About 30 floors of the 63-story tower anchoring the development have been fully completed and require air conditioning, while the top of the building is largely without a roof. Penn's offer disclaims liabilities for Fontainebleau's existing financial burden, which includes an estimated $1.6 billion in bank loans and bondholder debt, and several hundred million of contractors' liens, claiming the project's value is no longer worth any more than the estimated $1.46-billion cost to complete the project. The agreement calls for a vast majority of the existing contracts and leases related to the project to be rejected.

"Despite the impressive scale of that building, our view is its value is little to nothing because the cost to complete [the project] is at the edge of its value in our judgment," Penn National chief executive Peter Carlino told analysts last month. "And around that we have a very, very, very disciplined sense of what we will accept and what we will not, and so it kind of goes our way or it doesn't. It's as simple as that. We chase nothing, we'll stretch for nothing and this process will play out or it won't."

A stalking horse is meant to prevent "low-ball" offers. In exchange, Penn National gets the inside track and a guarantee via a break-up provision that its expenses will be repaid if it loses out to another buyer. As the stalking horse, Penn National's bid would be the standard by which any other bids to purchase the project would be evaluated. Other interested bidders who submit qualifying offers would be permitted to participate in the auction. Both Fontainebleau and Penn National are asking the bankruptcy court to approve the offer, set a bid deadline of Jan. 15, 2010, and an auction date of Jan. 21, 2010.