EXHIBIT 10.17

                   MANAGEMENT FEES SUBORDINATION AGREEMENT

      THIS MANAGEMENT FEES  SUBORDINATION  AGREEMENT (this "Agreement") dated as
of September  22, 2003 is made and entered into by and among THE OLD  EVANGELINE
DOWNS,  L.L.C., a Louisiana  limited  liability  company  ("Parent") and THE OLD
EVANGELINE  DOWNS  CAPITAL  CORP.,  a Delaware  corporation  (collectively  with
Parent, the "Borrowers" and each individually,  a "Borrower"),  OED ACQUISITION,
LLC, a Delaware limited liability company ("OEDA") and PENINSULA GAMING COMPANY,
LLC,  a Delaware  limited  liability  company  ("PGC"  and  together  with OEDA,
collectively,  the "Subordinated  Parties" and each individually a "Subordinated
Party"), and WELLS FARGO FOOTHILL, INC., a California corporation with an office
in  Atlanta,  Georgia,  as the  arranger  and the  administrative  agent for the
Lenders (as defined in the Senior Loan Agreement defined below) (the "Agent").

                              W I T N E S S E T H:

      WHEREAS,  the  Borrowers  are  indebted  and may from  time to time in the
future become  indebted to a  Subordinated  Party in respect of certain  amounts
owing to the Subordinated  Parties pursuant to that certain Amended and Restated
Management  Services  Agreement  (the  "Management  Agreement"),  by and between
Parent, OEDA and PGC, dated as of February 25, 2003 (such amounts, together with
all other obligations of the Borrowers,  or either of them, to each Subordinated
Party arising under the Management Agreement,  however evidenced and whether now
existing or  hereafter  arising,  are  referred  to herein as the  "Subordinated
Fees"; and

      WHEREAS,  the  Borrowers,  the Agent and the  Lenders  are parties to that
certain  Loan  and   Security   Agreement   dated  as  of  even  date   herewith
(collectively,  as amended,  restated,  supplemented or otherwise  modified from
time to time,  the  "Senior  Loan  Agreement"),  whereby  the  Borrowers  may be
indebted to the Lenders for certain  extensions of credit  outstanding from time
to time (all such  indebtedness  including  principal,  interest,  fees,  costs,
expenses and other sums  chargeable to the Borrowers by the Agent or the Lenders
(including  interest,  fees,  costs and expenses  accruing  after an  Insolvency
Proceeding (as hereafter defined) commences regardless of whether such interest,
fees,  costs and expenses are deemed  allowed or  recoverable  in any Insolvency
Proceeding (as hereinafter defined)) together with any modification,  amendment,
refinancing or supplement thereto, and any other obligations of the Borrowers to
the Agent or the Lenders are hereinafter referred to as the "Senior Debt"); and

      WHEREAS,  as security for the payment of all Senior Debt,  the  Borrowers,
pursuant to the Senior Loan  Agreement and the other Loan  Documents (as defined
in the Senior Loan Agreement), have granted to the Agent, for the benefit of the
Lenders, a first priority lien on and unconditional  security interest in and to
certain personal and real property assets of the Borrowers  (collectively,  said
interests  in  and  assets  of the  Borrowers  are  referred  to  herein  as the
"Collateral;"  and,  collectively said liens and security interests of the Agent
are referred to herein as the "Senior Lien"); and

      WHEREAS, as part of the consideration for the Lenders' extension of credit
to the  Borrowers,  each  Subordinated  Party has agreed,  among  other  things,
subject to the terms and


<PAGE>

provisions of this Agreement,  (i) to subordinate the  Subordinated  Fees to the
Senior Debt, (ii) to subordinate any lien which each  Subordinated  Party has or
may  have in the  future  in the  assets  or  property  of any  Borrower  or any
Subsidiary or Affiliate of the Borrowers (the "Subordinated Lien") to the Senior
Lien, and (iii) to forebear from exercising any creditor's  remedy or taking any
action against the Borrowers upon any of their  obligations to each Subordinated
Party.

      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency  of which are hereby  acknowledged,  the parties hereto hereby agree
that each  capitalized  term used herein and not defined  herein  shall have the
meaning  ascribed  thereto in the Senior Loan  Agreement,  and further  agree as
follows:

      1. Priority of Liens;  Subordinated Fees.  Notwithstanding anything to the
contrary,  including,  without  limitation,  the date, time,  manner or order of
perfection or attachment of the security  interests and liens on the  Collateral
granted  by  the  Borrowers  to  the  Agent  or  any  Subordinated   Party,  and
notwithstanding  the usual application of the priority provisions of the Uniform
Commercial Code as in effect in any  jurisdiction or any other applicable law or
judicial decision of any jurisdiction,  or whether such Subordinated Party holds
possession  of all or any  part  of the  Collateral,  or if the  Agent  or  such
Subordinated  Party is perfected without filing or possession in any part of the
Collateral, the Senior Lien shall be a first, senior and prior security interest
in  and  lien  on  the  Collateral,  prior  in  interest  and  superior  to  any
Subordinated  Lien.  The  priority of liens set forth in the  previous  sentence
states the relative  priority of liens of the parties to this Agreement,  and no
party hereto  represents  or warrants to any other party that such other party's
liens are prior to any lien on the  Collateral  of any person who is not a party
to this  Agreement  (except that each  Borrower  represents  and warrants to the
Agent that the Senior  Lien has been  granted in  accordance  with the terms and
provisions  of the  Senior  Loan  Agreement  and  other  Loan  Documents).  Each
Subordinated  Party agrees that if at any time such Subordinated  Party shall be
in  possession  of  any  assets  or  properties  of  the  Borrowers,  then  such
Subordinated  Party shall hold such assets or  properties in trust for the Agent
for the benefit of the Lenders,  so long as any Senior Debt remains  outstanding
and until all  obligations  of the  Lenders  to make  loans and other  financial
accommodations  to the  Borrowers  pursuant  to the Senior Loan  Agreement  (the
"Commitments")  are terminated.  Each Subordinated  Party represents that, as of
the date hereof,  it does not have a lien on or security  interest in any assets
of any  Borrower,  and  agrees  that it will not take any such lien or  security
interest  without  the prior  written  consent  of the  Agent.  Nothing  in this
Agreement shall be deemed a consent by the Agent to any such Subordinated Lien.

      2. Subordination of Subordinated Fees.

            (a) Each Subordinated  Party hereby  subordinates any and all claims
now or hereafter owing to it by the Borrowers,  or either of them,  under all or
any  portion of the  Subordinated  Fees to any and all Senior  Debt  (including,
without limitation,  interest,  fees, costs or other payments on the Senior Debt
paid or accrued after the  commencement of an Insolvency  Proceeding and whether
or not  such  claims  are  deemed  allowed  or  recoverable  in  any  Insolvency
Proceeding, and payment of or for adequate protection pursuant to any Insolvency
Proceeding),  and agrees,  except as provided in Section 2(b)  hereof,  that all
Senior Debt shall be paid in full in



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<PAGE>

cash to the satisfaction of the Lenders and the Commitments  shall be terminated
before any payment may be made on the Subordinated Fees.

            (b)  Except  as  set  forth  below  in  this   paragraph  (b),  each
Subordinated Party agrees not to accept any payment of the Subordinated Fees nor
make any  transfer  to third  parties not party to this  Agreement,  or take any
other action, designed to secure directly or indirectly from any Borrower or any
other  Person  any  payment on account of the  Subordinated  Fees,  without  the
express,  prior written consent of the Agent,  and, except as set forth below in
this  paragraph (b), each  Subordinated  Party agrees that any funds that may be
received  by it as a payment  on account  of the  Subordinated  Fees at any time
prior to the  termination  of this  Agreement  shall  be held in  trust  for the
benefit  of, and shall be  immediately  paid over and  delivered  to, the Agent.
Notwithstanding  anything contained herein to the contrary, (i) any Borrower may
reimburse Subordinated Parties for "Reimbursables" (as defined in the Management
Agreement) at any time in accordance with the terms of the Management  Agreement
provided  no Event of Default  (as that term is defined in the  Indenture)  then
exists or would be caused thereby, and (ii) on the date that payment of any fees
or other sums (other than Reimbursables) are owing to Subordinated Parties under
the Management  Agreement,  any Borrower may pay and each Subordinated Party may
receive payments of, all other  Subordinated  Fees payable on such date provided
no Event of Default then exists or would be caused thereby.

            (c) Each  Subordinated  Party agrees that the priority of the Senior
Debt set  forth  above  shall  continue  during  any  insolvency,  receivership,
bankruptcy,  dissolution,  liquidation,  or reorganization proceeding, or in any
other proceeding, whether voluntary or involuntary, by or against the Borrowers,
or either of them,  under any bankruptcy or insolvency  law or laws,  federal or
state  relating  to the relief of debtors of any  jurisdiction,  whether  now or
hereafter in effect,  and in any  out-of-court  composition,  assignment for the
benefit of creditors, readjustment of indebtedness, reorganization, extension or
other debt arrangement of any kind (collectively,  an "Insolvency  Proceeding").
In the event of any payment, distribution,  division or application,  partial or
complete,  voluntary or involuntary, by operation of law or otherwise, of all or
any part of the property,  assets or business of the Borrowers,  or the proceeds
thereof,  or any  securities of the Borrowers,  to any  Subordinated  Party,  by
reason of any  liquidation,  dissolution  or other winding up of any Borrower or
its business or by reason of any sale or  Insolvency  Proceeding,  then any such
payment or distribution of any kind or character,  whether in cash,  property or
securities,  that, but for the subordination provisions of this Section 2, would
otherwise be payable or deliverable upon or in respect of the Subordinated Fees,
shall  instead be paid over or delivered  directly to the Agent to be applied as
payment of the Senior  Debt,  to the extent  necessary  to repay the Senior Debt
remaining  unpaid after giving effect to any concurrent  payment or distribution
to the Agent.

            (d) Subject to the  provisions  of this  Agreement,  the Agent shall
have the sole right to control all aspects of  liquidation of the Collateral and
disposition  of the  proceeds  thereof,  including  all  proceedings  pertaining
thereto  under  any  Insolvency  Proceeding  and  the  approval  of any  plan of
reorganization of the Borrowers, or either of them, thereunder.

      3.  Forbearance from Exercise of Certain  Remedies.  Until the Senior Debt
has been  paid in full in cash and the  Commitments  have  been  terminated,  no
Subordinated  Party shall (a) take any action or exercise any remedy against the
Borrowers,  or either of them, to enforce all



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<PAGE>

or any portion of the  Subordinated  Fees;  (b) take any action or exercise  any
remedy against any guarantor of or pledgor  securing the Senior Debt in order to
collect  any of the  Subordinated  Fees;  (c)  commence,  or join with any other
creditor of the  Borrowers,  or either of them,  in  commencing  any  Insolvency
Proceeding  against the Borrowers,  or either of them; or (d) take any action or
exercise  any remedy  against  any  property  or assets of any  guarantor  of or
pledgor  securing  the Senior  Debt or  acquire or take any lien on or  security
interest in any of the Collateral.  The parties hereto understand and agree that
the Agent  shall  have the  right,  but shall  have no  obligation,  to cure any
default with respect to the Subordinated  Fees without the prior written consent
of each Subordinated Party. Notwithstanding anything contained in this Agreement
to the contrary, in no event shall any Subordinated Party be entitled to receive
and retain any securities,  equity or otherwise, or other consideration provided
for in (i) a  plan  of  reorganization  or  otherwise  in  connection  with  any
bankruptcy or Insolvency  Proceeding or (ii) any other  judicial or  nonjudicial
proceeding for the liquidation,  dissolution or winding up of the Borrowers,  or
any of them, or the assets or properties  of the  Borrowers,  or any of them, in
any  case  unless  and  until  the  Senior  Debt  is paid in full in cash to the
satisfaction of the Lenders and the Commitments are terminated.

      4.  Agent's  Authority to Act. For so long as any of the Senior Debt shall
remain  unpaid,  the Agent shall have the right to act as  attorney-in-fact  for
each Subordinated  Party for the purposes specified herein and each Subordinated
Party hereby  irrevocably  appoints the Agent as such Subordinated  Party's true
and  lawful  attorney,  with  full  power of  substitution,  in the name of such
Subordinated  Party for the use and  benefit of the  holders of the Senior  Debt
without  notice to the  Subordinated  Parties  or any of their  representatives,
successors  or assigns,  to perform  the  following  acts,  at the option of the
holders of the Senior Debt,  at any meeting of creditors of the  Borrowers or in
connection with any Insolvency Proceeding:

            (a)  if  a  proper  claim  or  proof  of  debt  in  respect  of  the
Subordinated Fees has not been filed in the form required in any such Insolvency
Proceeding at least ten (10)  Business Days prior to the  expiration of the time
for filing such claims,  to file an  appropriate  claim for and on behalf of the
holders of any Subordinated Fees;

            (b) to collect any assets of the Borrowers  distributed,  divided or
applied by way of dividend or payment,  or any securities  issued, on account of
the Subordinated  Fees and to apply the same, or the proceeds of any realization
upon the same that the Agent in its discretion  elects to effect,  to the Senior
Debt  until  all of the  Senior  Debt  has  been  paid  in  full  in cash to the
satisfaction  of the Lenders and any commitment of the Agent to extend credit or
make other financial accommodations to any Borrower is terminated, rendering any
surplus to the Subordinated Parties if and to the extent permitted by law; and

            (c)  generally  to take  any  action  in  connection  with  any such
Insolvency Proceeding either in its own name or in the name of each Subordinated
Party (including without limitation,  voting on any plan of reorganization) that
the Subordinated Parties would be authorized to take, but for this Agreement, in
the event that the Agent  believes  such  action is  necessary  to  protect  its
interests  in the Senior Debt and under this  Agreement  and after first  giving
each Subordinated Party five (5) days' written notice of its intent to take such
action (to the  extent  such  notice is  practicable),  provided  that the Agent
agrees to permit such  Subordinated  Party to take  action on such  Subordinated
Party's own behalf in connection with any such



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<PAGE>

Insolvency   Proceeding  as  may  be  necessary  to   reasonably   protect  such
Subordinated Party's interests,  as long as such action is not contrary to or in
conflict  with the  actions  and  interests  of the Agent and such  Subordinated
Party's  interests  are always in second  position  to the  Senior  Debt and the
Senior Lien.

In no event  shall the holder or  holders  of the  Senior  Debt be liable to any
Subordinated  Party for any failure to prove the Subordinated  Fees, to exercise
any right with  respect  thereto  or to  collect  any sums  payable  thereon.  A
distribution  made under this Agreement to holders of Senior Debt that otherwise
would have been made to  Subordinated  Parties is not, as between the Borrowers,
or either of them, its other creditors and any Subordinated  Party, a payment by
the  Borrowers on the Agent,  it being  understood  that the  provisions of this
Agreement  are solely for the purpose of  defining  the  relative  rights of the
Subordinated  Parties,  on the one hand,  and the Senior Debt on the other hand.
Each  Subordinated  Party  represents  that such  Subordinated  Party  shall not
assign,  participate,  pledge, encumber or transfer any of the Subordinated Fees
or any interest  therein until the Senior Debt is repaid in full in cash and the
Commitments are terminated. The power-of-attorney granted hereby is coupled with
an interest and shall be irrevocable.

      5. Duration and Termination.  This Agreement shall constitute a continuing
agreement  of  subordination,  and shall  remain in  effect  until  indefeasible
payment in full in cash to the  satisfaction  of the  Lenders of the Senior Debt
and  termination of the  Commitments.  The holder or holders of Senior Debt may,
without  notice to any  Subordinated  Party  extend or continue  credit and make
other  financial  accommodations  to or for  the  account  of the  Borrowers  in
reliance upon this Agreement.  The obligations of each Subordinated  Party under
this Agreement shall continue to be effective, or be reinstated, as the case may
be, if at any time any  payment in respect of any Senior  Debt is  rescinded  or
must  otherwise  be restored or returned by a holder of Senior Debt by reason of
any  Insolvency  Proceeding  or as a result of the  appointment  of a  receiver,
intervenor or conservator  of, or trustee or similar  officer for, the Borrowers
or any substantial part of any Borrower's property, or otherwise,  all as though
such payment had not been made.

      6. Subordinated Party's Waivers. All of the Senior Debt shall be deemed to
have been made or incurred in reliance upon this  Agreement.  Each  Subordinated
Party  expressly  waives  all  notice  of the  acceptance  by the  Agent  of the
subordination  and other  provisions of this Agreement and all other notices not
specifically  required pursuant to the terms of this Agreement  whatsoever,  and
each  Subordinated  Party  expressly  consents to reliance by the Agent upon the
subordination and other agreements as herein provided.  Each Subordinated  Party
agrees that the Agent has not made warranties or representations with respect to
the due execution,  legality,  validity,  completeness or  enforceability of the
Senior Loan  Agreement  and other Loan  Documents or the  collectibility  of the
obligations thereunder, that Agent shall be entitled to manage and supervise its
loans in accordance with applicable law and its usual  practices,  modified from
time to time as it deems appropriate under the circumstances, and that the Agent
shall  not  have  any  liability  to  such  Subordinated  Party  for,  and  such
Subordinated Party waives any claim (except with respect to willful  misconduct)
that such Subordinated Party may now or hereafter have against Agent arising out
of (i) any and all  actions  that the Agent  takes or omits to take  (including,
without  limitation,  actions  with  respect  to  the  creation,  perfection  or
continuation  of liens or  security  interests  in the Senior Debt or the Senior
Lien,  actions with respect to the  occurrence  of an Event of Default,  actions
with respect to the foreclosure  upon,



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sale,  release,  or depreciation  of, or failure to realize upon, the Collateral
and actions with respect to the  collection  of any claim for all or any part of
the Senior  Debt from any account  debtor,  guarantor  or any other  party) with
respect  to the  documents  regarding  the  Senior  Debt or any other  agreement
related  thereto or to the collection of the Senior Debt or the valuation,  use,
protection  or release of the  Collateral  and/or other  security for the Senior
Debt, (ii) the Agent's election,  in any proceeding  instituted under Chapter 11
of  Title 11 of the  United  States  Code  (11  U.S.C.  ss.  101 et  seq.)  (the
"Bankruptcy  Code"), of the application of Section  1111(b)(2) of the Bankruptcy
Code, and/or (iii) any making of loans to, or grant of a security interest under
Section 364 of the Bankruptcy Code by, the Borrowers as debtors-in-possession.

      7. Waiver of Marshaling;  No Offset.  Each Subordinated  Party agrees that
the Agent shall have no obligation to marshal any part of the  Collateral or any
such other property,  instruments,  documents,  agreements or guaranties  before
enforcing  its rights  against  any other part of the  Collateral  or its rights
herein as against such Subordinated  Party. In the event such Subordinated Party
is or becomes indebted to any Borrower, including, without limitation, under any
documents or instruments  evidencing the  Subordinated  Fees, each  Subordinated
Party agrees that it shall pay such  indebtedness  in accordance  with its terms
and shall not deduct from or set off against any amounts  owed to such  Borrower
any amounts such Borrower claims are due to it with respect to the  Subordinated
Fees.

      8. No Contest of  Security  Interest.  Each  Subordinated  Party shall not
contest  the  validity,  perfection  or  enforceability  of any lien or security
interest  granted  to the Agent by any  Borrower,  and each  Subordinated  Party
agrees to  cooperate  in the  defense of any  action  contesting  the  validity,
perfection or enforceability of such liens or security interests.

      9.  Subordination  Not Affected,  Etc.  Nothing in this Agreement shall be
construed as affecting or in any way limiting the extension of new or additional
financial  accommodation  by the  Lenders  to the  Borrowers  and the  terms and
conditions   hereof   shall   apply  to  such  new  and   additional   financial
accommodations.  Notwithstanding the preceding sentence or anything contained in
this Agreement to the contrary,  none of the provisions of this Agreement  shall
be deemed or construed to  constitute a commitment  or an obligation on the part
of the Lenders to make any future loans,  advances or other extensions of credit
or financial accommodation to the Borrowers. Each Subordinated Party understands
and agrees that all accrued  interest,  charges,  expenses,  attorneys' fees and
other  liabilities  and  obligations  under  the  Senior  Loan  Agreement  shall
constitute  part of the Senior  Debt,  and  nothing in this  Agreement  shall be
construed as affecting  or in any way  limiting  any  indulgence  granted by the
Lenders with respect to any existing  financial  accommodation to the Borrowers.
The  subordinations  effected,  and the  rights  created,  hereby  shall  not be
affected  by (a)  any  amendment  of or any  addition  of or  supplement  to any
instrument,  document or agreement relating to the Senior Debt, (b) any exercise
or non-exercise of any right,  power or remedy under or in respect of the Senior
Debt or any instrument, document or agreement relating thereto, (c) the release,
sale, exchange or surrender,  in whole or in part, of any part of the Collateral
or any  additional  collateral to which the Agent may become  entitled,  (d) any
release of any guarantor of or pledgor  securing the Senior Debt or any security
for such pledge or guaranty, or (e) any waiver,  consent,  release,  indulgence,
extension, renewal, modification, delay or other action, inaction or omission in
respect of the Senior Debt or any  instrument,  document or  agreement  relating
thereto or any security therefor or pledge or guaranty  thereof,  whether or not
each  Subordinated  Party  shall  have had  notice  or



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<PAGE>

knowledge of any of the  foregoing and  regardless of whether each  Subordinated
Party shall have consented or objected  thereto.  Any provision of any document,
instrument  or  agreement  evidencing,  securing  or  otherwise  relating to the
Subordinated  Fees  purporting  to limit or restrict  in any way any  Borrower's
ability  to enter  into any  agreement  with the  Agent to amend or  modify  any
document, instrument or agreement evidencing,  securing or otherwise relating to
the Senior Debt shall be deemed of no force or effect  until the Senior Debt has
been  repaid  in  full  in  cash  to the  satisfaction  of the  Lenders  and the
Commitments have been terminated.

      10. Voided Payments. Notwithstanding anything herein that may be construed
to the contrary, to the extent that any Borrower makes any payment on the Senior
Debt  which,  within  twelve  (12)  months  of the  date  of  such  payment,  is
subsequently invalidated,  declared to be fraudulent, avoidable or preferential,
set aside or is required to be repaid to a trustee, receiver, the estate of such
Borrower or any other  party under any  bankruptcy  act,  state or Federal  law,
common law or equitable cause (such payment being  hereinafter  referred to as a
"Voided Payment"),  then, to the extent of such Voided Payment,  that portion of
the Senior Debt that had been previously  satisfied by such Voided Payment shall
be revived and  continue in full force and effect as if such Voided  Payment had
never been made.  In the event that a Voided  Payment is sought to be  recovered
from the Agent or any other Lender under the Senior Loan Agreement, an "Event of
Default" under the Senior Loan Agreement shall be deemed to have occurred and to
be  continuing  from the date of such recovery from the Agent or any such Lender
of such Voided Payment until the full amount of such Voided Payment is fully and
finally  restored to the Agent or such Lender and until such time the provisions
of this Agreement shall be in full force and effect.

      11. Violation of Agreement by Borrowers.  Each Borrower hereby consents to
this Agreement,  agrees to abide by the terms hereof, agrees to make no payments
or distributions contrary to the terms and provisions hereof and to do every act
and thing necessary to carry out such terms and provisions. Each Borrower agrees
that  should it make any  payment  in  contravention  of any  provision  of this
Agreement the maturity of said Senior Debt may be accelerated in accordance with
the terms of the Senior Loan Agreement.

      12. Waiver.  Irrespective of the due date of any of the Subordinated Fees,
each Subordinated Party hereby expressly waives (except as expressly provided by
Section  2(b)  hereof)  any and all  rights to payment  by any  Borrower  of the
Subordinated  Fees prior to  repayment  in full in cash of the  Senior  Debt and
termination of the Commitments.

      13. Immediate Effect.  This Agreement shall be effective  immediately upon
its  execution  by each of the  parties  hereto,  and  there  are no  conditions
precedent or subsequent to the effectiveness of this Agreement.

      14.  Inducement.  As an inducement to, and part of the consideration  for,
the Lenders' extension of credit to the Borrowers, which each Subordinated Party
and the Borrowers  acknowledge that the Agent and the Lenders would be unwilling
to do without  this  Agreement,  each  Subordinated  Party  agrees,  among other
things,  (i) to subordinate the  Subordinated  Lien, if any, to the Senior Lien,
(ii) to  subordinate  the  Subordinated  Fees to the Senior  Debt,  and (iii) to
forebear from exercising any creditor's  remedy or taking any action against any
Borrower upon



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<PAGE>

any of its obligations to each Subordinated Party until the Senior Debt has been
paid in full in cash to the  satisfaction  of the Lenders and termination of the
Commitments.

      15.  Successors  and Assigns:  Continuing  Effect,  etc. This Agreement is
being  entered  into for the benefit of, and shall be binding  upon,  the Agent,
each  Subordinated  Party,  the Borrowers and their  respective  successors  and
assigns.  The Agent or any other  Lender  under the Senior  Loan  Agreement  may
assign or participate out to other parties any portion of its interest under the
Senior Debt and no such  assignee or  participant  shall be required to become a
signatory hereto.  Any assignee or transferee of each  Subordinated  Party shall
execute and deliver to the other parties  hereto an agreement  pursuant to which
they will become parties hereto as fully as if they were signatories  hereto and
providing  for the  effectiveness  of this  Agreement as to such  transferee  or
assignee and other parties.

      16.  Notification of Defaults.  Each Subordinated  Party shall immediately
give  written  notice to the Agent of a default  or an event of  default  by the
Borrowers  under the  Management  Agreement or with respect to the  Subordinated
Fees. Each Subordinated  Party  understands  that,  subject to any grace or cure
period  under such  Subordinated  Party's  agreements  with the  Borrowers,  any
default by the Borrowers under the Management  Agreement is,  automatically,  an
"Event of  Default"  of the  Borrowers  under the Senior  Debt.  Nothing in this
Agreement  shall be  interpreted to limit or restrict the right of the Agent and
each Subordinated  Party to waive any default under their respective  documents,
and each Subordinated  Party agrees that any waiver by each  Subordinated  Party
will be in writing and provided to the Agent.

      17.  Notices.  Any  notices,   consents,   requests,   demands  and  other
communications  required or permitted to be given  hereunder shall be in writing
and shall be deemed to be given to any party or parties (a) upon delivery to the
address of the party or parties  set forth  below if  delivered  in person or by
courier or if sent by certified or registered mail (return  receipt  requested),
or (b) upon  dispatch if  transmitted  by  telecopy or other means of  facsimile
transmission,  in any case to the party or parties at the  telecopy  numbers set
forth below:

      If to Borrower:         THE OLD EVANGELINE DOWNS, L.L.C.
                              c/o Peninsula Gaming Partners, LLC
                              P.O. Box 1750
                              400 E. Third Street
                              Dubuque, Iowa  52004
                              Attention:  Natalie Schramm
                              Fax No.     (563) 690-2190

                              and

                              THE OLD EVANGELINE DOWNS, L.L.C.
                              c/o Peninsula Gaming Partners, LLC
                              11100 Santa Monica Boulevard, 10th Floor
                              Los Angeles, California  90025
                              Attention:  M. Brent Stevens
                              Fax No.     (310) 914-6476



                                       8
<PAGE>

      with copies to:         MCGLINCHEY STAFFORD, PLLC
                               643 Magazine Street
                              New Orleans, Louisiana  70825
                              Attention:  Deborah Harkins, Esq.
                              Fax No.     (504) 596-2800

      If to the Subordinated
      Parties:                PENINSULA GAMING COMPANY, LLC
                              c/o Peninsula Gaming Partners, LLC
                              P.O. Box 1750
                              400 E. Third Street
                              Dubuque, Iowa  52004
                              Attention:  Natalie Schramm
                              Fax No.     (563) 690-2190

                              and

                              PENINSULA GAMING COMPANY, LLC
                              c/o Peninsula Gaming Partners, LLC
                              11100 Santa Monica Boulevard, 10th Floor
                              Los Angeles, California  90025
                              Attention:  M. Brent Stevens
                              Fax No.     (310) 914-6476

      If to Senior
      Lender:                 WELLS FARGO FOOTHILL, INC.
                              2450 Colorado Avenue, Suite 3000 West
                              Santa Monica, California  90404
                              Attention:  SFG
                              Fax No.     (310) 453-7442

      with additional
      copies to:              PAUL, HASTINGS, JANOFSKY & WALKER LLP
                              600 Peachtree Street, NE, Suite 2400
                              Atlanta, Georgia  30308
                              Attention:  Cindy J. K. Davis, Esq.
                              Fax No.     (404) 815-2424

Any party  hereto  may  designate  any other  address  or  telecopy  number,  as
applicable,  to which  any  notices  or other  communications  shall be given by
notice duly given hereunder;  provided,  however,  that any such notice of other
address or telecopy  number  shall be deemed to have been given  hereunder  only
when actually received by the party to which it is addressed.

      18. Amendments; Modifications. This Agreement may not be modified, altered
or amended  except by an  agreement  in writing  executed  by all of the parties
hereto.

      19.  Amendment of  Management  Agreement.  Except to the extent  expressly
provided in the Senior Loan Agreement, each Subordinated Party and the Borrowers
agree to  forbear from



                                       9
<PAGE>

(a) modifying,  altering or amending any term of the Management  Agreement,  and
(b) from granting (in the case of the  Borrowers)  and receiving (in the case of
any Subordinated Party) any collateral or other security of any nature to secure
the Subordinated Fees.

      20. Cost and Expenses of Enforcement.  Each  Subordinated  Party agrees to
pay  all  costs  and  expenses  including,   without   limitation,   attorneys',
paralegals' and other professionals' fees of every kind, paid or incurred by the
Agent in  enforcing  its  rights  hereunder  against  each  Subordinated  Party,
including,  but not  limited  to,  litigation  instituted  in a state or federal
court, as hereinafter provided (including proceedings under the Bankruptcy Code)
in endeavoring to collect the Senior Debt or in so enforcing this Agreement,  or
in defending against any defense, cause of action, counterclaim, setoff or cross
claim based on any act of  commission  or omission by the Agent with  respect to
the  Senior  Debt  promptly  on demand of the  Agent or other  person  paying or
incurring the same.

      21. Jurisdiction.  TO INDUCE THE AGENT AND THE LENDERS TO AFFORD FINANCIAL
ACCOMMODATIONS TO THE BORROWERS, EACH SUBORDINATED PARTY IRREVOCABLY AGREES THAT
ALL ACTIONS ARISING DIRECTLY OR INDIRECTLY AS A RESULT OR IN CONSEQUENCE OF THIS
AGREEMENT  SHALL BE INSTITUTED  AND LITIGATED ONLY IN COURTS HAVING SITUS IN THE
CITY OF NEW YORK, NEW YORK AND EACH  SUBORDINATED  PARTY HEREBY  CONSENTS TO THE
EXCLUSIVE  JURISDICTION  AND VENUE OF ANY STATE OR  FEDERAL  COURT  LOCATED  AND
HAVING ITS SITUS IN SAID CITY AND STATE. EACH  SUBORDINATED  PARTY HEREBY WAIVES
ANY OBJECTION BASED ON FORUM NON CONVENIENS,  AND EACH SUBORDINATED PARTY HEREBY
WAIVES  PERSONAL  SERVICE OF ANY AND ALL PROCESS.  THE PARTIES  CONSENT THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO THE AGENT OR EACH SUBORDINATED PARTY AT THE ADDRESS OF PGC SET FORTH
HEREIN IN THE MANNER  PROVIDED BY APPLICABLE  STATUTE,  LAW,  RULE OF COURT,  OR
OTHERWISE.

      22. Waiver of Claims;  Trial by Jury. EACH SUBORDINATED PARTY WAIVES EVERY
DEFENSE,  CAUSE OF ACTION,  COUNTERCLAIM OR SETOFF, THAT EACH SUBORDINATED PARTY
MAY NOW HAVE,  OR  HEREAFTER  MAY HAVE,  TO ANY ACTION BY THE AGENT IN ENFORCING
THIS  AGREEMENT AND RATIFIES AND CONFIRMS  WHATEVER THE AGENT MAY DO PURSUANT TO
THE TERMS HEREOF AND AGREES THAT THE AGENT SHALL NOT BE LIABLE FOR ANY ERRORS OF
JUDGMENT OR MISTAKE OF FACT OR LAW EXCEPT FOR WILLFUL  MISCONDUCT OF AGENT.  THE
AGENT AND EACH  SUBORDINATED  PARTY,  KNOWINGLY,  VOLUNTARILY AND  INTENTIONALLY
WAIVE IRREVOCABLY,  TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE RIGHT ANY ONE
OF THEM MAY HAVE TO TRIAL BY JURY WITH  RESPECT  TO ANY LEGAL  PROCEEDING  BASED
HEREON,  OR ARISING OUT OF, UNDER OR IN CONNECTION  WITH THIS  AGREEMENT AND ANY
AGREEMENT  CONTEMPLATED TO BE EXECUTED IN CONJUNCTION  HEREWITH OR ANY COURSE OF
CONDUCT OR COURSE OF DEALING, IN WHICH THE AGENT AND EACH SUBORDINATED PARTY ARE
ADVERSE PARTIES.  THIS PROVISION IS A MATERIAL  INDUCEMENT FOR THE AGENT TO MAKE
LOANS AND OTHER FINANCIAL ACCOMMODATIONS TO THE BORROWERS.



                                       10
<PAGE>

      23. Governing Law; Benefit of Agreement.  This Agreement shall be governed
by and construed in accordance  with the internal laws of the State of New York,
without  regard to the conflict of law,  principles  thereof other than Sections
5-1401  and  5-1402  of  the  New  York  General  Obligations  Law.  All  of the
understandings,  agreements,  covenants and representations contained herein are
solely for the benefit of the Agent and each  Subordinated  Party, and there are
no other persons who are intended to be benefited in any way  whatsoever by this
Agreement.

      24. Severability. In the event any one or more of the provisions contained
herein shall for any reason be held to be invalid,  illegal or  unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed as if such invalid,  illegal or  unenforceable  provision had
never been contained herein.

      25.  Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  each of which shall be deemed an original, and all of which taken
together shall constitute one and the same  instrument.  Delivery of an executed
counterpart of this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart hereof.

      26. Perfection and Release of Liens. Upon the Agent's  reasonable  request
(which request shall be in writing),  each  Subordinated  Party hereby agrees to
execute and deliver such documents,  instruments, lien releases, assignments and
financing statements and do such acts as may be necessary in order for the Agent
to establish and maintain a first,  valid, prior and perfected security interest
in the Collateral.  In the event of any sale or other  disposition of all or any
part of the Collateral prior to payment in full of the Senior Debt, upon request
by the Agent, each Subordinated Party shall execute releases,  assignments,  UCC
termination and other similar  agreements  that are reasonably  requested by the
Agent from time to time.  Until payment and  satisfaction  in full of the Senior
Debt,   each   Subordinated   Party  shall  cooperate  fully  in  releasing  the
Subordinated Lien, if in existence at such time, as soon as practicable upon the
reasonable request of the Agent.

              [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)




                                       11
<PAGE>

      IN WITNESS  WHEREOF,  the parties Dave executed  this  Agreement as of the
date first above written.

Borrowers:                          THE OLD EVANGELINE DOWNS, L.L.C.,
                                    a Louisiana limited liability company

                                    By:   /s/ Natalie Schramm
                                       --------------------------------
                                       Name:  Natalie Schramm
                                       Title: Chief Financial Officer


                                    THE OLD EVANGELINE DOWNS
                                    CAPITAL CORP., a Delaware corporation

                                    By:   /s/ Natalie Schramm
                                       --------------------------------
                                       Name:  Natalie Schramm
                                       Title: Chief Financial Officer


Subordinated Party:                 OED ACQUISITION, LLC,
                                    a Delaware limited liability company

                                    By:   /s/ Natalie Schramm
                                       --------------------------------
                                       Name:  Natalie Schramm
                                       Title: Chief Financial Officer


                                    PENINSULA GAMING COMPANY, LLC,
                                    a Delaware limited liability company

                                    By:   /s/ Natalie Schramm
                                       --------------------------------
                                       Name:  Natalie Schramm
                                       Title: Chief Financial Officer


Agent:                              WELLS FARGO FOOTHILL, INC.,
                                    a California corporation

                                    By:   /s/  Rhonda P. Noell
                                       --------------------------------
                                       Name:   Rhonda P. Noell
                                       Title:  S.V.P.