UPDATE 3-Penn National 3rd-qtr profit falls, shares rise

* Revenue inches up

* Full-year forecast lowered

* Would need strategic partner for Fontainebleau Las Vegas

* Shares rise 5.7 percent (Recasts; Adds company comment, byline)

By Deena Beasley

LOS ANGELES, Oct 21 (Reuters) - Penn National Gaming Inc (PENN.O) said on Wednesday that quarterly profit fell from a year ago, when it had gains from fees after a buyer backed out of a deal to acquire the company, but expansion plans continue on several fronts, and its shares rose more than 5 percent.

The casino operator also lowered its full-year forecast, and said August was the weakest month during the past quarter.

"The property operations were basically in line with our expectations and generally solid against what we perceive to be low expectations across the Street," Oppenheimer analyst David Katz said in a research note.

Quarterly net income fell to $21.4 million, or 20 cents per share, from $147.5 million, or $1.69 per share, a year earlier.

After adjusting for one-time charges, Penn posted a profit of 33 cents a share, falling 2 cents short of the average analyst estimate as compiled by Thomson Reuters I/B/E/S.

Revenue rose to $620.4 million from $617.9 million. The analysts' average estimate was $642 million.

Without lobbying expenses and other charges, earnings before interest, taxes, depreciation and amortization were only $1.7 million short of estimates, according to Susquehanna Financial analyst Robert LaFleur.

The company said it "allocated significant capital" during the third quarter and into the fourth quarter to lobby for the expansion of gambling in Ohio. It is also seeking to expand in several other states, including Kansas, Maryland and New York.

Aside from a potential Las Vegas property, "we're looking at very high double-digit kinds of returns," Penn National Chief Executive Peter Carlino said on a conference call.

Penn forecast adjusted earnings per share of 16 cents for the current quarter, compared with the average Thomson I/B/E/S estimate of 28 cents. It also lowered its outlook for full-year earnings to $1.01 per share from $1.27 per share.

Penn, which operates racetracks and casinos in U.S. cities other than Atlantic City and Las Vegas, confirmed last month that it was looking into buying the unfinished Fontainebleau Las Vegas resort, which filed for bankruptcy this summer.

"It's a very complicated bankruptcy ... it is true that we are thinking about it," Carlino said. "We think now that it is probably going to come to some resolve fairly quickly."

He said Penn could consider debtor-in-possession financing, but "despite the impressive scale of this building, its value is little to nothing because the cost to complete it is at the edge of its value.

"We would only approach it with a strategic partner who could bring something beyond money to the table," he added.

Penn's shares were up $1.56, or 5.7 percent, at $28.91 in early-afternoon trading on the Nasdaq. (Additional reporting by Karen Jacobs; Editing by Lisa Von Ahn, Maureen Bavdek and Steve Orlofsky)