estimates that were disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

ASC 820, Fair Value Measurements and Disclosures, provides guidance for measuring the fair value of assets and liabilities and requires expanded disclosures about fair value measurements. ASC 820 indicates that fair value should be determined based on the assumptions marketplace participants would use in pricing the asset or liability and provides additional guidelines to consider in determining the market-based measurement.

ASC 820 requires fair value measurements be classified and disclosed in one of the following categories:

Cash equivalents: Cash equivalents include investments in money market funds. Investments in this category can be redeemed immediately at the current net asset value per share. A money market fund is a mutual fund whose investments are primarily in short-term debt securities designed to maximize current income with liquidity and capital preservation, usually maintaining per share net asset value at a constant amount, such as one dollar. The carrying amounts approximate fair value because of the short maturity of these instruments.

Acquisition-related contingent considerations: Contingent consideration related to the July 2003 acquisition of Scioto Downs represents the estimate of amounts to be paid to shareholders of Scioto Downs under certain earn-out provisions. We consider the acquisition related contingency's fair value measurement to be Level 3 within the fair value hierarchy.

The following table presents assets and liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012:

The following table represents the change in acquisition-related contingent consideration liabilities during the three months ended March 31, 2013:

The carrying amounts for cash, trade accounts receivable, and trade accounts payable approximate their respective fair values based on the short-term nature of these instruments. The fair value of our 11.5% Senior Secured Second Lien Notes was $592.1 million at March 31, 2013 compared to a carrying value of $557.2 million at March 31, 2013. The fair value of our 11.5% Senior Secured Second Lien Notes was $609.9 million at December 31, 2012 compared to a carrying value of $556.7 million at December 31, 2012. The fair values of our Senior Secured Second Lien Notes were determined based on Level 2 inputs including quoted market prices and bond terms and conditions.

We have designated certain assets, consisting principally of land and undeveloped properties, as non-operating real property and declared our intent to sell those assets. At December 31, 2012, we obtained independent appraisals for our non-operating properties and determined that no adjustments to the carrying values were necessary. No developments have occurred subsequent to these appraisals that would indicate that impairment recognition is necessary. Although we continue to actively market these properties for sale, we do not anticipate that we will be able to sell the majority of the assets within the next twelve months. As such, these properties are not classified as held-for-sale as of March 31, 2013. These properties are included in non-operating real properties in our consolidated balance sheets as of March 31, 2013 and December 31, 2012.

We account for stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation. Total stock-based compensation expense recognized during the three months ended March 31, 2013 and 2012 was $0.4 million and $0.2 million, respectively. These amounts are included in general and administrative expenses in our consolidated statements of operations.

Nonqualified stock options ("Stock Options"), restricted stock units ("RSUs") and cash-based performance awards ("Performance Awards") are approved by the Compensation Committee of the Board of Directors and are granted to executive officers, certain key employees and nonemployee

members of the Board of Directors ("BOD") as permitted under the 2010 Long-Term Incentive Plan ("2010 Plan"). Stock Options primarily vest ratably over three years and RSUs granted to employees primarily vest and become non-forfeitable upon the third anniversary of the date of grant. RSUs granted to non-employee directors vest immediately and are delivered upon the date that is the earlier of termination of service on the Board of Directors or the consummation of a change of control of the Company. The Performance Awards relate to the achievement of differing levels of performance (as defined) and are measured by the level of the Company's Corporate Free Cash Flow (as defined) over a one or two-year Performance Period depending upon the award agreement. If the Performance Award levels are achieved, the awards earned will vest and become payable at the end of the Vesting Period, defined as either a one or two calendar year period following the Performance Period.

On January 25, 2013, the Compensation Committee of the Board of Directors approved the grant of 216,800 Stock Options and 163,768 RSUs to executive officers, certain key employees and nonemployee members of the BOD, as further discussed below. In addition, Performance Awards totaling $0.7 million were granted to executive officers and certain key employees with a Performance Period of two years and a Vesting Period of one calendar year period following the Performance Period.

As of March 31, 2013, we have approximately $2.0 million of unrecognized incentive compensation expense related to Performance Awards that is expected to be recognized over a weighted-average period of approximately 1.73 years.

During the first quarter of 2013, in accordance with the applicable guidance, the Company recognized a one-time reversal of $0.1 million in stock-compensation expense as a result of the update of forfeiture assumptions on outstanding equity awards and $0.3 million in expense associated with unvested Performance Awards of our President and Chief Executive Officer ("CEO"), who announced his resignation on March 27, 2013. Our CEO will continue in his current capacity, for a reasonable period of time, while the Board of Directors conducts its interview process for a new CEO. The CEOs unvested equity awards will forfeit upon his departure upon the terms of the underlying award agreements.

A summary of the Stock Option activity for the three months ended March 31, 2013 is as follows:

		Range of Exercise Prices		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life		Aggregate Intrinsic Value

						(in years)		(in millions)
Outstanding—December 31, 2012	1,143,900	$	2.04–16.27	$	4.59		7.10	$	1.4
Granted	216,800		3.94		3.94
Exercised	—		—		—
Expired	—		—		—
Forfeited	—		—		—

Outstanding—March 31, 2013	1,360,700	$	2.04–$16.27	$	4.49		7.33	$	0.9

Exercisable at March 31, 2013	752,696	$	2.04–$16.27	$	5.69		5.98	$	0.6

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2013 was $2.64 per share.

As of March 31, 2013, there was $0.8 million of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted-average period of approximately 2.21 years.

The fair value of each stock option granted under the 2010 Plan is estimated on the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for options granted during the three months ended March 31, 2013:

A summary of the RSU activity for the three months ended March 31, 2013 is as follows:

As of March 31, 2013, we had approximately $0.4 million of unrecognized compensation expense related to unvested RSUs that is expected to be recognized over a weighted-average period of approximately 2.09 years.

Basic earnings per share are computed by dividing net income (loss) by the weighted-average shares outstanding during the reporting period. Dilutive earnings per share are computed similarly to basic earnings per share except that the weighted-average shares outstanding are increased to include additional shares from the assumed exercise of stock options and the assumed vesting of restricted share units, if dilutive. The number of additional shares is calculated by assuming that outstanding stock options were exercised, that outstanding restricted share units were released, and that the proceeds from such activities were used to acquire shares of common stock at the average market price during the reporting period.

The following table illustrates the required disclosure of the reconciliation of the numerators and denominators of the basic and diluted net income per share computations during the three months ended March 31, 2013 and 2012.

The dilutive EPS calculations do not include the following potential dilutive securities for each of the three months ending March 31 because their effect would be anti-dilutive.

The Company estimates an annual effective income tax rate based on projected results for the year and applies this rate to income before taxes to calculate income tax expense. Any refinements made due to subsequent information that affects the estimated annual effective income tax rate are reflected as adjustments in the current period. Separate effective income tax rates are calculated for net income from continuing operations and any other separately reported net income items, such as discontinued operations.

The income tax provision for the three months ended March 31, 2013 and 2012 results in an effective tax rate that has an unusual relationship to the Company's pretax loss. This is due to an increase in the federal and state valuation allowances on the Company's deferred tax assets as discussed below.

The difference between the effective rate and the statutory rate is attributed primarily to permanent items not deductible for income tax purposes and the treatment of certain items in accordance with the rules for interperiod tax allocation. As a result of our net operating losses and the net deferred tax asset position (after exclusion of certain deferred tax liabilities that generally cannot be offset against deferred tax assets), we expect to continue to provide for a full valuation allowance against all of our net federal and our net state deferred tax assets.

For income tax purposes we amortize or depreciate certain assets that have been assigned an indefinite life for book purposes. The incremental amortization or depreciation deductions for income tax purposes result in an increase in certain deferred tax liabilities that cannot be used as a source of future taxable income for purposes of measuring our need for a valuation allowance against the net deferred tax assets. Therefore, we expect to record non-cash deferred tax expense as we amortize these assets for tax purposes. The increase in the valuation allowance for the three months ended March 31, 2013 and 2012 was $0.9 million and $0.6 million, respectively.

There were no material changes to unrecognized tax benefits during the three months ended March 31, 2013.

The Company and its subsidiaries file a consolidated US federal income tax return and consolidated and separate income tax returns in various state and local jurisdictions. We are no longer subject to US federal or state and local income tax examinations by tax authorities for years before 2004.

On August 1, 2011, we completed the offering of $565.0 million 11.5% Senior Secured Second Lien Notes due August 1, 2019 (the "Notes") at an issue price equal to 97% of the aggregate principal amount of the Notes. The Notes were issued pursuant to an indenture, dated as of August 1, 2011 (the "Indenture"), among the Company, Mountaineer Park, Inc., Presque Isle Downs, Inc., Scioto Downs, Inc. (each, a wholly-owned subsidiary of the Company and as a guarantor, the "Guarantors") and Wilmington Trust, National Association, as Trustee and as Collateral Agent.

The Notes mature on August 1, 2019, with interest payable semi-annually in arrears on February 1 and August 1 of each year. Until and including the interest payment due on August 1, 2013, interest will be payable, at the election of the Company, (i) entirely in cash or (ii) at a rate of 10.50% in cash and a rate of 1.00% paid in kind ("PIK") by increasing the principal amount of the outstanding Notes or by issuing additional PIK Notes, as defined in the Indenture. The interest payments due on February 1, 2012 and August 1, 2012 were satisfied in cash and PIK Notes, resulting in the issuance of $5.6 million of additional Notes during 2012, increasing the total Notes outstanding to $570.7 million. We satisfied our February 1, 2013 interest payment entirely in cash and have also elected to pay our August 1, 2013 interest payment entirely in cash.

The Notes and the guarantees are the Company's and the Guarantors' senior secured obligations and are jointly and severally, fully, and unconditionally guaranteed by the Guarantors, as well as future subsidiaries, other than our immaterial subsidiaries and unrestricted subsidiaries, as defined in the Indenture. The Notes and the guarantees rank equally in right of payment with all of the Company's and the Guarantors' existing and future senior debt and senior in right of payment to all of the Company's and the Guarantors' future subordinated debt. The Notes and the guarantees will be effectively junior to any of the Company's and the Guarantors' existing and future debt that is secured by senior or prior liens on the collateral, including indebtedness under the Company's new senior secured revolving credit facility, as discussed below, to the extent of the value of the collateral securing such obligations. The Notes and the guarantees will be structurally subordinated to all existing and future liabilities of the Company's subsidiaries that do not guarantee the Notes.

The Notes are secured by a second priority lien on substantially all of the assets of the Company and the Guarantors, other than excluded property, as defined in the Indenture.

The Credit Facility is secured by substantially the same assets securing the Notes (and including securities of the Company's subsidiaries to the extent permitted by law). Borrowings under the Credit Facility are guaranteed by all of our existing and future domestic restricted subsidiaries. The security interest in the collateral that secures the Credit Facility is senior to the security interest in the collateral that secures the Notes.

The Credit Facility requires the Company to comply with certain financial covenants, including, maximum capital expenditures, maximum consolidated leverage ratios, minimum consolidated interest coverage ratios and minimum consolidated EBITDA amounts. As of March 31, 2013, the Company was in compliance with the required covenants.

The Company's accumulated other comprehensive loss is limited to the Scioto Downs defined benefit pension plan. A summary of the change in accumulated other comprehensive loss as of March 31, 2013 is as follows:

Amounts reclassified from accumulated other comprehensive loss are limited to the amortization of actuarial losses, which are a component of net periodic benefit cost. These reclassifications are included as a component of general and administrative expense in the accompanying consolidated statement of operations.

We are a party to various lawsuits, which have arisen in the normal course of our business. Estimated losses are accrued for these lawsuits and claims when the loss is probable and can be estimated. The current liability for the estimated losses associated with those lawsuits is not material to our consolidated financial condition and those estimated losses are not expected to have a material impact on our results of operations.

On April 17, 2010, Presque Isle Downs, Inc. initiated legal action which named as defendants Dwayne Cooper Enterprises, Inc. ("DCE"), Turner Construction Company, and Rectenwald Buehler Architects, Inc. f/k/a Weborg Rectenwald Buehler Architects, Inc. with respect to the surveillance system that was installed as part of the original construction of Presque Isle Downs which opened on February 28, 2007. Shortly after the opening of Presque Isle Downs, it was discovered that certain equipment components of the surveillance system that were installed by DCE were defective or malfunctioning. Furthermore, various components of the surveillance system that DCE was required to install were not installed. As a result, during 2008, Presque Isle Downs was required to replace certain equipment components of the surveillance system at a cost of $1.9 million, and to write-off approximately $1.5 million related to the net book value of the equipment that was replaced. On April 5, 2011, Presque Isle Downs received a default judgment in the amount of $2.7 million against DCE for the failure to answer or otherwise respond to Presque Isle Downs' complaint. We are currently in the process of attempting to enforce the judgment. Any proceeds that may be received will be recorded as the amounts are realized.

Scioto Downs, Inc., in order to protect its right to VLT gaming, pursuant to its conditional License granted by the Ohio Lottery Commission, successfully intervened in a lawsuit filed by a public policy group in Ohio challenging certain aspects of the casino referendum and the Ohio Governor's and legislature's approval of legislation authorizing VLTs at Ohio's seven horse racetracks. Relators, the plaintiffs, among other claims against Ohio's casinos, allege that VLTs were not contemplated by Ohio's constitutional amendment permitting casinos in Ohio. Dispositive Motions were filed by the Ohio Attorney General, Scioto Downs, Inc. and others on February 20, 2012, and, on May 30, 2012, the litigation was dismissed. On March 13, 2013, the appeals court affirmed the lower court decision. On April 26, 2013, the plaintiffs filed a Notice of Appeal to the Ohio Supreme Court. The Ohio Supreme Court may elect to not hear the appeal.

In October 2005, we sold all but 24 of the 229 acres of real property, known as the International Paper site, to the Greater Erie Industrial Development Corporation, a private, not-for-profit entity that is managed by the municipality (the "GEIDC"). On October 1, 2009, the GEIDC initiated legal action against Presque Isle Downs alleging breach of contract regarding clean fill dirt which the GEIDC claims was supposed to be furnished as a result of the sale. On December 14, 2011, the Erie County Court of Common Pleas ruled in favor of the GEIDC, awarding $0.7 million in damages, including interest. Presque Isle Downs timely filed its appeal on January 13, 2012; however, the judgment and related interest were accrued and reflected as part of accrued liabilities in the accompanying consolidated balance sheets at December 31, 2012 and December 31, 2011. Pending the appeal process, we were required to post a surety bond in the amount of 120% of the judgment, or approximately $0.8 million, which was collateralized by a cash deposit and is reflected as part of restricted cash in the consolidated balance sheets at March 31, 2013 and December 31, 2012. On October 30, 2012, the appeal was argued before the Pennsylvania Superior Court and on April 8, 2013 we received a ruling from the Superior Court affirming the trial court's decision in the case. On April 22, 2013, we filed a motion for reconsideration with the Superior Court and are preparing to file an appeal with the Supreme Court of Pennsylvania.

In October 2004, we acquired 229 acres of real property, known as the International Paper site, as an alternative site to build Presque Isle Downs. In connection with our acquisition of the International Paper site, we entered into a consent order and decree (the "Consent Order") with the PaDEP and International Paper insulating us from liability for certain pre-existing contamination, subject to compliance with the Consent Order, which included a proposed environmental remediation plan for the site, which was tied specifically to the use of the property as a racetrack. The proposed environmental remediation plan in the Consent Order was based upon a "baseline environmental report" and management estimated that such remediation would be subsumed within the cost of developing the property as a racetrack. The racetrack was never developed at this site. In October 2005, we sold approximately 205 acres to GEIDC who assumed primary responsibility for the remediation obligations under the Consent Order relating to the property they acquired. However, we were advised by the PaDEP that we were not released from our liability and responsibility under the Consent Order. We also purchased an Environmental Risk Insurance Policy in the amount of $10.0 million with respect to the property, which expires in 2014. We believe the insurance coverage is in excess of any exposure that we may have in this matter.

The Pennsylvania Gaming Control Board (the "PGCB"), the Pennsylvania Department of Revenue and the Pennsylvania State Police (collectively "the Borrowers"), were required to fund the costs they incurred in connection with the initial development of the infrastructure to support gaming operations in Pennsylvania as well as the initial ongoing costs of the Borrowers. The initial funding of these costs was provided from a loan from the Pennsylvania General Fund in the amount of approximately $36.1 million, and further funding was provided from additional loans from the Pennsylvania Property Tax Reserve Fund in the aggregate amount of approximately $63.8 million.

The Pennsylvania Department of Revenue will assess all licensees, including Presque Isle Downs, their proportionate share of amounts represented by the borrowings, which are in the aggregate amount of $99.9 million, once the designated number of Pennsylvania's slot machine licensees is operational. On July 11, 2011, the PGCB issued an administrative order which established that payments associated with the $63.8 million that was borrowed from the Property Tax Reserve Fund would commence on January 1, 2012. The repayment allocation between all current licensees is based upon equal weighting of (i) cumulative gross slot revenue since inception in relation to the combined cumulative gross slot revenue for all licensees and (ii) single year gross slot revenue (during the state's fiscal year ending June 30) in relation to the combined single year gross slot revenue for all licensees; and amounts paid each year will be adjusted annually based upon changes in the licensee's proportionate share of gross slot revenue. We have estimated that our total proportionate share of the aggregate $63.8 million to be assessed to the gaming facilities will be approximately $4.2 million and will be paid quarterly over a ten-year period, which began effective January 1, 2012. For the $36.1 million that was borrowed from the General Fund, payment is scheduled to begin after all fourteen licensees are operational. Although we cannot determine when payment will begin, we have considered a similar repayment model for the General Fund borrowings and estimated that our total proportionate share of the aggregate $36.1 million to all fourteen gaming facilities will approximate $2.1 million, which has been accrued in our consolidated balance sheet at March 31, 2013.

The recorded estimate is subject to revision based upon future changes in the revenue assumptions utilized to develop the estimate. Our estimated total obligation at March 31, 2013 and December 31, 2012 was $5.6 million and $5.8 million, respectively, and is accrued in the respective accompanying consolidated balance sheets. During the three months ended March 31, 2013, decreases to our total estimated liability of $0.1 million were recorded and recognized in gaming operating expenses. The Company paid approximately $0.1 million during the three months ended March 31, 2013.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information. When used in this report, the terms or phrases such as "anticipates", "believes", "projects", "plans", "intends", "expects", "might", "may", "estimates", "could", "should", "would", "will likely continue", and variations of such words or similar expressions are intended to identify forward-looking statements. Although our expectations, beliefs and projections are expressed in good faith and with what we believe is a reasonable basis, there can be no assurance that these expectations, beliefs and projections will be realized.

There are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements which are included elsewhere in this report. Such risks, uncertainties and other important factors include, but are not limited to:

In light of these and other risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur. Any forward-looking statement speaks only as of the date on which that statement is made. We do not intend to update publicly any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes which are contained elsewhere in this report.

We were incorporated in March 1988 in Delaware under the name "Secamur Corporation," a wholly-owned subsidiary of Buffalo Equities, Inc. In 1996, we were renamed MTR Gaming Group, Inc. and, since 1998, we have operated only in the racing, gaming and entertainment businesses.

Through our wholly-owned subsidiaries, we own and operate Mountaineer Casino, Racetrack & Resort in Chester, West Virginia ("Mountaineer"), Presque Isle Downs & Casino in Erie, Pennsylvania ("Presque Isle Downs"), and Scioto Downs in Columbus, Ohio. We consider these three properties, which are located in contiguous states, to be our core assets. Scioto Downs, through its subsidiary RacelineBet, Inc., also operates Racelinebet.com, a national account wagering service that offers online and telephone wagering on horse races as a marketing affiliate of TwinSpires.com, an affiliate of Churchill Downs, Inc.

We operate racino properties, all of which include gaming and dining facilities, and some of which include hotel, retail and other amenities. The majority of our revenue is gaming revenue, derived primarily from gaming on slot machines and, to a lesser extent, table games. Other revenues are derived from our racing operations, hotel, dining, retail and entertainment offerings. Our gaming operations are highly dependent on the volume and spending levels of our customers, which, in turn, may affect the prices we can charge for our hotel, dining and other amenities. Our properties generate significant operating cash flow, which is essential to debt service and to funding maintenance capital expenditures.

Mountaineer currently operates 2,054 slot machines, 12 poker tables and 39 casino table games, including blackjack, craps, roulette and other games, and offers live thoroughbred horse racing during the months of March through December, operating 210 live race days with on-site pari-mutuel wagering year-round.

Presque Isle Downs currently operates 1,720 slot machines, 9 poker tables and 37 casino table games. In addition, Presque Isle Downs offers live thoroughbred horse racing during the months of May through September, operating 100 live race days with pari-mutuel wagering year-round.

Scioto Downs currently operates 2,106 VLTs and offers live harness horse racing from May through September, operating 75 live racing days and year-round pari-mutuel wagering. Prior to the opening of the VLT facility, Scioto Downs' pari-mutuel wagering was restricted to the months of May through October pursuant to a previous agreement with Beulah Park, which limited the offering of pari-mutuel wagering to the months in which live racing was offered. Upon the opening of the VLT facility in June 2012, this agreement expired and Scioto Downs now offers year-round simulcasting.

During the second quarter of 2012, we entered into an agreement to manage and operate a new Wyndham property hotel to be located adjacent to our Presque Isle Downs property. The hotel broke ground in July 2012 and is expected to open in the latter part of 2013 or early 2014.

Certain key operating statistics specific to the gaming industry are used to review our property results. These include slot handle and table game drop, which are volume indicators, and "win" or "hold" percentage. For the three months ended March 31, 2013, our property slot win percentage is in the range of 7% to 9% of slot handle, and our table game win percentage is in the range of 20% to 22% of table game drop. We also review daily net win per slot and table as a measure of overall gaming performance. For the three months ended March 31, 2013, our property daily net win per slot is in the range of $178 to $216, and for Presque Isle Downs and Mountaineer our daily net win per table is $921 and $1,218, respectively.

In addition, average daily room rate ("ADR") and revenue per available room ("RevPAR") are used to measure Mountaineer's hotel volume and efficiency. For the three months ended March 31, 2013, our ADR was $77 excluding complimentary rooms and $45 including complimentary rooms. RevPAR for the three months ended March 31, 2013 was approximately $38, including complimentary rooms.

The significant factors affecting our results for the three months ended March 31, 2013, compared to the three months ended March 31, 2012, were:

Three Months Ended March 31, 2013 Compared to Three Months Ended March 31, 2012

	Three Months Ended March 31,

	2013			2012
	(unaudited, in thousands)
Revenues:
Gaming	$	114,769		$	100,141
Pari-mutuel commissions		1,380			1,159
Food, beverage and lodging		9,488			7,874
Other		2,157			1,946

Revenues		127,794			111,120
Less promotional allowances		(4,455	)		(3,170	)

Net revenues		123,339			107,950

Operating expenses:
Gaming		67,221			62,126
Pari-mutuel commissions		1,852			1,564
Food, beverage, lodging		7,519			5,774
Other		1,541			1,345
Marketing and promotions		4,223			3,073
General and administrative		15,977			13,197
Project opening costs		—			259
Depreciation		7,544			6,238
Gain on the sale or disposal of property		(82	)		(5	)

Total operating expenses		105,795			93,571

Operating income		17,544			14,379
Interest expense, net		(17,377	)		(16,940	)
Provision for income taxes		(953	)		(630	)

Net loss	$	(786	)	$	(3,191	)

Financial results for the three months ended March 31, 2013 compared to the three months ended March 31, 2012

Net revenues for the three months ended March 31, 2013, comprised of $116.1 million in gaming and pari-mutuel revenues (94% of total net revenues), $11.6 million of non-gaming revenues (9% of total net revenues) less $4.4 million of promotional allowances (-3% of total net revenues), increased $15.4 million, or 14.3%, compared to net revenues for the three months ended March 31, 2012, comprised of $101.3 million in gaming and pari-mutuel revenues (94% of total net revenues), $9.8 million of non-gaming revenues (9% of total net revenues) less $3.2 million of promotional allowances (-3% of total net revenues). The increase was primarily attributable to the following components.

Gaming revenues are comprised of the net win from our slot operations, table games and poker. Gaming revenues for the three months ended March 31, 2013 of $114.8 million represents a $14.6 million, or 14.6%, increase compared to the prior year period. The increase of $14.6 million is comprised of an increase in slot revenue of $18.7 million, offset by a decrease in table gaming and poker revenue of $3.6 million and $0.5 million, respectively. The increase in slot revenue was primarily due to the opening of our gaming facility at Scioto Downs, which provided incremental gaming revenue of $33.7 million, offset by decreases at Presque Isle Downs and Mountaineer of $8.7 million and $6.3 million, respectively, due to continued competitive pressures principally from expansion of gaming in Ohio in 2012, as well as, current year impacts of weather compared to the unseasonably warm weather in 2012. The decrease in table gaming and poker revenue at our Mountaineer and Presque Isle Downs facilities were due to the same factors impacting our slot revenues.

Gaming revenue at Mountaineer decreased by $8.3 million, or 15.5%, to $45.4 million for the three months ended March 31, 2013, compared to the prior year period. The decrease is comprised of a decrease in slot, table gaming and poker revenue of $6.3 million, $1.8 million and $0.2 million, respectively.

Gaming revenue at Presque Isle Downs decreased by $10.8 million, or 23.2%, to $35.6 million for the three months ended March 31, 2013, compared to the prior year period. The decrease is comprised of a decrease in slot, table gaming and poker revenue of $8.7 million, $1.9 million and $0.2 million, respectively.

Gaming revenue at Scioto Downs, which opened in June 2012, provided incremental revenue of $33.7 million for the three months ended March 31, 2013.

Pari-mutuel commissions consist of commissions earned from thoroughbred and harness racing and importing/exporting of simulcast signals from/to other race tracks. Pari-mutuel commissions for the three months ended March 31, 2013 of $1.4 million represents a $0.2 million, or 19.1%, increase compared to the prior year period.

Pari-mutuel commissions at Scioto Downs increased by $0.4 million for the three months ended March 31, 2013, compared to the prior year period. The increase is due to year-round simulcasting now being offered at Scioto Downs.

Pari-mutuel commissions at Mountaineer and Presque Isle Downs decreased slightly to $0.8 million and $0.2 million, respectively, for the three months ended March 31, 2013, compared to the prior year period.

Revenue from our food, beverage and lodging operations for the three months ended March 31, 2013 of $9.5 million represents a $1.6 million, or 20.5%, increase compared to the prior year period. The increase was primarily attributable to the opening of various dining amenities upon the opening of our gaming facility at Scioto Downs, partially offset by a decrease at Mountaineer, which was consistent with the decrease in gaming revenue and overall decline in patron traffic.

Food, beverage and lodging revenue at Mountaineer decreased by $0.7 million, or 12.3%, to $4.7 million for the three months ended March 31, 2013, compared to the prior year period.

Food and beverage revenue at Presque Isle Downs remained relatively flat at $2.5 million for the three months ended March 31, 2013, compared to the prior year period.

Food and beverage revenue at Scioto Downs provided incremental revenue of $2.3 million for the three months ended March 31, 2013.

Other revenues are primarily derived from operations of Mountaineer's Spa, Fitness Center, retail outlets and golf course; from the sale of programs, admission fees, and lottery tickets; from check cashing and ATM services and from special events at our entertainment and convention centers. Other revenues for the three months ended March 31, 2013 of $2.1 million represent a $0.2 million, or 10.8%, increase compared to the prior year period. The increase is comprised primarily of a $0.8 million increase at our Scioto Downs property, which is primarily attributed to increased retail sales and commissions earned from check cashing and ATM services due to the new gaming facility, offset by decreases of $0.4 million and $0.2 million, respectively, at Mountaineer and Presque Isle Downs due to a decrease in commissions earned from check cashing and ATM services as a result of decreased patron traffic.

Promotional allowances increased by $1.3 million, or 40.5%, to $4.5 million for the three months ended March 31, 2013, compared to the prior year period. The increase was primarily attributable to Scioto Downs, which provided promotional allowances of $1.2 million for the three months ended March 31, 2013.

Gaming expense for the three months ended March 31, 2013 of $67.2 million represents a $5.1 million, or 8.2%, increase compared to the prior year period. The increase of $5.1 million is comprised of an increase in gaming taxes and assessments of $4.2 million and other gaming operating costs of $0.9 million. The increase in gaming taxes during the first quarter of 2013 is consistent with the increase in gaming revenues. Gaming taxes and assessments as a percentage of gaming revenues varies by the states in which our properties operate. On a blended basis, our gaming taxes and assessments as a percentage of gaming revenue decreased to 51.3% for the three months ended March 31, 2013, compared to 54.6% for the prior year period, largely due to a lower effective tax rate of 42.5% on slots revenue at our facility at Scioto Downs. Our gaming taxes and assessments as a percentage of gaming revenue for the three months ended March 31, 2013 were 54.3% and 55.8%, respectively, at Mountaineer and Presque Isle Downs.

Pari-mutuel expense of $1.9 million represents a $0.3 million, or 18.4%, increase compared to the prior year period. The increase was primarily attributable to Scioto Downs which did not provide simulcasting during the first quarter of 2012.

Food, beverage and lodging expense increased by $1.7 million, or 30.2%, to $7.5 million for the three months ended March 31, 2013, compared to the prior year period. The increase was attributable to increased costs at Scioto Downs of $2.0 million, partially offset by a decrease at Mountaineer which was consistent with their decline in revenues. Our gross profit margin for the three months ended March 31, 2013 decreased to 20.8% from 26.7% in the same period prior year. The gross profit margin was primarily impacted by lower revenues and increased food costs at our Mountaineer and Scioto Downs properties.

Other expense increased by $0.2 million, or 14.6%, to $1.5 million for the three months ended March 31, 2013, compared to the prior year period. The increase was primarily related to the increase in other revenues at Scioto Downs.

Marketing and promotions expense increased by $1.1 million, or 37.4%, to $4.2 million for the three months ended March 31, 2013, compared to the prior year period. The increase was due to incremental marketing costs at our Scioto Downs facility since the opening in June 2012.

General and administrative expense increased by $2.8 million, or 21.1%, to $16.0 million for the three months ended March 31, 2013, compared to the period year period. The increase was primarily attributable to an increase in general and administrative costs at Scioto Downs due to increased staffing levels, consulting costs, utility costs and general operating expenses associated with operations of the new gaming facility.

Project opening costs decreased by $0.3 million for the three months ended March 31, 2013, compared to the prior year period. The costs for the three months ended March 31, 2012 were related to the opening of our Scioto Downs gaming facility and were comprised of direct salaries and wages, legal and consulting fees, utilities and advertising.

Depreciation expense increased by $1.3 million, or 20.9%, to $7.5 million for the three months ended March 31, 2013, compared to the prior year period. The increase was attributable to a $3.2 million increase in depreciation at Scioto Downs from the completion of the gaming facility, offset by a decrease of $1.3 million at Presque Isle Downs as the majority of their slot machines were fully depreciated during the first quarter of 2012 and a $0.6 million decrease at Mountaineer due to the aging of certain assets.

Interest expense, net increased by $0.4 million, or 2.6%, to $17.4 million for the three months ended March 31, 2013, compared to the prior year period. The increase was due in part to additional interest expense incurred as a result of the issuance of $5.6 million in additional PIK interest Notes in 2012. The increase was also due to $0.3 million of capitalized interest incurred in the prior year period related to the construction of our gaming facility at Scioto Downs. There was no capitalized interest during the three months ended March 31, 2013.

The income tax provision for the periods presented results in an effective tax rate that has an unusual relationship to the Company's pretax loss. This is due to an increase in the federal and state valuation allowances on the Company's deferred tax assets as discussed below. The income tax provision also includes interest expense related to uncertain tax positions.

net deferred tax asset position (after exclusion of certain deferred tax liabilities that generally cannot be offset against deferred tax assets), we expect to continue to provide for a full valuation allowance against all of our net federal and net state deferred tax assets.

For income tax purposes we amortize or depreciate certain assets that have been assigned an indefinite life for book purposes. The incremental amortization or depreciation deductions for income tax purposes result in an increase in certain deferred tax liabilities that cannot be used as a source of future taxable income for purposes of measuring our need for a valuation allowance against the net deferred tax assets. Therefore, we expect to record non-cash deferred tax expense as we amortize these assets for tax purposes. Our tax expense was $1.0 million and $0.6 million for the three months ended March 31, 2013 and 2012, respectively, and was largely the result of increases in our valuation allowance.

Adjusted EBITDA (defined below), a non-GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry. Management of the Company uses Adjusted EBITDA as the primary measure of the Company's operating performance and as a component in evaluating the performance of operating personnel. This non-GAAP financial measure has limitations as an analytical tool, should not be viewed as a substitute for net revenues determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Management believes that this non-GAAP supplemental information will be helpful in understanding the Company's ongoing operating results.

The following table summarizes our net revenues by property, our Consolidated Adjusted EBITDA, and Adjusted EBITDA by property, in addition to reconciling Adjusted EBITDA to net income (loss) in accordance with U.S. GAAP:

	Three Months Ended March 31,

	2013			2012
	(unaudited, in thousands)
Adjusted EBITDA:
Mountaineer Casino, Racetrack & Resort	$	8,300		$	12,760
Presque Isle Downs & Casino		6,270			10,835
Scioto Downs		12,950			(732	)
Corporate expenses		(2,563	)		(2,384	)

Consolidated Adjusted EBITDA	$	24,957		$	20,479

Mountaineer Casino, Racetrack & Resort:
Net income	$	6,080		$	9,960
Interest income		(2	)		—
Depreciation		2,232			2,805
Gain on the sale or disposal of property		(10	)		(5	)

Adjusted EBITDA	$	8,300		$	12,760

Presque Isle Downs & Casino:
Net income	$	3,900		$	7,146
Interest income & capitalized interest		(1	)		(24	)
Provision for income taxes		621			627
Depreciation		1,871			3,219
Other regulatory gaming assessments		(49	)		(133	)
Gain on the sale or disposal of property		(72	)		—

Adjusted EBITDA	$	6,270		$	10,835

Scioto Downs:
Net income (loss)	$	9,167		$	(705	)
Interest expense (capitalized interest)		19			(228	)
Provision for income taxes		332			—
Depreciation		3,432			201

Adjusted EBITDA	$	12,950		$	(732	)

Corporate:
Net loss	$	(19,933	)	$	(19,592	)
Interest expense, net of interest income		17,361			17,192
Provision for income taxes		—			3
Depreciation		9			13

Adjusted EBITDA	$	(2,563	)	$	(2,384	)

MTR Gaming Group, Inc. (consolidated)
Net loss	$	(786	)	$	(3,191	)
Interest expense, net of interest income and capitalized interest		17,377			16,940
Provision for income taxes		953			630
Depreciation		7,544			6,238
Other regulatory gaming assessments		(49	)		(133	)
Gain on the sale or disposal of property		(82	)		(5	)

Consolidated Adjusted EBITDA	$	24,957		$	20,479

Adjusted EBITDA represents (losses) earnings before interest expense (income), income tax expense (benefit), depreciation and amortization, (loss) gain on the sale or disposal of property, other regulatory gaming assessment costs, loss on asset impairment, loss (gain) on debt modification and extinguishment and equity in loss on unconsolidated joint venture, to the extent that such items existed in the periods presented. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with GAAP, is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance, or cash flows from operating activities, as a measure of liquidity. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments and certain regulatory gaming assessments, which can be significant. Other companies that provide EBITDA information may calculate EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.

The primary sources of liquidity and capital resources have been existing cash, cash flow from operations, borrowings from banks and proceeds from the issuance of debt securities.

At March 31, 2013, our cash and cash equivalents, excluding restricted cash, totaled $99.0 million. As of March 31, 2013, Mountaineer has contributed funds for racing purses, which exceed our purse payment obligations by $10.2 million. This amount is available for payment of future purse obligations at our discretion, and is held in bank accounts owned by the horsemen's association.

At March 31, 2013, we had total debt in the aggregate principal amount of $557.2 million; net of discounts, all of which was secured, and cash collateralized letters of credit of approximately $0.2 million. At March 31, 2013, there were no borrowings under the $20 million senior secured revolving credit facility.

We believe that our cash balances on hand, cash flow from operations, availability under the credit facility and any proceeds from the sale of non-core assets will be sufficient to fund our liquidity needs, including debt service of our Senior Secured Second Lien Notes, any other contemplated capital expenditures and short-term funding requirements for the next twelve months, as well as the amounts required for the remaining licensing of $25 million and capital investment requirements of our gaming facility at Scioto Downs.

We cannot assure you that estimates of our liquidity needs are accurate or that any new business developments or other unforeseen events will not occur. If any of these events occur, it may require

additional liquidity to continue to execute our business strategy. We anticipate that, to the extent that we require additional liquidity, it will be funded through the incurrence of indebtedness, equity offerings or a combination of potential sources of liquidity, although no assurance can be given that such forms of capital will be available to us or available to us on terms which are acceptable, at such time.

A summary of cash flows from operating, investing and financing activities for the periods indicated are shown in the following table:

Our operating cash inflows are used for operating expenses, debt service, working capital needs and capital expenditures in the normal course of business.

Net cash used in operating activities approximated $10.5 million during the three months ended March 31, 2013 compared to net cash used in operating activities of $11.6 million during the three months ended March 31, 2012. Current period non-cash expenses included in operating activities of $9.7 million consist primarily of $8.5 million of depreciation and amortization. In 2012, non-cash expenses of $8.0 million included depreciation and amortization of $7.2 million. Additionally, net cash used in operating activities included changes in operating assets and liabilities of approximately $19.5 million and $16.4 million during the three months ended March 31, 2013 and 2012, respectively.

Net cash used in investing activities was $5.6 million during the three months ended March 31, 2013, comprised primarily of capital expenditures of $2.9 million and an increase in restricted cash of $2.8 million due to an increase in funds related to horsemen's fines and simulcasting funds that are restricted to payments for improving horsemen's facilities and racing purses at Scioto Downs. During the three months ended March 31, 2012, net cash used in investing activities was $21.0 million, comprised principally of capital expenditures of $23.4 million, primarily related to the construction of Scioto Downs gaming facility and the payment of the Ohio video lottery terminal license fee of $10 million, offset by the use of funds held for construction in the amount of $13.1 million.

There was no cash used in financing activities during the three months ended March 31, 2013. Cash used in financing activities was $0.1 million during the three months ended March 31, 2012, which included the payment of financing costs of $0.1 million.

During the three months ended March 31, 2012, cash flows from operating and financing activities excludes the portion of the interest payable on the Senior Secured Second Lien Notes that was satisfied with PIK Interest on February 1, 2012, resulting in the issuance of additional Notes of $2.8 million.

During the three months ended March 31, 2013, additions to property and equipment and other capital projects aggregated $2.8 million, which included casino renovations, other maintenance related expenditures at Mountaineer; new slot machines and other gaming equipment at Mountaineer and Presque Isle Downs and grandstand clubhouse renovations at Scioto Downs.

During the third quarter of 2012, we completed the final phase of construction on our gaming facility at Scioto Downs. Development, construction and equipment costs are expected to be approximately $125.0 million over a required three-year period. During the three months ended March 31, 2013, we expended approximately $0.3 million on qualifying capital purchases. As of March 31, 2013, we have expended a total of $111.9 million of the required $125.0 million, on qualifying capital expenditures. The project also included certain other development related expenditures, which are not included in the $111.9 million above, for which a determination has not been made as to whether any such costs will be included in satisfying the investment requirement.

Under legislation approved by West Virginia in July 2011, Mountaineer participates in a modernization fund which provides for reimbursement from amounts paid to the West Virginia Lottery Commission, of $1 for each $2 expended for certain qualifying capital expenditures having a useful life of more than three years and placed into service after July 1, 2011. Qualifying capital expenditures include the purchase of slot machines and related equipment to the extent such slot machines are retained by Mountaineer at its West Virginia location for not less than five years. In July 2011, the West Virginia Lottery Commission issued an administrative order which stated that approximately $3.7 million would be available to Mountaineer during the state's fiscal year commencing July 1, 2011. Any unexpended balance from a given fiscal year will be available for one additional fiscal year, after which time the remaining unused balance carried forward will be forfeited. During the three months ended March 31, 2013, Mountaineer did not make any purchases that qualified for reimbursement under the modernization fund. As of March 31, 2013, approximately $1.4 million of the initial $3.7 million allocated to Mountaineer remains available, and we anticipate we will be able to receive these funds through qualifying capital expenditures to be made prior to the fiscal year 2011 modernization fund's expiration in June 2013. Additionally, we have received notification from the West Virginia Lottery Commission that Mountaineer is now eligible for another estimated $3.7 million of reimbursement from the modernization fund, which will be effective for the period July 1, 2012 through June 30, 2014.

We anticipate spending up to a total of approximately $16.5 million during the remainder of 2013 on capital expenditures.

On August 1, 2011, we entered into a senior secured revolving credit facility (the "Credit Facility") with a borrowing availability of $20.0 million and a maturity date of August 1, 2016. The interest rate per annum applicable to loans under the Credit Facility will be, at the Company's option, either (i) LIBOR plus a spread of 4.0%, or (ii) base rate, which will be the "prime rate" of interest in effect on the day of the borrowing request as published in the Wall Street Journal, plus a spread of 3.0%. There were no borrowings outstanding at March 31, 2013.

The Credit Facility is secured by substantially the same assets securing the 11.5% Senior Secured Second Lien Notes (the "Notes"), discussed below (and including securities of the Company's subsidiaries to the extent permitted by law). Borrowings under the Credit Facility are guaranteed by all of our existing and future domestic restricted subsidiaries. The security interest in the collateral that secures the Credit Facility is senior to the security interest in the collateral that secures the Notes.

The Credit Facility contains a number of customary covenants and certain financial covenants, including, maximum consolidated leverage ratios, minimum consolidated interest coverage ratios and minimum consolidated EBITDA amounts. Capital expenditures are also limited to $25.0 million per annum, with carryover provisions (as defined), throughout the term of the Credit Facility.

Permitted indebtedness under the Credit Facility includes furniture and equipment financing provided that the aggregate principal amounts of such indebtedness outstanding at any time shall not exceed the greater of $20.0 million and 4.5% of consolidated net tangible assets, as defined; other unsecured indebtedness at any time not to exceed $5.0 million; and other indebtedness to finance the acquisition, development or construction of any future gaming property provided that (i) such indebtedness shall be unsecured and subordinated to the Credit Facility, (ii) no part of the principal or interest of such indebtedness is required to be paid prior to six months after the maturity date of the Credit Facility and (iii) upon the incurrence of such indebtedness and after giving pro forma effect thereto there shall be no default or event of default and that we shall be in pro forma compliance with the financial covenants.

On August 1, 2011, we completed the offering of $565.0 million in aggregate principal amount of 11.5% Senior Secured Second Lien Notes due August 1, 2019 at an issue price equal to 97% of the aggregate principal amount of the Notes. The net proceeds of the sale of the Notes were utilized to refinance our former debt obligations and to finance development of the Scioto Downs gaming facility.

The Notes will mature on August 1, 2019, with interest payable semi-annually in arrears on February 1 and August 1 of each year. Until and including the interest payment due on August 1, 2013, interest will be payable, at the election of the Company, (i) entirely in cash or (ii) at a rate of 10.50% in cash and a rate of 1.00% paid in kind ("PIK") by increasing the principal amount of the outstanding Notes or by issuing additional PIK Notes, as defined in the Indenture. The interest payments due on February 1 and August 1, 2012 were satisfied in cash and PIK Notes, as defined in the Indenture. As a result, in aggregate, additional Notes of $5.6 million were issued, increasing the total Notes outstanding to $570.7 million. We have satisfied our February 1, 2013 interest payment entirely in cash and have not elected the PIK interest option for our August 1, 2013 interest payment.

The Notes are secured by a second priority lien on substantially all of the assets of the Company and the Guarantors, other than excluded property, as defined in the Indenture.

The Indenture governing the Notes permits equipment financing for gaming facilities which are either non-recourse to the Company or limited in amount to the greater of $20.0 million or 4.5% of consolidated tangible assets (as defined) of the Company. The Indenture also permits (i) financing under credit agreements of up to $20.0 million and (ii) indebtedness to finance the purchase, lease or improvement of property or equipment (other than software) in an aggregate principal amount at the date of such incurrence, together with all other indebtedness previously incurred under this clause, not to exceed 2.5% of consolidated net tangible assets as defined; provided, however, that such indebtedness exists at the date of such purchase or transaction or is created within 180 days thereafter. However, additional borrowings, including amounts permitted under the indentures are limited by the terms of the Credit Facility. In order to borrow amounts in excess of the debt permitted to be incurred under the Indenture governing the Notes and our Credit Facility, we must either satisfy the debt incurrence tests provided by the indenture, obtain the prior consents of the holders of at least a majority in aggregate principal amount of those notes and the consent of the lenders under our Credit Agreement, or obtain a sufficient amount of financing to refinance the Notes and indebtedness outstanding under our Credit Facility, if any.

Annual interest expense on the Notes approximates $65.6 million. Additionally, annual amortization of deferred financing fees on the Notes approximates $1.6 million and annual amortization of the original issue discount on the Notes approximates $2.1 million.

There have been no material changes during the three months ended March 31, 2013 to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2012.

proportionate share of the aggregate $36.1 million to all fourteen gaming facilities will approximate $2.1 million.

We are faced with certain contingencies involving litigation and environmental remediation and compliance. These commitments and contingencies are discussed in greater detail in "Part II, Item 1. "Legal Proceedings" and Note 9 to our consolidated financial statements, both of which are included elsewhere in this report. In addition, new competition may have a material adverse effect on our revenues, and could have a similar adverse effect on our liquidity. See "Part I, Item 1A. Risk Factors—Risks Related to Our Business" which is included in our Annual Report on Form 10-K for the year ended December 31, 2012.

Our critical accounting policies disclosures are included in our Annual Report on Form 10-K for the year ended December 31, 2012. Management believes that there have been no material changes since December 31, 2012. We have not substantively changed the application of our policies and there have been no material changes in assumptions or estimation techniques used as compared to prior periods.

We are exposed to changes in interest rates primarily from our variable rate long-term debt arrangements. However, with the issuance of the fixed rate 11.5% Senior Secured Second Lien Notes due 2019 (the "Notes"), our exposure to interest rate changes will be limited to amounts which may be outstanding under our Credit Facility. There were no amounts outstanding under our Credit Facility as of March 31, 2013. (See Liquidity and Capital Resources included elsewhere within this report and "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Sources of Capital" which is included in our Annual Report on Form 10-K for the year ended December 31, 2012).

Assuming that the entire amount of borrowings permitted under the Credit Facility was outstanding, a hypothetical 100 basis point (1%) change in interest rates would result in an annual interest expense change of up to approximately $0.2 million.

At March 31, 2013, the fair value of amounts outstanding under our Credit Facility and other long-term debt approximates the carrying value, except for our Notes, for which the fair value was determined based upon Level 2 inputs (as defined by ASC 820, Fair Value Measurements and Disclosures) including quoted market prices and bond terms and conditions. The aggregate fair value of the Senior Secured Second Lien Notes was $592.1 million at March 31, 2013.

We have established and maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports that we file under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, evaluated and

reported within the time periods specified in the rules and forms of the Securities and Exchange Commission ("SEC"), and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Form 10-Q Quarterly Report (the "Evaluation Date"). They have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports that we file under the Exchange Act is recorded, processed, summarized, evaluated and reported within the time periods specified in SEC rules and forms.

There were no significant changes in our internal control over financial reporting identified in connection with the above evaluation that occurred during the period covered by this Form 10-Q Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

State ex rel. Walgate v. Kasich; Case No. 11 CV-10-13126; Court of Common Pleas of Franklin County, Ohio. Scioto Downs, Inc., in order to protect its right to video lottery terminal ("VLT") gaming pursuant to its conditional license granted by the Ohio Lottery Commission, successfully intervened in a lawsuit filed by a public policy group in Ohio challenging certain aspects of the casino referendum and the Ohio Governor's and legislature's approval of legislation authorizing VLTs at Ohio's seven horse racetracks. Relators, the plaintiffs, among other claims against Ohio's casinos, allege that VLTs were not contemplated by Ohio's constitutional amendment permitting casinos in Ohio. Dispositive Motions were filed on February 20, 2012 and, on May 30, 2012, the litigation was dismissed. On March 13, 2013, the appeals court affirmed the lower court decision. On April 26, 2013, the plaintiffs filed a Notice of Appeal to the Ohio Supreme Court. The Ohio Supreme Court may elect to not hear the appeal.

Greater Erie Industrial Development Corporation v. Presque Isle Downs, Inc; Case No. 11436-09; Court of Common Pleas of Erie County, Pennsylvania. In October 2005, we sold all but 24 of the 229 acres of real property, known as the International Paper site, to the Greater Erie Industrial Development Corporation, a private, not-for-profit entity that is manager by the municipality (the "GEIDC"). On October 1, 2009, the GEIDC initiated legal action against Presque Isle Downs, Inc. alleging breach of contract regarding clean fill dirt which the GEIDC claims was supposed to be furnished as a result of the sale. On December 14, 2011, the Erie County Court of Common Pleas ruled in favor of the GEIDC, awarding $0.7 million in damages, including interest. Presque Isle Downs timely filed its appeal on January 13, 2012; however, the judgment and related interest were accrued and reflected as part of accrued liabilities in the consolidated balance sheets at March 31, 2013 and December 31, 2012. Pending the appeal process, we were required to post a surety bond in the amount of 120% of the judgment, or approximately $0.8 million, which was collateralized by a cash deposit and is reflected as part of restricted cash in the consolidated balance sheets at March 31, 2013 and December 31, 2012. On October 30, 2012, the appeal was argued before the Pennsylvania Superior Court and on April 8, 2013 we received a ruling from the Superior Court affirming the trial court's decision in the case. On April 22, 2013, we filed a motion for reconsideration with the Superior Court and are preparing to file an appeal with the Supreme Court of Pennsylvania.

Presque Isle Downs, Inc. v. Dwayne Cooper Enterprises, Inc. et al; Civil Action No. 10493-2009; Court of Common Pleas of Erie County, Pennsylvania. On April 17, 2010, Presque Isle Downs, Inc. initiated legal action which named as defendants Dwayne Cooper Enterprises, Inc. ("DCE"), Turner Construction Company, and Rectenwald Buehler Architects, Inc. f/k/a Weborg Rectenwald Buehler Architects, Inc. with respect to the surveillance system that was installed as part of the original construction of Presque Isle Downs which opened on February 28, 2007. Shortly after the opening of Presque Isle Downs, it was discovered that certain equipment components of the surveillance system that were installed by DCE were defective or malfunctioning. Furthermore, various components of the surveillance system that DCE was required to install were not installed. As a result, during 2008 Presque Isle Downs was required to replace certain equipment components of the surveillance system at a cost of $1.9 million, and to write-off approximately $1.5 million related to the net book value of the equipment that was replaced. On April 5, 2011, Presque Isle Downs received a default judgment in the amount of $2.7 million against DCE for the failure to answer or otherwise respond to Presque Isle

Downs' complaint. We are continuing our efforts of attempting to enforce the judgment. Any proceeds that may be received will be recorded as the amounts are realized.

Legal matters are discussed in greater detail in "Part I, Item 3. Legal Proceedings" and Note 15 to our Consolidated Financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2012.

A description of our risk factors can be found in "Part I, Item 1A. Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2012. There were no material changes to those risk factors during the three months ended March 31, 2013.

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


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o


PART I—FINANCIAL INFORMATION			2
Item 1—Financial Statements			2
Consolidated Balance Sheets at March 31, 2013 (unaudited) and December 31, 2012			2
Consolidated Statements of Operations for the Three Months Ended March 31, 2013 and 2012 (unaudited)			3
Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2013 and 2012 (unaudited)			4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012 (unaudited)			5
Notes to Consolidated Financial Statements (unaudited)			6
Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3—Quantitative and Qualitative Disclosures about Market Risk			31
Item 4—Controls and Procedures			31
PART II—OTHER INFORMATION			33
Item 1—Legal Proceedings			33
Item 1A—Risk Factors			34
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 3—Defaults upon Senior Securities			34
Item 4—Mine Safety Disclosures			34
Item 5—Other Information			34
Item 6—Exhibits			35
SIGNATURE PAGE			36
EXHIBIT INDEX			37


Level 1:		Unadjusted quoted market prices for identical assets and liabilities.
Level 2:		Inputs other than Level 1 that are observable, either directly or indirectly, for the asset or liability through corroboration with market data for substantially the full term of the asset or liability.
Level 3:		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities (management's own assumptions about what market participants would use in pricing the asset or liability at the measurement date).

	March 31, 2013

Description	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash equivalents	$	43,312	$	—	$	—	$	43,312

Total assets	$	43,312	$	—	$	—	$	43,312

Liabilities
Acquisition-related contingent considerations	$	—	$	—	$	542	$	542

Total liabilities	$	—	$	—	$	542	$	542


DELAWARE (State or other jurisdiction of incorporation)		84-1103135 (I.R.S. Employer Identification Number)


Balance as of December 31, 2012	$	517
Amortization of present value discount(1)		19
Fair value adjustment for change in consideration expected to be paid(2)		6
Settlements		—

Balance as of March 31, 2013	$	542


Assumptions:
Expected dividend yield(1)	N/A
Expected stock price volatility(2)	77.4	%
Risk-free interest rates(3)	1.36	%
Expected term of options (in years)(4)	6.00

			Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Life		Aggregate Fair Value

					(in years)		(in millions)
Unvested outstanding as of December 31, 2012	300,036		$	2.35		1.65	$	1.3
Granted	163,768			3.94
Vested	(106,369	)		3.64
Forfeited	—			—

Unvested outstanding as of March 31, 2013	357,435		$	2.69		2.09	$	1.2

	Three Months Ended March 31

	2013			2012
	(dollars in thousands, except per share amounts)
Net loss	$	(786	)	$	(3,191	)
Shares outstanding:
Weighted average shares outstanding		28,137,030			27,960,030
Effect of diluted securities		—			—

Diluted shares outstanding		28,137,030			27,960,030

Net loss per common share:
Basic	$	(0.03	)	$	(0.11	)

Diluted	$	(0.03	)	$	(0.11	)

	Three Months Ended March 31

	2013		2012
Weighted-average stock options outstanding		1,252,300		984,350
Weighted-average restricted stock units outstanding		328,736		285,569

		1,581,036		1,269,919

	March 31, 2013		December 31, 2012

	(in thousands)
11.5% Senior Secured Second Lien Notes (net of unamortized discount of $13,419 and $13,948 in 2013 and 2012, respectively)	$	557,245	$	556,716

	Defined benefit pension plans(1)

	(in thousands)
Beginning balance	$	(341	)
Other comprehensive loss before reclassifications		—
Amounts reclassified from accumulated other comprehensive loss		10

Net current-period other comprehensive loss		10

Ending balance	$	(331	)

	Three Months Ended March 31,

	2013			2012
	(unaudited, in thousands)
Cash flow summary
Net cash used in operating activities	$	(10.5	)	$	(11.6	)
Net cash used in investing activities		(5.6	)		(21.0	)
Cash used in financing activities		—			(0.1	)

Net decrease in cash and cash equivalents	$	(16.1	)	$	(32.7	)

Exhibits			Item Title

	31.1		Certification of Jeffrey J. Dahl pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
	31.2		Certification of John W. Bittner, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
	32.1		Certification of Jeffrey J. Dahl in accordance with 18 U.S.C. Section 1350 (filed herewith).
	32.2		Certification of John W. Bittner, Jr. in accordance with 18 U.S.C. Section 1350 (filed herewith).
	101.1		XBRL Instance Document
	101.2		XBRL Taxonomy Extension Schema Document
	101.3		XBRL Taxonomy Extension Calculation Linkbase Document
	101.4		XBRL Taxonomy Extension Definition Linkbase Document
	101.5		XBRL Taxonomy Extension Label Linkbase Document
	101.6		XBRL Taxonomy Extension Presentation Linkbase Document


Date: May 7, 2013	MTR GAMING GROUP, INC.
	By:	/s/ JEFFREY J. DAHL Jeffrey J. Dahl PRESIDENT AND CHIEF EXECUTIVE OFFICER
	By:	/s/ JOHN W. BITTNER, JR. John W. Bittner, Jr. EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER