Exhibit 10.12

BB&T Leasing Corporation
Post Office Box 31273
Charlotte, NC 28231   EQUIPMENT LEASE
(Finance)

12/16/02
Date of Lease
 
6500135-001
Contract Number Lessee       Asset Location
Name:
 
Mountaineer Park, Inc.
 
Name:
 
Mountaineer Race Track & Gaming Resort    

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Address:   Route 2   Address:   Route 2    

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    P.O. Box 358
Chester, WV 26034       P.O. Box 358
Chester, WV 26034    

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Attn:       County:   Hancock    

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Telephone:   (304) 387-8300   Telephone:   (304) 387-8300    

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Asset Description:
 
     

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Model:
 
 
 
Serial #:
 
     

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If Schedule "A" is attached check here: ý

Estimated Cost:   $787,887.00*   Estimated Monthly
Payment:   $24,017.85   Estimated
Residual:   $1.00   No. of Monthly
Payments:   36   Advance
Payment:   $24,017.85    

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Actual Cost:   $757,812.50*   Monthly Lease
Payment:   $22,939.43   Stated
Residual:   $1.00   Lease Payment
Commencement Date:   1/1/2003            

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*Includes $100 documentary fee

        IN WITNESS WHEREOF, the parties hereto hereby execute this lease as of
the day and year written as the date of lease.

    BB&T LEASING CORPORATION       /s/  EDSON R. ARNEAULT      

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BY:
 
/s/

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Lessee:
 
Mountaineer Park, Inc.

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Title:
 
 
 
Title:
 
President & CEO    

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        THIS EQUIPMENT LEASE (herein "lease" or "agreement") is made in
Charlotte, North Carolina, by and between BB&T LEASING CORPORATION (herein
"Lessor") and the above named Lessee.

        1.    Lease of Equipment. Lessor hereby leases to Lessee and Lessee
leases from Lessor equipment (herein "equipment") described above upon the terms
and conditions set forth herein.

        2.    Lease Term. The term of this lease commences on the date set forth
above and shall continue thereafter until the end of the month for which the
last lease payment required is made or until final settlement is otherwise made
pursuant to the terms hereof.

        3.    Lease Payments. Within the lease term, lease payments shall be
made on or before the first day of each calendar month commencing the first day
of the month immediately following delivery of the equipment to Lessee. The
first such payment shall include an interim charge for the period from the
delivery date of the equipment to the first lease payment date. Lessee
authorizes Lessor to fill in the Lease Payment Commencement Date above with the
date the first lease payment is due hereunder. Time is of the essence. Should
Lessee fail to pay the lease payment on or before the tenth day of the calendar
month it became due, Lessor may collect from Lessee as an additional lease
payment an

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amount equal to five percent (5%) of such monthly lease payment. Lessor may
charge a $20.00 return check charge for each Lessee check which is returned
unpaid for any reason.

        4.    Ownership of Equipment; Special Power of Attorney. (a) The
equipment is, and shall at all times remain, the property of Lessor and Lessee
shall have no right, title or interest therein or thereto except as expressly
set forth in this lease. The equipment is, and shall at all times be and remain,
personal property notwithstanding that the equipment or any part thereof may now
be, or hereafter become, in any manner affixed or attached to real property or
any building thereon by any means. If Lessor supplies Lessee with labels stating
that the equipment is owned by Lessor, Lessee shall affix and keep the same on
each item of equipment. (b) Lessee hereby appoints Lessor Lessee's
attorney-in-fact for the purpose of executing in the Lessee's name and filing
any instrument or document, including UCC financing statements, pertaining to or
evidencing Lessor's interest in the equipment and for the purpose of paying, on
Lessee's behalf, any fee, tax or other expense arising out of such a filing and
out of a records search in connection with the same. Lessee shall reimburse
Lessor for any such payment. Lessor specifically disclaims any security interest
in all cash, coins or related currency utilized in the equipment.

        5.    Use of Equipment. Lessee acknowledges that it is leasing the
equipment for commercial purposes. Lessee shall use the equipment in a careful
manner and shall comply with all laws and regulations relating to its
possession, use and maintenance.

        6.    Delivery, Location and Inspection. The equipment shall be
delivered and thereafter kept at the Mountaineer Race Track & Gaming Resort, and
shall not be removed therefrom without Lessor's written consent. Upon tender of
the equipment in good repair, Lessee shall promptly accept such equipment and
execute a Delivery Receipt therefor. Lessor shall have the right to inspect the
equipment after providing reasonable notice and at reasonable times; provided,
however, that such inspections shall be on such dates and such times as to avoid
any interference with Lessee's use of the machines for its customary business
purposes. Lessee shall, whenever requested by Lessor, advise Lessor of the exact
location of the equipment. In no event, however, shall Lessor be entitled to
inspect the equipment more than one (1) time every six (6) months absent a
default by Lessee.

        7.    Warranties. Lessee agrees that it has selected the equipment based
upon its own judgment and that Lessor has acquired the equipment only in
connection with this lease. Lessee disclaims any reliance upon any statements or
representations of Lessor. LESSOR MAKES NO WARRANTY WITH RESPECT TO THE
EQUIPMENT OR ANY PART OR PIECE THEREOF, EXPRESSED OR IMPLIED, AND LESSOR
SPECIFICALLY DISCLAIMS ANY WARRANTY OF SUITABILITY, CONDITION, MERCHANTABILITY
AND OF FITNESS FOR A PARTICULAR PURPOSE AND ANY LIABILITY FOR CONSEQUENTIAL
DAMAGES ARISING OUT OF THE USE OF THE EQUIPMENT OR INABILITY TO USE THE
EQUIPMENT OR ANY PART OR PIECE THEREOF. Lessee agrees to make the lease payment
and other payments required hereunder without regard to the condition,
suitability or fitness of the equipment and to look only to persons other than
the Lessor (such as the manufacturer, vendor or carrier thereof) if any item of
the equipment is for any reason defective.

        8.    Advance Lease Payments. Any advance lease payment paid by Lessee
to Lessor for the lease of the equipment shall be applied by Lessor to the first
lease payment due hereunder and, if any of the advance payment remains after
such application, it will be held by Lessor for satisfaction of Lessee's
obligations under this lease.

        9.    Determination of Actual Cost. Actual Cost means the cost to Lessor
of purchasing and delivering the equipment to Lessee, including excise and other
taxes, transportation and all other charges. The amount of each estimated lease
payment and the estimated cost set forth above are estimates and it is mutually
agreed that upon final determination of the Actual Cost, Lessor will adjust the
lease payments proportionately if the Actual Cost differs from Estimated Cost,
insert the appropriate figures and notify the Lessee of such amounts. Lessee
authorizes Lessor to add to the amount of any lease payment any tax that may be
imposed on or measured by the lease payments. The Stated Residual shall be One
Dollar ($1.00). If the Actual Cost differs materially (as determined by Lessor)
from the estimated cost initially set forth above, Lessor, at its option, may
terminate this lease.

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        10.  Insurance.

        (a)    Personal Property.    MTR Gaming Group, Inc. and its subsidiaries
(collectively, the "Lessee Group") shall maintain a special causes of loss ("All
Risk") perils property coverage for all personal property owned, leased or for
which the Lessee Group is legally liable. The coverage will include a lenders'
loss payable endorsement in favor of Lessor. The policy providing personal
property coverage may include a deductible of no more than Twenty-Five Thousand
Dollars ($25,000.00) for any single occurrence. Flood and earthquake deductibles
can be no more than Two Hundred Fifty Thousand Dollars ($250,000.00), if a
separate deductible applies.

        (b)    Commercial General Liability.    The Lessee Group shall maintain
a Commercial General Liability policy with a One Million Dollar ($1,000,000.00)
combined single limit for bodily injury and property damage, including Products
Liability, Contractual Liability, and all standard policy form extensions. The
policy must provide a Two Million Dollar ($2,000,000.00) general aggregate (per
location, if multi-location risk) and be written on an "occurrence form". If the
general liability policy contains a self-insured retention, it shall be no
greater than Ten Thousand Dollars ($10,000.00) per occurrence, with an aggregate
retention of no more than Two Hundred Fifty Thousand Dollars ($250,000.00),
including expenses.

        11.  Operation and Repair. Lessee shall pay or cause to be paid all
costs, expenses, fees and charges incurred in connection with the use and
operation of the equipment and shall keep the equipment in good condition and
repair and furnish all parts, mechanisms and devices required therefor. Lessee
shall reimburse Lessor upon demand, as an additional lease payment, the amount
of any such costs, expenses, fees or charges which are paid by Lessor.

        12.  Alterations. Lessee shall not make any alterations, additions or
improvements to the equipment which impair the economic value, economic and
useful life, or functional utility of the equipment without Lessor's written
consent. Any alterations, modifications and attachments made to the equipment
must be removed without damaging the functional capabilities or economic value
of the equipment upon the termination of the Lease. If not so removed, all
additions and improvements made to the equipment shall become the property of
Lessor.

        13.  Liens and Taxes. Lessee shall keep the equipment free and clear of
all levies, liens and security interests and shall give Lessor immediate notice
of any attachment or other judicial process affecting any item of equipment.
Lessee shall pay all charges and taxes (local, state and federal) which may now
or hereafter be imposed upon the ownership, leasing, rental, sale, purchase,
possession or use of the equipment, excluding all taxes on or measured by
Lessor's net income.

        14.  Lessor's Payment. If Lessee fails to procure or maintain said
insurance, release said liens or pay said charges and taxes, Lessor shall have
the right, but shall not be obligated, to obtain such insurance, release such
liens or pay such charges and taxes and Lessee shall pay to Lessor the amounts
so paid, on demand, as an additional lease payment.

        15.  Assignment or Sublease. Without Lessor's prior written consent,
Lessee shall not (a) assign, transfer, pledge, hypothecate or otherwise dispose
of this lease or any interest herein, or (b) sublet or lend the equipment or
permit it to be used by anyone other than Lessee or Lessee's employees. Lessor
may assign this lease and/or mortgage the equipment, in whole or part, without
notice to Lessee and its assignee or mortgagee may reassign this lease and/or
such mortgage, without notice to Lessee. However the Lessor shall not assign or
transfer this Lease or its interest in this Lease Agreement to any other entity
without the prior approval of the West Virginia Lottery Commission (312
MacCorkle Avenue, Charleston, West Va. 25314)., Each such assignee and/or
mortgagee shall have all of the rights but none of the obligations of Lessor
under this lease. Lessee shall execute and deliver an acknowledgement of each
such assignment and/or mortgage and shall not assert against the assignee and/or
mortgagee any defense, counterclaim or offset that Lessee may have against
Lessor. Subject to the foregoing, this lease inures to the benefit of and is
binding upon the heirs, legatees, personal representatives, successors and
assigns of the parties hereto. Lessee hereby waives any and all existing and
future claims and offsets against any lease payments or other payments due
hereunder and agrees to pay the lease payments and

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other amounts hereunder regardless of any offset or claim which may be asserted
by Lessee or on its behalf.

        16.  Loss and Damage. Lessee shall bear the entire risk of loss, theft,
destruction or damage of the equipment from any cause whatsoever and no loss,
theft, destruction or damage of the equipment shall relieve Lessee of the
obligation to pay lease payments or of any other obligation under this lease. In
addition, Lessee shall bear the entire risk of loss, theft, destruction or
damage of the equipment in the course of its transportation or delivery to
Lessee, notwithstanding the failure of Lessee to execute a Delivery Receipt for
such equipment.

        17.  INDEMNITY. Lessee hereby indemnifies Lessor against and agrees to
hold it harmless from any and all claims, actions, proceedings, liability and
expense (including legal expense) arising in connection with the equipment,
including without limitation the manufacture, selection, ordering, purchase,
delivery, possession, ownership, use, condition, operation or return thereof and
including liability for death or injury to persons, damage to property and
strict liability under the laws or judicial decisions of any state or of the
United States. This indemnity will survive a termination of this lease.

        18.  Default. Each of the following events will constitute an "Event of
Default" hereunder: (a) Lessee's failure to pay when due any lease payment or
other charges required herein to be paid within ten days following written
notice thereof by Lessor to Lessee; (b) Lessee's failure to observe or perform
any other agreement required herein to be observed or performed by Lessee and
Lessee's continued failure for ten days following written notice thereof by
Lessor to Lessee; (c) the cessation of doing business as a going concern or
assignment for the benefit of creditors by the Lessee or any guarantor of this
lease or any partner of Lessee if Lessee is a partnership; (d) the bankruptcy or
receivership of Lessee; (e) Lessee's failure to submit timely financial or
credit information in accordance with the requirements of the Credit Agreement
or Lessee's submission of financial or credit information that is false or
misleading in any material respect when submitted; and (f) Lessee's default in
the repayment of any indebtedness Lessee may now or hereafter owe Lessor or any
affiliate thereof or any other entity or person. In any event of Default, any
Notice of Default provided to Lessee will simultaneously be provided to the West
Virginia Lottery Commission (312 Maccorkle Avenue Charleston, West Virginia
25314.

        19.  Remedies. Lessor and Lessee agree that Lessor's damages suffered by
reason of the occurrence of an Event of Default are uncertain and not capable of
exact measurement at the time this lease is executed and therefore they agree
that, for purposes of this paragraph 19, "Lessor's Loss" as of any date will be
the sum of the following: (i) the amount of all lease payments and other amounts
payable by Lessee hereunder that are due but unpaid as of such date; plus
(ii) all lease payments and other amounts required hereunder to be made during
the course of the remainder of the term hereof less unearned income which would
otherwise have been realized by Lessor from the date of termination or surrender
through the remainder of the term of this lease; plus (iii) the Stated Residual
of the equipment as set forth above. Upon the occurrence of an Event of Default
and at any time thereafter, Lessor may, subject to Lessee's right to purchase
the equipment pursuant to Section 21(b), exercise any one or more of the
following remedies.

        (a)  Lessor may, by written notice to Lessee, terminate this lease and
declare an amount equal to Lessor's Loss as of the date of the notice to be
immediately due and payable, and the same will then be and become immediately
due and payable without further notice or demand, and all rights of the Lessee
to use the equipment will terminate but Lessee will remain liable as provided in
this paragraph. Lessee will at its expense promptly deliver the equipment to
Lessor at a location specified by Lessor. .

        (b)  Lessor may proceed by appropriate court action to enforce
performance by Lessee of the applicable covenants of this lease or to recover,
for breach of this lease, Lessor's Loss as of the date Lessor's Loss is declared
due and payable hereunder. Lessor may elect binding arbitration of any dispute
with Lessee regarding a default by Lessee and any such arbitration will be
conducted in Charlotte, North Carolina pursuant to the Rules of the American
Arbitration Association.

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        (c)  In the event Lessor repossesses the equipment, Lessor will publicly
or privately sell or lease each item of the equipment in such manner and upon
such terms as Lessor may in its sole discretion determine to be appropriate. The
proceeds of the sale or lease will be applied to reimburse Lessor for Lessor's
Loss and any additional amounts due under subparagraphs (d) and (e), below.
Lessor will be entitled to any surplus and Lessee will remain liable for any
deficiency. For purposes of this subparagraph, the proceeds of any lease of all
or any part of the equipment by Lessor will be the amount reasonably assigned by
Lessor as the cost of such equipment in determining the lease payments under
such lease.

        (d)  Lessor may recover interest on the unpaid balance of Lessor's Loss
from the date of the Event of Default until the date that it is fully paid equal
to ten percent or the highest rate permitted by law.

        (e)  Subject to final court order Lessor may exercise any other right or
remedy available to it by law or agreement, and may in any event recover
attorneys' fees of fifteen per cent of Lessor's Loss together with all other
expenses incurred by reason of an Event of Default or the exercise of any remedy
hereunder, including without limitation the expenses of repossession, repair,
storage, transportation and disposition of the equipment.

        No remedy provided for in this paragraph is intended to be exclusive and
each will be cumulative but only to the extent necessary to enable Lessor to
recover from Lessee amounts for which Lessee is liable hereunder. No express or
implied waiver by Lessor of any breach of Lessee's obligations hereunder will
constitute a waiver of any other breach of Lessee's obligations hereunder.

        20.  [Intentionally Deleted]

        21.  Surrender and Final Settlement.

        (a)  On or before the termination of this Lease, Lessee shall pay Lessor
all sums due hereunder, whether for lease payment or otherwise. If any such sum
is past due, it will bear interest at the highest rate allowed by law and such
accrued interest shall be paid by Lessee prior to termination.

        (b)  Provided that Lessee shall have paid all sums due hereunder
(including the Lendor's Loss in the Event of Default), Lessee shall have upon
the termination of this Lease the right to purchase the equipment for the Stated
Residual plus $100.

        22.  Notices. Any written notice or demand shall be given to a party by
mailing it to the party at its address set forth above, or at such address as
the party may provide in writing from time to time. Notice or demand so mailed
shall be effective when deposited in the United States mail, duly addressed and
with postage prepaid.

        23.  Financial Information.

        (a)    Quarterly Reporting.    Within forty-five (45) days after the end
of each fiscal quarter, Lessee shall provide Lessor with the consolidated and
consolidating balance sheet, income statement, statement of cash flows,
statement of retained earnings and operating statement for the fiscal quarter
under review and reflecting year-to-date performance of the Lessee Group and a
comparison of the financial performance of the Lessee Group to the prior fiscal
year's operations and projected results from operations (in each case reconciled
with year end audited statements and compared to budget and prior year period)
of the Lessee Group all in reasonable detail. Such financial statements shall be
certified by an officer of the Lessee Group as fairly presenting the financial
condition, results of operations and cash flows of the Lessee Group in
accordance with GAAP (other than footnote disclosures) as at such date and for
such periods, subject only to normal year-end accruals and audit adjustments.

        (b)    Annual Financial Reporting.    Within ninety (90) days after the
end of each fiscal year, Lessee shall provide Lessor with the consolidated and
consolidating balance sheet, income statement, statement of retained earnings
and cash flows (reconciled with year end audited statements) of the Lessee Group
as at the end of such fiscal year, all in reasonable detail. Such financial
statements shall

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be prepared in accordance with GAAP and shall be accompanied by a report of
independent public accountants of recognized standing selected by Borrowers and
reasonably satisfactory to the Lessor (it being understood that Ernst & Young,
LLP or any "Big 5" accounting firm shall be automatically deemed satisfactory to
the Lessor), which report shall be prepared in accordance with generally
accepted auditing standards as at such date, and shall not be subject to any
qualifications or exceptions as to the scope of the audit. Such financial
statements shall be certified by an officer of the Lessee Group in the same
manner as required with respect to financial statements delivered pursuant to
Section 23(a);

        (c)    SEC Reporting.    Promptly after the same are available, Lessee
shall provide Lessor with copies of each annual report, proxy or financial
statement or other report or communication that shall have been sent to the
stockholders of MTR Gaming Group, Inc. ("MTR") and copies of all annual,
regular, periodic and special reports (including, without limitation, each 10Q
and 10K report) and registration statements which MTR shall have filed or be
required to file with the Securities and Exchange Commission under Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended, and not otherwise
required to be delivered to the Lessor pursuant to other provisions of this
Section 23.

        24.  Entire Agreement; Miscellaneous. This agreement, together with
Schedule "A", if attached, and the Delivery Receipt executed by Lessee in
connection with the equipment, constitute the entire agreement between Lessor
and Lessee and supersedes any agreement heretofore entered into between the
parties relating to the equipment. If more than one Lessee is named in this
lease, the liability of each shall be joint and several. No agent or employee of
any manufacturer or dealer is authorized to bind Lessor, waive or alter any term
or condition or add any provision hereto. Waiver by Lessor of any provision in
one instance shall not constitute a waiver as to any other instance. This lease
shall be governed by and construed in accordance with the laws of the State of
West Virginia. The plural shall include the singular and the singular the
plural. Lessee shall provide Lessor with such corporate resolutions, opinions of
counsel and other documents as Lessor shall request from time to time. Any
provision of this agreement prohibited by law shall be ineffective to the extent
of such prohibition without invalidating the remaining provisions of this
agreement.

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