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                                                                    EXHIBIT 4.53

                               SECURITY AGREEMENT


                          Dated as of November 12, 1997


                                      From

                            HORSESHOE GAMING, L.L.C.,
                      A Delaware Limited Liability Company


                                   in Favor of

                       CANADIAN IMPERIAL BANK OF COMMERCE,

                                    as Agent

                                       and

                               CERTAIN COMMERCIAL
                              LENDING INSTITUTIONS

                                   as Lenders
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                               SECURITY AGREEMENT


         This SECURITY AGREEMENT dated as of November 12, 1997 (this
"Agreement"), is made by HORSESHOE GAMING, L.L.C., a Delaware limited liability
company with an office located at 4024 Industrial Road, Las Vegas, Nevada 89103
(the "Company"), in favor of the Lenders (as herein defined) and Canadian
Imperial Bank of Commerce ("CIBC"), in its capacity as agent for the Lenders (in
such capacity, the "Agent").

                                R E C I T A L S:

         WHEREAS, on October 10, 1995, the Company authorized the issuance of up
to $150,000,000 of its Senior Secured Credit Facility Notes due September 30,
1999 pursuant to a Senior Secured Credit Facility Note Purchase Agreement dated
as of October 10, 1995, between the Company and the Purchasers named therein
(the "Note Purchasers"), as amended prior to the date hereof (as so amended, the
"Senior Secured Credit Facility Note Purchase Agreement");

         WHEREAS, pursuant to that certain letter agreement dated as of the date
hereof among the remaining Note Purchaser and CIBC, the remaining Note Purchaser
assigned to CIBC all of the rights, duties and obligations of the Note
Purchasers in connection with the Senior Secured Credit Facility Note Purchase
Agreement and the security documents and other documents executed in connection
therewith;

         WHEREAS, pursuant to an Amended and Restated Credit Facility Agreement
of even date herewith, (the "Amended and Restated Credit Agreement"), the
Company, various financial institutions as are or may become parties thereto
(the "Lenders") and the Agent amended and restated the Senior Secured Credit
Facility Note Purchase Agreement in its entirety;

         WHEREAS, it is a condition precedent to the execution, delivery and
performance of the Amended and Restated Credit Agreement by the Lenders and the
Agent that the Company execute this Agreement on the terms, and subject to the
conditions set forth herein;

         NOW, THEREFORE, in consideration of, and in order to induce, the
execution, delivery and performance of the Amended and Restated Credit Agreement
by the Lenders and the Agent, including the extension of availability of credit
to the Company and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged by the Company, the Company hereby
agrees as follows:

         SECTION 1. TERMS AND DEFINITIONS.

         Section 1.1 Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
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         "Chattel Paper" has the meaning provided in the UCC.

         "Contract Rights" means all rights of the Company (including, without
limitation, all rights to payment) under each Contract.

         "Contracts" means all contracts between the Company and one or more
additional parties.

         "Copyrights" means any copyright registered with the United States
Copyright Office, as well as any application for a United States copyright
registration made with the United States Copyright Office.

         "Documents" has the meaning provided in the UCC.

         "Equipment" means any "equipment," as such term is defined in the UCC
and, in any event, shall include, but shall not be limited to, all machinery,
equipment, furnishings, movable trade fixtures and vehicles and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.

         "General Intangibles" has the meaning provided in the UCC and in any
event includes all claims, rights, powers, privileges, authority, options,
security interests, liens and remedies under any partnership agreement to which
the Company is a party or with respect to any partnership of which the Company
is a partner.

         "Goods" has the meaning provided in the UCC.

         "Instrument" has the meaning provided in Article 9 of the UCC.

         "Intercompany Notes" means a promissory note evidencing indebtedness of
a Subsidiary of the Company to the Company.

         "Inventory" means merchandise, inventory and goods, and all additions,
substitutions and replacements thereof, wherever located, together with all
goods, supplies, incidentals, packaging materials, labels, materials and any
other items used or usable in manufacturing, processing, packaging or shipping
same; in all stages of production--from raw materials through work-in-process to
finished goods--and all products and proceeds of whatever sort and wherever
located and any portion thereof which may be returned, rejected, reclaimed or
repossessed by the Agent, and shall specifically include all "inventory" as such
term is defined in the UCC.

         "Marks" means any trademarks and service marks registered in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any state thereof or any political subdivision thereof any
application for such trademarks and service marks, as well as any unregistered
marks used in the United States and trade dress, logos, designs, trade names,

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company names, business names, fictitious business names and other business
identifiers used in the United States.

         "Obligations" means any and all Obligations of the Company to the Agent
and the Lenders now or hereafter existing under the Notes, the Letters of
Credit, the Secured Hedging Obligations and the Amended and Restated Credit
Agreement, without regard to the Company's use of the proceeds of the Loans, the
Letters of Credit or the Secured Hedging Obligations, whether for principal,
premium, interest, fees, costs, expenses or otherwise, including, without
prejudice to the generality of the foregoing, the prompt payment of the Notes
and payment of interest and premium thereon at the times and in the manner
specified in the Notes and the Amended and Restated Credit Agreement, prompt
payment of amounts owing pursuant to the issuance of the Letters of Credit,
prompt payment of the Secured Hedging Obligations at the times and in the manner
specified in the documentation therefor and the payment of any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent and the
Lenders in enforcing any rights under the Notes, the Letters of Credit, the
Secured Hedging Obligations, the Amended and Restated Credit Agreement and this
Agreement.

         "Patents" means any patent registered with the United States Patent and
Trademark Office, as well as any application for a United States patent
registration made with the United States Patent and Trademark Office.

         "Pledged Stock" means the shares of capital stock described in Schedule
A hereto, as it may, from time to time, be supplemented in accordance with the
terms of the Agreement.

         "Proceeds" shall mean all "proceeds", as such term is defined in the
UCC and, in any event, shall mean and include, but not be limited to (i) any and
all proceeds of any insurance, indemnity, warranty or guarantee payable to the
Company from time to time with respect to any of the Pledged Collateral (as
defined in Section 3), (ii) any and all payments (in any form whatsoever) made
or due and payable to the Company from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Pledged Collateral by any governmental authority, bureau or agency
(or any Person acting under color of governmental authority) and (iii) any and
all other amounts from time to time paid or payable under or in connection with
any of the Pledged Collateral.

         "Receivables" means any "account" as such term is defined in the UCC,
and, in any event, shall include, but shall not be limited to, all rights to
payment for goods sold or leased or services performed, whether now in existence
or arising from time to time hereafter, including, without limitation, such
rights evidenced by an account, note, contract, security agreement, chattel
paper, or other evidence of indebtedness or security, together with (i) all
security pledged, assigned, hypothecated or granted to or held to secure the
foregoing; (ii) all right, title and interest in and to any goods, the sale of
which gave rise thereto; (iii) all guarantees, endorsements and indemnifications
on, or of, any of the foregoing; (iv) all powers of attorney for the execution

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of any evidence of indebtedness or security or other writing in connection
therewith; (v) all books, records, ledger cards, and invoices relating thereto;
(vi) all evidences of the filing of financing statements and other statements
and the registration of other instruments in connection therewith and amendments
thereto, notices to other creditors or secured parties, and certificates from
filing or other registration officers; (vii) all credit information reports and
memoranda relating thereto; and (viii) all other writings related in any way to
the foregoing.

         "UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York.

         Section 1.2 Additional Terms. All other capitalized terms used herein
but not otherwise defined herein shall have the respective meanings ascribed
thereto in the Amended and Restated Credit Agreement.

         Section 1.3 Action by the Agent or the Lenders. Whenever any action is
required or permitted to be taken by the Agent or the Lenders, except for such
action which is expressly provided herein to be taken by an individual Lender or
by all the Lenders, such action, including, without limitation, in connection
with the exercise of any remedy granted herein, shall be taken by the Agent,
acting at the direction of Majority Lenders or the Required Lenders, as provided
in the Amended and Restated Credit Agreement.

         SECTION 2. GRANT OF SECURITY.

         Section 2.1 Pledged Collateral.

         (a) The Company, to secure its punctual payment and performance
hereunder in respect of the Obligations hereby pledges, assigns and transfers
unto the Agent, and does hereby grant to the Agent, for the benefit of the
Lenders, a continuing security interest of first priority in, all of the right,
title and interest of the Company in, to and under all of the following, whether
now existing or hereafter from time to time acquired: (i) all cash, accounts,
deposits, securities and insurance policies now or at any time hereafter in the
possession or under control of the Company or its respective bailees and any
interest therein, (ii) each and every Receivable, (iii) all Contract Rights
arising under all Contracts, and all equity and debt securities and other
interests in any and all Subsidiaries (other than Unrestricted Subsidiaries),
(iv) all Inventory, (v) all Equipment, (vi) all Marks, together with the
registrations and right to all renewals thereof, and the goodwill of the
business of the Company symbolized by the Marks, (vii) all Patents and
Copyrights, and all reissues, renewals or extensions thereof, (viii) all
computer programs and all intellectual property rights therein and all other
proprietary information, (ix) (A) the indebtedness of the Company's Subsidiaries
to the Company; (B) all Intercompany Notes listed on Schedule A (as it may, from
time to time, be supplemented in accordance with the terms hereof) and all
promissory notes which are pledged to the Agent; and (C) all shares of capital
stock described in Schedule A (as it may, from time to time, be supplemented in
accordance with the terms hereof) and all other shares of capital stock or other

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equity interests, (x) all books and records, customer lists, ledger cards,
credit files, print-outs, and other materials and records pertaining to any of
the foregoing, whether now owned or hereafter acquired, (xi) all other Goods,
General Intangibles, investment property (as defined in Article 9 of the UCC),
Chattel Paper, Documents and Instruments, (xiii) all other personal property of
the Company, whether now owned or hereafter acquired, (xiv) all documents of
title evidencing or issued with respect to any of the foregoing, and (xv) all
Proceeds and products of any and all of the foregoing (collectively, the
"Pledged Collateral").

         (b) The Pledged Collateral secures the payment of all obligations of
every kind and character now or hereafter existing (whether matured or
unmatured, contingent or liquidated) of the Company under Section 2 with respect
to the Obligations and under each other provision of this Agreement (in each
case as this Agreement hereafter may be amended, supplemented or otherwise
modified from time to time), whether for principal, interest, premium, fees,
expenses, reimbursement, indemnification or otherwise.

         (c) The Intercompany Notes and the certificates representing the
Pledged Stock listed on Schedule A shall be delivered to the Agent
contemporaneously herewith together with appropriate undated note powers and
stock powers duly executed in blank. Neither the Agent nor any Lender shall be
obligated to preserve or protect any rights with respect to the Intercompany
Notes or the Pledged Stock or to receive or give any notice with respect thereto
whether or not the Agent or any Lender is deemed to have knowledge of such
matters.

         (d) The assignments and security interests under this Agreement granted
to the Agent shall not relieve the Company from the performance of any term,
covenant, condition or agreement on the Company's part to be performed or
observed under or in respect of the Pledged Collateral or from any liability to
any Person under or in respect of any of such Pledged Collateral or impose any
obligation on the Agent to perform or observe any such term, covenant, condition
or agreement on the Company's part to be so performed or observed or impose any
liability on the Agent for any act or omission on the part of the Company
relative thereto or for any breach of any representation or warranty on the part
of the Company contained in this Agreement or any other Loan Document, or in
respect of the Pledged Collateral or made in connection herewith or therewith.
The obligations of the Company contained in this paragraph shall survive the
termination of this Agreement and the discharge of the Company's other
obligations hereunder.

         SECTION 3. OBLIGATIONS UNCONDITIONAL.

         The obligations of the Company set forth in this Agreement and all
rights of the Agent and the Lenders shall be absolute and unconditional, shall
not be subject to any counterclaim, set-off, deferment, reduction or diminution
of any obligation or defense of any kind or nature (other than full,
indefeasible and timely payment of the Obligations) based upon any claim the
Company or any other party may have against the Agent, the Lenders, the Company,
any of their Affiliates, or any other party, shall remain in full force and
effect without regard to, and

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shall not be released, discharged or in any way affected by, any circumstance or
condition whatsoever (whether or not the Agent, the Lenders, or the Company
shall have any knowledge or notice thereof).

         SECTION 4. APPOINTMENT AS ATTORNEY-IN-FACT.

         (a) Effective upon the occurrence and during the continuance of an
Event of Default, the Company hereby irrevocably constitutes and appoints the
Agent, its agents, representatives and designees, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Company and in the name of the
Company or in its own name, from time to time in the Agent's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement
(except, without limiting the generality of the foregoing, that the Agent shall
not ratify any of its own actions pursuant to this power of attorney), and,
without limiting the generality of the foregoing, hereby gives the Agent in its
sole discretion the power and right, on behalf of the Company, without notice to
or assent by the Company, to do the following:

                  (i) to ask, demand, collect, receive and give acquittances and
         receipts for any and all monies due and to become due under any Pledged
         Collateral and, in the name of the Company or its own name or
         otherwise, to take possession of and endorse and collect any checks,
         drafts, notes, acceptances or other instruments for the payment of
         monies due under any Pledged Collateral and to file any claim or to
         take any other action or proceeding in any court of law or equity or
         otherwise deemed appropriate by the Agent for the purpose of collecting
         any and all such monies due under any Pledged Collateral whenever
         payable and to file any claim or to take any other action or proceeding
         in any court of law or equity or otherwise deemed appropriate by the
         Agent for the purpose of collecting any and all such moneys due under
         any Pledged Collateral whenever payable; and

                  (ii) to pay or discharge taxes, liens, security interests or
         other encumbrances levied or placed on or threatened against the
         Pledged Collateral.

      The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof and acknowledges that this power of attorney
is a power coupled with an interest and shall be irrevocable.

         (b) The powers conferred on the Agent hereunder are solely to protect
the Agent's and the Lenders' interests in the Pledged Collateral and shall not
impose any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither the Agent nor any of its

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agents, representatives or designees shall be responsible to the Company for any
act or failure to act, except for any act involving their gross negligence or
willful misconduct.

         (c) Nothing in this Agreement shall authorize the Agent, prior to an
Event of Default (i) to participate in the management of or to operate any
facility owned or operated by the Company or (ii) to control decisions regarding
the disposal or other management of hazardous substances generated, used or
handled by the Company or any of its Affiliates.

         SECTION 5. WAIVERS.

         (a) The Company hereby irrevocably waives promptness, diligence, notice
of acceptance, nonpayment, nonperformance, dishonor or protest and any other
notice with respect to any of the Obligations and this Agreement and any other
circumstance which might otherwise constitute a legal or equitable discharge,
release or defense of a guarantor or surety or which might otherwise limit the
obligations of the Company under this Agreement. The Company hereby irrevocably
waives any requirement that the Agent or the Lenders protect, secure, perfect or
insure any Lien on the Pledged Collateral or exhaust any right or take any
action against the Company, or any other Person or mitigate the damages
resulting from default by the Company under the Amended and Restated Credit
Agreement or any Secured Hedging Obligations, or by the Company under this
Agreement.

         (b) The Company hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim based upon, arising out of, or relating
to, this Agreement, the transactions contemplated by the Amended and Restated
Credit Agreement or the Secured Hedging Obligations or the actions of the Agent
and the Lenders in the negotiation, administration, performance or enforcement
thereof. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including, without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims. The
Company acknowledges that this waiver is a material inducement to the Agent and
the Lenders to enter into a business relationship with the Company and its
Subsidiaries and Affiliates and that the Agent and the Lenders have each already
relied on this waiver in entering into this Agreement and the Loan Documents and
that each will continue to rely on this waiver in their related future dealings.
The Company further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.

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         (c) The Company hereby irrevocably waives, until the end of the term of
this Agreement as set forth in Section 10.9, any claim or other rights that it
may now or hereafter acquire against the Company or any other guarantor of the
obligations of the Company that arise from the existence, payment, performance
or enforcement of the Obligations, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Agent or the Lenders against
the Company or any other guarantor or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from the Company or
any other guarantor directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security on account of such claim,
remedy or right. If any amount shall be paid to the Company in violation of the
preceding sentence at any time prior to the payment in full in cash of the
Obligations, such amount shall be held in trust for the benefit of the Agent and
the Lenders and shall forthwith be paid to the Agent to be credited and applied
to the Obligations, whether matured or unmatured, in accordance with the terms
of this Agreement and the Amended and Restated Credit Agreement or to be held as
Pledged Collateral for any Obligations thereafter arising. The Company
acknowledges it will derive substantial economic benefits from the financing
arrangements contemplated by the Amended and Restated Credit Agreement and the
Secured Hedging Obligations and that the waiver set forth in this subsection (c)
is knowingly made in contemplation of such benefits.

         SECTION 6. REPRESENTATIONS OF THE COMPANY. The Company hereby
represents and warrants to the Agent and the Lenders as follows:

         Section 6.1 Location. The chief place of business and chief executive
office of the Company is located at the address first specified above for the
Company.

         Section 6.2 Security Interest. This Agreement and the pledge and
delivery of the Pledged Collateral pursuant hereto constitute a valid and
continuing Lien on the Pledged Collateral and create a valid and perfected first
priority security interest in the Pledged Collateral in favor of the Agent
securing the payment of the Obligations, and all filings and other actions
necessary or desirable to perfect and protect such security interest have been
duly taken.

         SECTION 7. COVENANTS. The Company hereby covenants and agrees that on
and after the date hereof, so long as this Agreement shall remain in effect, it
shall comply with the following provisions:

         Section 7.1 Continuous Perfection. The Company shall not change its
name, identity or structure in any manner which might make any financing or
continuation statement filed hereunder misleading within the meaning of Section
9-402(7) of the UCC (or any other then applicable provision of the UCC) unless
the Company shall have given the Agent and the Lenders at least 90 days' prior
written notice thereof of its intention to so change and shall

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<PAGE>   10
have taken all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary, or reasonably requested by the Agent and the Lenders, to
amend such financing or continuation statement so that it is not misleading.

         Section 7.2 Amendment of Organization Documents. The Company shall not
amend its Limited Partnership Agreement in a manner that affects adversely the
Agent or the Lenders.

         Section 7.3 Further Assurances.

         (a) From time to time, at the expense of the Company, the Company will
promptly execute and deliver all further instruments and documents and take all
further action, that may be necessary or desirable, or that the Agent or the
Lenders reasonably may request, in order to perfect and protect any pledge,
assignment or security interest granted or purported to be granted hereby or to
enable the Agent or the Lenders to exercise and enforce their rights and
remedies hereunder with respect to any Pledged Collateral. Without limiting the
generality of the foregoing, the Company will execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Agent or the Lenders may
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.

         (b) The Company hereby authorizes the Agent or the Lenders to file one
or more financing or continuation statements, and assignments thereof and
amendments thereto, relating to all or any part of the Pledged Collateral
without the signature of the Company where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Pledged Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.

         (c) The Company will furnish to the Agent and the Lenders from time to
time statements and schedules further identifying and describing the Pledged
Collateral and such other reports in connection with the Pledged Collateral as
the Agent, the Lenders or the Company reasonably may request, all in reasonable
detail.

         (d) If the Company shall acquire in any manner any additional
Intercompany Notes, the Company shall forthwith (and without the necessity for
any request or demand by the Agent) deliver such Intercompany Notes to the Agent
in the same manner as described in Section 1.1(c), together with a supplement to
Schedule A reflecting the addition of such additional Intercompany Notes,
whereupon such additional Intercompany Notes shall be deemed to be pledged
hereunder for all purposes hereunder. If the Company shall at any time acquire
any additional shares of the capital stock of any class of Pledged Stock,
whether such acquisition shall be by purchase, exchange, reclassification,
dividend, or otherwise, or acquire any new shares of capital stock of any newly
formed or acquired Subsidiary (as defined under and to the extent permitted by
the

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Amended and Restated Credit Agreement), the Company shall forthwith (and without
the necessity for any request or demand by the Agent) deliver such shares to the
Agent in the same manner as described in Section 1.1(c), together with a
supplement to Schedule A reflecting the addition of such additional shares of
stock, whereupon such additional shares of stock shall be deemed to be Pledged
Stock for all purposes hereunder. The Company will hold in trust for the Agent
upon receipt and immediately thereafter deliver to the Agent any instrument
evidencing or constituting Pledged Collateral (except, so long as no Event of
Default has occurred and is continuing, ordinary cash dividends, if any, paid
with respect to the Pledged Stock and payments in respect of the Intercompany
Notes, in each case as permitted by the Amended and Restated Credit Agreement).

         SECTION 8. EVENTS OF DEFAULT; REMEDIES.

         Section 8.1 Events of Default Defined. If any Event of Default shall
occur and be continuing (for any reason whatsoever and whether it shall be
voluntary or involuntary or by operation of law or otherwise), then (i) all
payments received by the Company under or in connection with any of the Pledged
Collateral shall be held by the Company in trust for the Agent and the Lenders,
shall be segregated from other funds of the Company and shall forthwith upon
receipt by the Company be turned over to the Agent for the ratable benefit of
the Lenders in the same form as received by the Company (duly endorsed by the
Company to the Agent, if required); (ii) any and all such payments so received
by the Lenders (whether from the Company or otherwise) will be applied by the
Lenders against their Obligations; and (iii) any amount remaining after payment
in full of all of the Obligations shall be paid over to the Company.

         Section 8.2 Remedies.

         (a) If any Event of Default shall occur and be continuing, the Agent
and the Lenders may exercise in addition to all other rights and remedies
granted to the Agent and the Lenders in this Agreement, and under any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the UCC as applicable to the
Pledged Collateral and all the rights granted to the Agent and the Lenders.
Without limiting the generality of the foregoing, the Company expressly agrees
that in any such event the Agent and the Lenders, without demand of performance
or other demand, advertisement or notice of any kind (except the notice,
specified below of time and place of public or private sale) to or upon the
Company or any other Person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith assume, collect,
receive, appropriate and realize upon the Pledged Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Pledged Collateral
(or contract to do so), or any part thereof, in one or more parcels at a public
or private sale or sales, at any exchange broker's board or at its offices or
elsewhere at such prices as the Agent may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Agent and the
Lenders

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<PAGE>   12
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of said Pledged Collateral so sold, free of any right or equity of
redemption, which equity of redemption the Company hereby releases, and in lieu
of payment of such actual purchase price may set-off the amount of such purchase
price against the Obligations then owing to such purchaser. The Company further
agrees, at the Agent's request, to assemble the Pledged Collateral and make it
available to the Agent at places which the Agent shall reasonably select,
whether at the Company's premises or elsewhere. The Agent and the Lenders shall
retain the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safe keeping
or otherwise of any or all of the Pledged Collateral or in any way relating to
the rights of the Agent and the Lenders hereunder, including reasonable
attorneys' fees and legal expenses, for application to the payment in whole or
in part of the Obligations, and only after so retaining such net proceeds and
after the payment by the Agent and the Lenders of any other amount required by
any provision of law, including Section 9-504 (1)(c) of the UCC, need the Agent
and the Lenders account for the surplus, if any, to the Company. To the extent
permitted by applicable law, the Company waives all claims, damages and demands
against the Agent and the Lenders arising out of the repossession, retention or
sale of the Pledged Collateral, except to the extent that such claims, damages
and demands arise out of the willful misconduct or gross negligence of the Agent
or the Lenders.

         (b) The Company also agrees to pay all costs of the Agent and the
Lenders, including reasonable attorneys' fees, incurred with respect to the
collection of any of the Obligations and the enforcement and protection of any
of the rights of the Agent and the Lenders hereunder. All costs and expenses
incurred by each of the Agent and the Lenders with respect to the enforcement,
collection and protection of the Agent's and the Lenders' interest in the
Pledged Collateral shall be additional Obligations of the Company to the Agent
and the Lenders payable on demand, and secured by the Pledged Collateral.

         (c) Any notice required to be given by the Agent of a sale, lease or
other disposition or other intended action by it with respect to any of the
Pledged Collateral which is deposited in the United States mails, postage
prepaid and duly addressed to the Company, at least 10 days prior to such
proposed action, shall constitute fair and reasonable notice to the Company of
any such action. The net proceeds realized by the Agent and the Lenders upon any
such sale or other disposition, after deduction for the expense of retaking,
holding, preparing for sale, selling or the like and the reasonable attorneys'
fees and legal expenses incurred by the Agent and the Lenders in connection
therewith, shall be applied as provided herein toward satisfaction of the
Obligations. The Agent and the Lenders shall account to the Company for any
surplus realized upon such sale or other disposition. The commencement of any
action, legal or equitable, or the rendering of any judgment or decree for any
deficiency shall not affect the Agent's and the Lenders' security interest in
the Pledged Collateral until the Obligations are fully paid. The Company agrees
that the Agent and the Lenders have no obligation to preserve their rights to
the Pledged Collateral against any other parties. The

                                      -11-
<PAGE>   13
Agent and the Lenders shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. The Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

         Section 8.3 Limitation on the Agent's and the Lenders' Duty in Respect
of Pledged Collateral. Except as otherwise provided herein, under no
circumstances whatsoever shall the Agent or the Lenders be deemed to assume any
responsibility for, or obligation or duty with respect to, any part or all of
the Pledged Collateral, of any nature or kind whatsoever, or any matter or
proceedings arising out of or relating thereto. The Agent and the Lenders shall
not be required to take any action of any kind to collect or protect any
interest in the Pledged Collateral, including, but not limited to, any action
necessary to preserve the rights of the Agent and the Lenders, and the Company
against prior parties to any of the Pledged Collateral. The Agent and the
Lenders shall not be liable or responsible in any way for the safe keeping, care
or custody of any of the Pledged Collateral if the Pledged Collateral is
accorded the same treatment and level of care as their own property, for any
loss or damages thereto, for any diminution in the value thereof, for any act or
default of any agent or bailee of the Agent, the Lenders, the Company or of any
carrier, forwarding agency or other person whomsoever or for the collection of
any proceeds, except to the extent that the selection of such agent, bailee,
carrier or other person involved gross negligence or willful misconduct. The
Company hereby releases the Agent and the Lenders from any claims, causes of
action and demands at any time arising out of or with respect to this Agreement
or the Obligations and any actions taken or omitted to be taken by the Agent and
the Lenders with respect thereto, and the Company hereby agrees to hold the
Agent and the Lenders harmless from and with respect to any and all such claims,
causes of action and demands. The Company hereby releases the Agent and the
Lenders from any claims, causes of action and demands arising under 42 U.S.C.
Section 9607 or 9613 or similar provisions of state or local law.

         Section 8.4 Remedies Cumulative. No remedy conferred upon the Agent and
the Lenders is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.

         Section 8.5 Remedies Not Waived. No course of dealing between the
Company and the Agent and the Lenders and no delay or failure in exercising any
rights hereunder in respect thereof shall operate as a waiver of any of the
rights of the Agent and the Lenders.

         SECTION 9. AMENDMENT AND WAIVER. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Company
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Agent, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given and shall
not be deemed to waive any other breach hereunder; provided, however, that no
amendment, waiver or consent, unless in writing and signed by all

                                      -12-
<PAGE>   14
the Lenders, shall (a) limit the liability of the Company hereunder, (b)
postpone any date fixed for payment hereunder or (c) change the number of
Lenders required to take any action hereunder.

         No failure on the part of the Agent or the Lenders to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other, or
further exercise thereof or the exercise of any other right.

         SECTION 10. MISCELLANEOUS.

         Section 10.1 Expenses. The Company will pay the Agent and the Lenders
for any and all sums, costs and expenses which the Agent or the Lenders may pay
or incur by reason of defending, protecting or enforcing the security interest
herein granted or the priority hereof, enforcing payment of the Obligations,
discharging any Lien or claim against the Pledged Collateral or any part thereof
or, if the Company fails to perform or comply with any of its agreements herein,
performing or complying with such terms. Such sums, costs and expenses shall
include, without limitation, all court costs, collection charges, travel and
reasonable attorneys' fees (including fees and expenses incident to the
enforcement of payment of any obligations of the Company by any action or
participation in, or connection with, a case or proceeding under Chapters 7, 11
or 13 of the Bankruptcy Code). All sums, costs and expenses of the Agent and the
Lenders payable by the Company pursuant to this Agreement shall be payable by
the Company to the Agent and the Lenders on demand and shall constitute
Obligations secured by the Pledged Collateral.

         Section 10.2 Reliance on and Survival of Representations. All
agreements, representations and warranties of the Company herein and in any
certificates or other instruments delivered pursuant to this Agreement shall (a)
be deemed to be material and to have been relied upon by the Agent and the
Lenders, notwithstanding any investigation heretofore or hereafter made by the
Agent and the Lenders or on their behalf and (b) survive the execution and
delivery of this Agreement and of the Notes, and shall continue in effect so
long as any Note or Obligation is outstanding and thereafter as provided in
Sections 10 and 12.1.

         Section 10.3 Successors and Assigns; Transfers of the Notes. This
Agreement shall bind and inure to the benefit of, and be enforceable by, the
Company, the Agent, the Lenders, and their respective permitted successors and
assigns, and, in addition, shall inure to the benefit of, and be enforceable by,
each Person who shall from time to time be a holder of any of the Notes. The
Company may not assign its rights and obligations under this Agreement, except
pursuant to a reorganization permitted under the Amended and Restated Credit
Agreement. The Lenders may transfer the Notes (and any portion thereof) at any
time without the consent of the Company, subject to compliance with all
applicable Gaming Laws and state

                                      -13-
<PAGE>   15
and federal securities laws and the requirements of Section 9 of the Amended and
Restated Credit Agreement.

         Section 10.4 Notices. All notices and other communications provided for
in this Agreement shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, and addressed to:

         (a)      if to the Company:

                  HORSESHOE GAMING, L.L.C.
                  c/o Horseshoe Gaming, Inc.
                  4024 Industrial Road
                  Las Vegas, Nevada 89103

                  Attention: Paul Alanis

                  Telephone:  (702) 650-0080
                  Telecopy:  (702) 650-0081

                  with a copy to:

                  RIORDAN & MCKINZIE
                  695 Towne Center Drive
                  Suite 1500
                  Costa Mesa, California 92626

                  Attention: Jim Shnell, Esq.

                  Telephone:  (714) 433-2616
                  Telecopy:  (714) 699-5435

         (b) if to the Agent or the Lenders, at their respective addresses as
set forth in the Amended and Restated Credit Agreement or at such other address
as shall be provided to the Company in accordance to the terms of the Amended
and Restated Credit Agreement.

         Any such notice or communication shall be deemed to have been duly
given when delivered or telecopied and, if mailed, two days after deposit in the
U.S. mail as aforesaid.

         Section 10.5 Severability. If any term or provision hereof or the
application thereof to any circumstance, in any jurisdiction and to any extent,
shall be invalid or unenforceable, such term or such provision shall be
ineffective as to such jurisdiction to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable any remaining
terms and provisions hereof or the application of such term or provision to
circumstances other

                                      -14-
<PAGE>   16
than those as to which it is held invalid or unenforceable. To the fullest
extent permitted by applicable law, the parties hereto hereby waive any
provision of law which renders any term or provision hereof invalid or
unenforceable in any respect.

         Section 10.6 Governing Law. This Agreement and the Notes, the Letters
of Credit, the Secured Hedging Obligations and (unless otherwise provided) all
amendments, supplements, waivers and consents relating hereto or thereto shall
be governed by, and construed in accordance with, the internal laws of the State
of New York.

         Section 10.7 Forum and Jurisdiction. The Company represents and
warrants that it is not entitled to immunity from judicial proceedings and, for
purposes of any action, suit or other proceeding in respect of, or arising out
of or in connection with, this Agreement or any course of conduct, course of
dealing, statements or actions of the Company, the Agent or the Lenders related
thereto, the Company hereby submits and consents to the jurisdiction of the
courts of the State of New York and of the United States District Court for the
Southern District of New York, and the Company agrees that any such action, suit
or proceeding may be brought by the Agent or the Lenders in the Supreme Court of
the State of New York, New York County, or in the United States District Court
for the Southern District of New York, and the service of process may be made
upon the Company by mailing a copy of the summons and any complaint to the
Company by registered mail, at the address specified in Section 12.4. The
Company hereby waives and agrees not to assert, by way of motion or otherwise,
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of the above-named courts, that the action is brought in an
inconvenient forum or that the venue of the action is improper. The Agent and
the Lenders, nevertheless, may serve, process or commence any such action, suit
or proceeding in such other jurisdiction(s), and in such other manner as may be
permitted by applicable law. The methods of service of process specified in this
paragraph may be used in the alternative or together as the Agent and the
Lenders may see fit.

         Section 10.8 Headings. The headings in this Agreement are for
convenience only and shall not be construed as a part of this Agreement.

         Section 10.9 Term of Agreement. This Agreement and all agreements of
the Company contained herein shall continue in full force and effect and shall
not be discharged until such time as the Obligations shall be indefeasibly paid
or performed in full and all of the agreements of (a) the Company under the
Amended and Restated Credit Agreement and the Secured Hedging Obligations and
(b) the Company hereunder shall be fully paid or performed; provided, certain
provisions of this Agreement shall survive such termination as expressly set
forth herein.

                                      -15-
<PAGE>   17
         IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed delivered as of the date first above written.

                                     HORSESHOE GAMING, L.L.C.

                                     By Horseshoe Gaming, Inc.,
                                     Its Sole Manager


                                            By:________________________________
                                                  Name:  Walter J. Haybert
                                                  Title:  Treasurer

                                      -16-
<PAGE>   18
                                                        Horseshoe Gaming, L.L.C.

                                   SCHEDULE A


Pledged Stock

         1. Stock (10,000 shares) of Horseshoe G.P., Inc.

         2. Limited Partner Interest in Robinson Property Group L.P.
(uncertificated).

         3. Limited Partner Interest in New Gaming Capital Partnership
(uncertificated).

         4. Membership Interest in Horseshoe Ventures, LLC (uncertificated).


Intercompany Notes

         1. Horseshoe Entertainment Intercompany Note dated October 10, 1995, in
the amount of $82,000,000.

         2. Robinson Property Group L.P. Intercompany Note dated October 10,
1995, in the amount of $74,500,000.

         3. Horseshoe Ventures, LLC Intercompany Note dated October 20, 1995, in
the amount of $6,000,000.

         4. Horseshoe Entertainment Intercompany Note dated April 1, 1997, in
the amount of $168,000,000.

         5. Robinson Property Group L.P. Intercompany Note dated April 1, 1997,
in the amount of $50,500,000.

         6. Horseshoe Entertainment Intercompany Note dated June 25, 1997, in
the amount of $50,000,000.

         7. Robinson Property Group L.P. Intercompany Note dated June 25, 1997,
in the amount of $25,000,000.
<PAGE>   19
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                               Page
<S>                                                                                                            <C>
SECTION 1.         TERMS AND DEFINITIONS..........................................................................1
         Section 1.1       Definitions............................................................................2
         Section 1.2       Additional Terms.......................................................................4
         Section 1.3       Action by the Agent or the Lenders.....................................................4

SECTION 2.         GRANT OF SECURITY..............................................................................4
         Section 2.1       Pledged Collateral.....................................................................4

SECTION 3.         OBLIGATIONS UNCONDITIONAL......................................................................5

SECTION 4.         APPOINTMENT AS ATTORNEY-IN-FACT................................................................6

SECTION 5.         WAIVERS........................................................................................7

SECTION 6.         REPRESENTATIONS OF THE COMPANY.................................................................8
         Section 6.1       Location...............................................................................8
         Section 6.2       Security Interest......................................................................8

SECTION 7.         COVENANTS
         Section 7.1       Continuous Perfection..................................................................8
         Section 7.2       Amendment of Organization Documents....................................................9
         Section 7.3       Further Assurances.....................................................................9

SECTION 8.         EVENTS OF DEFAULT; REMEDIES...................................................................10
         Section 8.1       Events of Default Defined.............................................................10
         Section 8.2       Remedies..............................................................................10
         Section 8.3       Limitation on the Agent's and the Lenders' Duty in Respect of
                           Pledged Collateral....................................................................12
         Section 8.4       Remedies Cumulative...................................................................12
         Section 8.5       Remedies Not Waived...................................................................12

SECTION 9.         AMENDMENT AND WAIVER..........................................................................12

SECTION 10.        MISCELLANEOUS.................................................................................13
         Section 10.1      Expenses..............................................................................13
         Section 10.2      Reliance on and Survival of Representations...........................................13
         Section 10.3      Successors and Assigns; Transfers of the Notes........................................13
         Section 10.4      Notices...............................................................................14
         Section 10.5      Severability..........................................................................14
</TABLE>

                                       -i-
<PAGE>   20
<TABLE>
<CAPTION>
<S>              <C>                                                                                            <C>
         Section 10.6      Governing Law.........................................................................15
         Section 10.7      Forum and Jurisdiction................................................................15
         Section 10.8      Headings..............................................................................15
         Section 10.9      Term of Agreement.....................................................................15
</TABLE>

                                      -ii-