Chairman of The Finance Committee Employment Agreement

EMPLOYMENT AGREEMENT


AGREEMENT made this 1st day of February, 1999, by and between MTR Gaming Group, Inc., a Delaware corporation having its principal office at State Route 2 South, Chester, West Virginia 26034, together with all of its subsidiaries whether now existing or hereafter formed or acquired (collectively, the "Company"), and Robert A. Blatt, 25 Ocean Avenue, Larchmont, NY 10538 ("Executive").


WHEREAS, the Executive has served the Company in the capacity of Chairman of the Finance Committee, member of the Compensation Committee and Assistant Secretary; and


WHEREAS, the Executive has provided consulting services related to acquisitions and other matters and will assume significant additional duties and responsibilities due to the expansion of the Company's facilities in West Virginia, the expansion of the Company's operation to two additional locations in Nevada, and the Company's pursuit of other gaming and entertainment opportunities; and


WHEREAS, the Company continues to explore additional expansion opportunities both to its existing facilities and to new venues; and


WHEREAS, the Executive has been instrumental in the Company's improved performance and profitability; and


WHEREAS, the parties wish to enter into an agreement reflecting the present status of the Executive's employment relationship to the Company;


Now, Therefore, the parties, in reliance upon the mutual promises and covenants herein contained, do hereby agree as follows:


1. PRIOR AGREEMENTS. From and after the date hereof, this Agreement shall replace and supercede any prior agreements, written or oral, between the Company and Executive with respect to the subject matter hereof.


2. TERM. The Company hereby agrees to employ Executive, and Executive agrees to serve the Company, in the capacity of Vice President, Chairman of the Company's Finance Committee, and member of the Compensation Committee for a five year period commencing on February 1, 1999, (the "Employment Date") and ending on January 31, 2004 (such period, subject to earlier termination as provided herein, being referred to as the "Period of Employment").


3. DUTIES AND SERVICES. During the Period of Employment, Executive agrees to serve the Company as Assistant Secretary, Vice President, Chairman of the Finance Committee and member of the Compensation Committee, as well as Assistant Secretary and Vice President of Mountaineer Park, Inc., and in such other offices and directorships of the Company and of its subsidiaries and related companies (collectively, "Affiliates") to which he may be elected or appointed, and to perform such other reasonable and appropriate duties as may be requested of him by the board of directors of the Company (the "Board of Directors"), in accordance with the terms herein set forth. In performance of his duties, Executive shall be subject to the direction of the Board of Directors. Executive shall devote such of his time, energy and skill during regular business hours to the business and affairs of the Company and its affiliates and to the promotion of their interests as is required. The Company acknowledges, however, that the Executive is also engaged in other businesses that do not compete with the Company.


2


4. COMPENSATION.


(a) BASE SALARY. The base salary of the Executive for his services pursuant to the terms of this Agreement shall be $46,000 per year, payable in equal bi-monthly installments, or on such other terms as may mutually be agreed upon by the Company and Executive. Executive's base salary shall be subject to an automatic cost-of-living increase of five percent (5%) on each anniversary of this Agreement, and shall be subject to periodic increase by the Compensation Committee of the Board of Directors in its discretion.


(b) BONUS. Executive shall be entitled to cash bonuses and other benefits, such as stock or stock option awards, as the Compensation Committee of the Board of Directors may periodically award in its discretion based on the Executive's performance.


(c) ADDITIONAL COMPENSATION. To the extent Executive provides services in addition to those set forth herein, Executive shall be entitled to $2,500 per day for the performance of such services.


(d) BENEFIT PLANS AND FRINGE BENEFITS. Executive shall receive such employment fringe benefits and shall be entitled to participate in other employee benefit plans, including without limitation any pension plan, profit-sharing plan, savings plan, deferred compensation plan, stock option plan, life insurance made available by the Company now or in the future to its executives as the Compensation Committee of the Board of Directors may periodically award in its discretion based on the Executive's performance, subject to and on a basis consistent with the terms, conditions and overall administration of such Benefit Plans. Specifically, and without limitation, the Company will provide Executive a deferred compensation plan.


(e) EXPENSES. All travel and other expenses incident to the rendering of services by Executive hereunder shall be paid by the Company. If any such expenses are paid in the first


3


instance by Executive, the Company shall reimburse him therefor on presentation of the appropriate documentation required by the Internal Revenue Code of 1986, as amended (the "Code"), or Treasury Regulations promulgated thereunder, or otherwise required under the Company's policy with respect to such expenses. The Company recognizes that pursuant to a prior employment agreement, the Executive maintains his principal office in Washington, D.C. and will frequently be required to travel outside that area.


(f) WORKING FACILITIES. The Company shall provide Executive with an office, secretarial, administrative and other assistance, and such other facilities and services as shall be suitable to his position and appropriate for the performance of his duties. All such Working Facilities shall be provided on an as needed basis at the Company's corporate headquarters as well as in any other jurisdiction in which the Company is conducting or pursuing substantial business.


5. EARLY TERMINATION.


(a) Notwithstanding the provisions of Section 2 hereof, Executive may be discharged by the Company for Cause (as defined in Section 5(d) hereof), in which event the Period of Employment hereunder shall cease and terminate ...