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                                                                   EXHIBIT 10.18



                                    AGREEMENT

        Agreement dated as of February 3, 1999 (this "Agreement"), by and among
Horseshoe Gaming, Inc., a Nevada corporation (the "Company"), Horseshoe Gaming,
L.L.C., a Delaware limited liability company (the "LLC"), and John M. Allen
("Allen" or the "Employee").

                                R E C I T A L S :

        WHEREAS, pursuant to an Employment Agreement, dated as of October 1,
1995, by and between Allen and the Company (the "Employment Agreement"), Allen
has served as Senior Vice President-Operations of the Company;

        WHEREAS, the Company acts as manager of the LLC, which is governed by
the Limited Liability Company Operating Agreement, dated October 1, 1995 (the
"LLC Agreement");

        WHEREAS, the LLC is the owner of Horseshoe Entertainment, a Louisiana
limited partnership ("HE"), which owns and operates Horseshoe Bossier City
Casino located in Bossier City, Louisiana, and Robinson Property Group Limited
Partnership, a Mississippi limited partnership ("RPG"), which owns and operates
the Horseshoe Hotel and Casino located at Casino Center in Tunica County,
Mississippi (the LLC, HE and RPG and their respective subsidiaries and
affiliates are herein sometimes referred to as the "Horseshoe Companies");

        WHEREAS, the LLC is party to an agreement pursuant to which it may
acquire the gaming operations of Empress Entertainment, Inc., a Delaware
corporation, and its subsidiaries Empress Casino Hammond Corporation, an Indiana
corporation, and Empress Casino Joliet Corporation (collectively, "Empress") in
Hammond, Indiana and Joliet, Illinois;

        WHEREAS, the Employee, together with Paul R. Alanis ("Alanis"), the
former President of the Company, Cliff Kortman, the former Vice President -
Design and Development of the Company and Loren Ostrow ("Ostrow"), the former
Senior Vice President and General Counsel of the Company (the "Other
Employees"), has entered into a contractual arrangement with Hollywood Park,
Inc., a Delaware corporation ("Hollywood Park"), to commence employment with
Hollywood Park upon the expiration of the term of his Employment Agreement on
May 11, 1999;

        WHEREAS, the Company has claimed that (i) Hollywood Park has tortiously
interfered with the Company's contractual relationship with the Employee and the
Other Employees and (ii) the Employee has breached his fiduciary duty to the
Company and (iii) the Other Employees have likewise breached their fiduciary
duties to the Company;

        WHEREAS, Hollywood Park and the Employee have denied the Company's
claims;

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        WHEREAS, pursuant to an Agreement dated as of December 31, 1998, and in
order to avoid litigation, the Horseshoe Companies and Hollywood Park have
agreed to release each other from all claims which each of such parties may have
against the other in connection with Hollywood Park's hiring of the Employee and
the Other Employees, the Company has agreed to permit the Employee and the Other
Employees to pursue employment opportunities with Hollywood Park and Hollywood
Park has agreed, among other things not to hire or solicit a group of Horseshoe
employees;

        WHEREAS, the Employee, the Company and the Horseshoe Companies desire to
avoid litigation over the Company's claims and, in furtherance of that desire,
the Employee and the Company have agreed to an immediate separation of the
Employee from all positions he presently holds with the Company and any of the
Horseshoe Companies in accordance with the terms of this Agreement; and

        WHEREAS, the Employee acknowledges that, as a result of his positions in
the Company and related authorities, he has had substantial responsibility with
respect to the business and operations of the Company and the Horseshoe
Companies and, in connection therewith, has had access to confidential
information of the Company, the Horseshoe Companies and their respective
subsidiaries and affiliates (and, in connection with the potential acquisition,
the confidential information of Empress) and has acted in a supervisory capacity
with respect to certain employees of the Company, the Horseshoe Companies, and
their respective subsidiaries and affiliates.

        NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements contained herein, and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
parties agree as follows:


                                    ARTICLE I

                    TERMINATION OF THE EMPLOYMENT AGREEMENTS

        I.1 Termination. The Company and the Employee hereby agree that,
effective December 31, 1998 (the "Termination Date"), the employment of the
Employee by the Company, the Horseshoe Companies and any of their respective
subsidiaries and affiliates from all positions, shall be deemed to have been
terminated, and the Employment Agreement shall be deemed to have no further
force or effect, except for the following provisions of the Employment
Agreement, which shall survive (subject, however, to the modifications to such
provisions as are made in this Agreement): Section 12-Put/Call Option Upon
Termination, Section 13-Distributions; Public Offering, Section 17-Arbitration,
Section 18-Governing Law, Section 19-Notices (except that notices to the Company
and the LLC shall be to the address provided in Section 5.1 of this Agreement),
Section 20-Assignment, Section 21-Waiver, and Section 22-Construction.



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Notwithstanding the foregoing and any provision in the Employment Agreement to
the contrary, the LLC and the Company agree that the Employee shall be fully
vested in his interests in the LLC as of the Termination Date. Further, Allen
shall be entitled to receive payment for his interest in the LLC on the same
schedule as Alanis and Ostrow are entitled to receive payment for their
interests in the LLC as provided under their respective employment agreements
with the Company (i.e., Allen shall be paid in three (3) equal principal
installments: the first payment shall be due within ten (10) days after
determination of or agreement as to the value of his entire economic interest in
the LLC as provided in Section 2.4 of this Agreement; the second payment of
principal plus accrued interest shall be due and payable on the first
anniversary of the date of termination (provided that the value of such interest
has been fully and finally determined by such date); and the last payment of
principal plus accrued interest shall be due and payable on the second
anniversary of the date of termination (provided that the value of such interest
has been fully and finally determined by such date). It is understood that if no
final determination of value has been made by the anniversary dates referred to
herein, then any payment that would otherwise have been due prior to the date of
determination of value shall be made within 30 days of a final determination of
value. Under certain circumstances, the LLC has the right to extend the payments
over five years. Such obligations shall bear interest at the rate set forth in
the Employment Agreement.

        I.2 Employment Opportunities. The Company agrees that the Employee may
pursue employment with Hollywood Park and agrees that from and after the
Termination Date, the non-competition provisions of the Employment Agreement
have been waived by the Company in respect of the Employee's employment with
Hollywood Park.


                                   ARTICLE II

                                    PAYMENTS

        II.1 Payments Under the Employment Agreement. The Employee shall be paid
the amounts set forth below (the "Scheduled Amounts") within one week of the
execution of this Agreement:

               (i)    base salary under the Employment Agreement through the
                      Termination Date;

               (ii)   severance benefits in the total amount of $1,810,494,
                      payable to Employee pursuant to the terms of Section 8(B)
                      of the Employment Agreement;

               (iii)  accrued, unused vacation pay in the amount of $26,923; and

               (iv)   reimbursement for all outstanding reasonable business
                      expenses (details and evidence of which Employee has
                      provided to the Company's financial



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                      department) incurred by Employee and as to which Employee
                      is entitled to reimbursement pursuant to Section 6(c) of
                      the Employment Agreement.

The Employee shall also be paid all vested amounts held in a 401(k) account for
the benefit of Employee with the investment firm of Scudder pursuant to the
Company's 401(k) plan (the "401(k) Payment"). The Company, as reasonably
requested, will assist the Employee in transferring the 401(k) Payment in
accordance with the Company's 401(k) plan.

        II.2 Fringe Benefits. On or before the execution of this Agreement, the
Employee shall return to the Company all credit cards, cellular phones,
computers and any and all other items of property which were provided to the
Employee by the Company, the Horseshoe Companies or any of their respective
subsidiaries or affiliates.

        II.3 Entire Payment. The Employee acknowledges that the Scheduled
Amounts and the 401(k) Payment represent the total compensation and other
benefits payable to him by the Company, including salary, bonuses and any
accrued and unused vacation days, holidays, sick pay and severance pay and other
benefits of any kind; provided, however, that:

               (i)    the Employee shall continue to retain his interest in the
                      LLC as described in Section 4.1(d) (which is the subject
                      of Employees' put option and the Company's call option
                      pursuant to the terms of his Employment Agreement);

               (ii)   the Employee (subject to the provisions of this Agreement)
                      shall continue to enjoy the same rights and privileges of
                      other members of said LLC; and

               (iii)  the LLC shall remain obligated to make payment to the
                      Employee in connection with any purchase of said interest
                      from the Employee by the LLC pursuant to this Agreement
                      and Section 12 of the Employment Agreement (as modified by
                      this Agreement).

The Employee further acknowledges that other than as set forth expressly herein
and in the provisions of the Employment Agreement regarding the Employee's
interest in the LLC which survive this Agreement, as described in Section 1.1
above, there are no other unpaid financial commitments or obligations of any
kind, express or implied, of the Company or any of the Horseshoe Companies to
him or to his heirs, executors, administrators, personal representatives or
members of his family and, except to the extent permitted by law, the Employee
shall have no further right to participate in any employee benefit plan of the
Company or any of the Horseshoe Companies.

        II.4 Modification of Put/Call Provisions. The Employee hereby agrees not
to exercise his rights under the Employment Agreement to cause the LLC to
purchase his ownership interest in the LLC (the "Put Right") and the LLC hereby
agrees not to exercise its right under the



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Employment Agreement to purchase the Employee's ownership interest in the LLC
(the "Call Right"). The Employee and the LLC agree that in lieu of exercising
the Put Right or the Call Right, as the case may be, under the Employment
Agreement, the LLC shall pay the Employee for his ownership interest in the LLC
a purchase price to be determined using the average of the valuations of the
LLC, which are fully and finally determined in the arbitration, appraisal or
other proceedings in which the Company and the LLC, on the one hand, and one or
more of the Other Employees on the other, are parties, or pursuant to any
settlement agreement pursuant to which the purchase price of the Other
Employees' entire ownership interests in the LLC are determined ("Valuation
Proceedings"), provided that such value shall be appropriately adjusted to take
into account any adjustments used to fix the purchase price of the Other
Employees' entire ownership interests in the LLC in such Valuation Proceedings
("Valuation Adjustments"). Exhibit A shows an example of how to calculate the
value of the LLC for purposes of valuing the Employee's ownership interest in
the LLC.

        If the LLC and all of the Other Employees have not determined, pursuant
to Valuation Proceedings, the value of the ownership interests in the LLC of all
the Other Employees within eighteen (18) months from the date of this Agreement,
then the Employee shall have the option to (1) average the valuations of the LLC
taking into account the Valuation Adjustments determined in Valuation
Proceedings with respect to two of the Other Employees, provided that two of the
Other Employees' Valuation Proceedings have been completed within the eighteen
(18) months, (2) proceed pursuant to Section 12 of the Employment Agreement
(subject to Section 4.1(c) of this Agreement) to exercise his Put Right (and
after the Employee has chosen to proceed pursuant to Section 12 the LLC shall
have the right to exercise its Call Right) or (3) wait until all of the
Valuation Proceedings between the LLC and the Other Employees have been
completed and in such case the LLC shall pay a purchase price for the Employee's
entire ownership interest in the LLC as determined in the preceding paragraph.
The Employee has ten days following the conclusion of the eighteen (18) months
to give written notice of his decision as to which of the options in the
preceding sentence he would like to proceed under. If the Employee does not give
written notice of his decision on how to proceed, within the time specified, by
default it will be assumed that the Employee has chosen to proceed under option
(3).

        The determination of or agreement as to the value of the Employee's
entire ownership interest in the LLC is considered complete, for purposes of
making the first payment to the Employee, when the Valuation Proceedings with
respect to each of the Other Employees have been completed, except if the
Valuation Proceedings of all three Other Employees have not been completed
within eighteen (18) months and (i) the Employee elects to proceed under option
(1) of the preceding paragraph, then the determination of or agreement as to
value is considered complete at the end of the eighteen (18) months or (ii) the
Employee elects to proceed under option (2) of the preceding paragraph, then the
determination of or agreement as to value is determined pursuant to the terms of
Section 12 of the Employment Agreement and subject to 4.1(c).



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                                   ARTICLE III

                 CONFIDENTIALITY; NON-SOLICITATION AND NON-HIRE

        III.1  Confidential Information.

               (1) The Employee covenants and agrees that from the Termination
Date until December 31, 2001, he will keep strictly confidential and will not at
any time, use or make use of, show, display, reveal, divulge, communicate or
make known, either directly or through another, to any person, firm,
corporation, association or other entity, any Confidential Information (as
herein defined) that was received by him during the course of his employment by
the Company or, after the Termination Date, as a member of the LLC.

               (2) Confidential Information means any information that is not
generally known to the public or the gaming industry that relates to the
existing or reasonably foreseeable business of the Company, the Horseshoe
Companies, Empress or any of their respective subsidiaries and affiliates
including, without limitation, any information contained in or relating to
customer lists, account lists, price lists, product designs, marketing plans or
proposals, customer information, merchandising, selling, accounting, finances,
knowhow, trademarks, trade names, trade practices, trade secrets, new personnel
acquisition plans, the terms of contracts and agreements with customers,
contractors and suppliers, the Company's, the Horseshoe Companies', Empress' or
any of their respective subsidiaries' and affiliates' course of dealings with
any such actual and prospective customers, contractors and suppliers, personal
information, customer and vendor credit information and other proprietary
information of the Company, the Horseshoe Companies, Empress or any of their
respective subsidiaries and affiliates. Confidential Information shall not
include any information which (i) is known generally to the public or the gaming
industry (other than as a result of unauthorized disclosure by the Employees),
(ii) becomes available to the Employees on a non-confidential basis from a
source, other than the Company, the Horseshoe Companies, Empress or any of their
subsidiaries or affiliates, who is not also bound by an agreement of
confidentiality with the Company, the Horseshoe Companies, Empress or any of
their subsidiaries or affiliates or (iii) was available to the Employees on a
non-confidential basis prior to its disclosure to the Employees by the Company,
the Horseshoe Companies, Empress or any of their subsidiaries or affiliates.

               (3) The Employee agrees that all documents and other tangible or
intangible property relating in any way to the business of the Company, the
Horseshoe Companies or any of their subsidiaries or affiliates including,
without limitation, those items of tangible or intangible property which may
have been conceived or generated by the Employee or have come into the
Employee's possession prior to the Termination Date are the property of the
Company and may not be used by the Employee. The Company and Horseshoe Companies
acknowledge that the gaming industry is undergoing a consolidation and that many
companies, including Hollywood Park, have considered or may consider business
opportunities relating to the purchase of existing 



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gaming companies or properties or pursue licenses for new gaming facilities and
that the pursuit of such opportunities by Hollywood Park with the assistance of
the Employee shall not be violative of this provision.

               (4) On or before the execution of this Agreement, the Employee
shall return to the Company, all Horseshoe Property. "Horseshoe Property" shall
include, without limitation, all documents, papers, and other tangible and
intangible property of the Company, the Horseshoe Companies, Empress and each of
their respective subsidiaries and affiliates, including, but not limited to, all
records, manuals books, blank forms, documents, letters memoranda, notes,
notebooks, reports, data, tables, magnetic tapes, computer disks, calculations
or copies thereof, whether such materials are confidential or not, which are
property of the Company, the Horseshoe Companies, Empress or any of their
respective subsidiaries or affiliates and which relate in any way to the
business, customers, products, practices or techniques of the Company, the
Horseshoe Companies, Empress or any of their respective subsidiaries or
affiliates, as well as all other practices or techniques of the Company, the
Horseshoe Companies, Empress or any of their subsidiaries or affiliates. The
Employee agrees to immediately return all Horseshoe Property that may come into
Employee's possession after the execution of this Agreement.

        III.2  Non-Solicitation and Non-Hire.

               (1) The Employee agrees that from the Termination Date until
December 31, 2001, he will not directly or indirectly (whether by
recommendation, disclosure of names and job descriptions of persons on the
Protected List attached hereto as Exhibit B and by this reference made a part
hereof, or participation in the solicitation or hiring process or otherwise,
whether or not he has authority over solicitation and hiring of employees,
consultants, independent contractors or others) solicit, hire or retain, or
cause any other employer of such Employee, or any other person who has retained
him as a consultant or independent contractor to solicit, hire or retain, as an
employee, consultant, independent contractor or otherwise any of the persons
whose names are contained on the Protected List attached hereto as Exhibit A and
by this reference made a part hereof.

               (2) In the event the Employee violates any legally enforceable
provision of this Article III as to which there is a specific time period during
which or the Employee is prohibited from taking certain actions or engaging in
certain activities, then the violation will toll the running of the time period
from the date of violation until the violation ceases as to the specific
employee as to which a violation is alleged but not as to other employees whose
names are on the Protected List.

               (3) The Employee acknowledges that he has carefully considered
the nature and extent of the restrictions upon him and the rights and remedies
conferred upon the Company and the Horseshoe Companies under this Article III.
The Employee further acknowledges that the same are reasonable in time and
territory and are fully required to protect the legitimate



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interest of the Company and the Horseshoe Companies and do not confer a benefit
upon the Company and the Horseshoe Companies disproportionate to any detriment
to the Employee.

        III.3 Remedies. The Employee and the Company acknowledge that the
provisions contained in this Article III are reasonable and necessary, that the
damages which would be suffered by the Company and the Horseshoe Companies as a
result of a breach or threatened breach by the Employee of any of such
provisions may not be calculable, and that the award of a money judgment to the
Company and the Horseshoe Companies for such a breach or threatened breach by
the Employee would be an inadequate remedy. Consequently, the Employee agrees
that any breach or threatened breach of any provision of this Article III may be
enforced by the Company and/or the Horseshoe Companies by means of an action for
injunctive or other equitable relief, including a temporary and/or permanent
injunction, filed in a court of competent jurisdiction. Any such remedy shall be
in addition, and shall not limit the right of the Company or the Horseshoe
Companies, to any other remedy to which it may be entitled in law or in equity.
Due to the financial strength of the Company and the Horseshoe Companies, the
Employee agrees that it is not necessary for the Company or the Horseshoe
Companies to post a bond and that they shall not be obligated to post a bond or
other security in seeking such relief. The Employee hereby waives any right to
seek a bond. In connection with the remedies provided in this Section 3.3, the
Employee hereby waives any objection and consents to the subject matter and
personal jurisdiction of the state and federal courts of the State of Nevada and
hereby waives any and all objections to venue.


                                   ARTICLE IV

                             RELEASE; NON-DISCLOSURE

        IV.1   Release.

               (1) Except as provided in Section 4.1(c) and 4.1(d), the Employee
hereby releases and forever discharges the Company, the Horseshoe Companies and
each of their respective past, present and future subsidiaries, affiliates,
officers, directors, employees, agents, stockholders, partners, managers,
members, successors and assigns, both individually and in their official
capacities with the Company, the Horseshoe Companies or any subsidiaries or
affiliates of any of them as applicable (collectively, the released parties are
herein referred to as the "Horseshoe Released Parties"), from any and all
actions or causes of actions, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, covenants, claims, charges, complaints, contracts,
agreements, trespasses, damages, judgments, commissions, executions, demands,
and promises whatsoever, in law or equity, which the Employee, or his heirs,
executors and administrators, may now have or hereafter can, shall or may have
against the Horseshoe Released Parties for, upon, or by reason of any and all
matters arising out of or relating to (i) the Employee's employment by the
Company or the cessation of said employment including the termination of the
Employment Agreement, and including, but not limited to, any alleged



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violation of Title VII of the Civil Rights Act of 1964, the Employees Retirement
Income Security Act of 1974, the Age Discrimination in Employment Act of 1967,
the Vocational Rehabilitation Act, the Equal Pay Act of 1963, the National Labor
Relations Act, and any other alleged violation of any local, state or federal
law, regulation or ordinance, and/or public policy, contract or tort law, having
any bearing whatsoever on the terms and conditions and/or cessation of the
Employee's employment; (ii) the expected employment of the Employee by Hollywood
Park; and (iii) Employee's status as a member of the LLC, including, without
limitation, any and all claims arising out of the management of the LLC and the
treatment of members of the LLC; provided, however, that notwithstanding any of
the foregoing provisions of this release, the Employee hereby expressly reserves
any rights, claims, or causes of action he may have arising out of or resulting
from the non-performance or breach of the terms and conditions of this Agreement
by the Company or the Horseshoe Companies; and provided, further that
notwithstanding the foregoing provisions of this release, the Employee expressly
reserves his rights under the provisions of the Employment Agreement (as amended
by this Agreement) which survive after the Termination Date as provided in
Section 1.1. The Employee is aware that he is releasing claims as to which he
may be currently unaware and only may come to learn, but is nevertheless willing
to enter into this release. It is the intention of the Employee that,
notwithstanding the possibility that the Employee or his counsel might discover
or gain a more complete understanding of the facts, events or law which, if
presently known or fully understood, would have affected this release, this
release shall be deemed to have fully, finally and forever settled any and all
claims without regard to the existence or subsequent discovery of different or
additional facts, events or laws.

               (2) Except as provided in Section 4.1(c) and 4.1(d), each of the
Company and the Horseshoe Companies hereby releases and forever discharges the
Employee and each of his heirs, successors, employees, agents and assigns, both
individually and in his official capacity with Hollywood Park, or any
subsidiaries or affiliates of any of them as applicable, from any and all
actions or causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, covenants, claims, charges, complaints, contracts,
agreements, trespasses, damages, judgments, commissions, executions, demands and
promises whatsoever, in law or equity, which the Company or the Horseshoe
Companies, or its successors or assigns, may now have or hereafter can, shall or
may have against any of them, for, upon, or by reason of any and all matters
arising out of or relating to (i) subject to the representations of Section 4.5,
Employee's performance or non-performance of his duties as an employee of the
Company and the cessation of said employment, including the termination of
Employee's Employment Agreement; (ii) the expected employment of the Employee by
Hollywood Park; and any violation or purported violation of Employee's
Employment Agreement in connection with his prospective employment by Hollywood
Park; and (iii) any solicitation, actual or alleged, of any other employees of
the Company and/or any of its affiliated entities, occurring prior to the
execution of this Agreement; provided however, that notwithstanding the
foregoing provisions of this release, the Company and the Horseshoe Companies
hereby expressly reserve any rights, claims, or causes of action they may have
against the Employee arising out of or resulting from the non-performance or
breach of the terms and conditions of this Agreement; provided, further, that
notwithstanding the 



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foregoing provisions of this release, nothing herein shall be deemed to release
the Employee from his obligation to repay any and all loans made to him by the
Company or the Horseshoe Companies and deficits in his capital account; which
amounts shall be offset against amounts due to the Employee in respect of his
interest in the LLC; provided, further, however, that the Company and the
Horseshoe Companies expressly reserve their rights under the provisions of the
Employment Agreement (as amended by this Agreement) which survive after the
Termination Date as provided in Section 1.1. Each of the Company and the
Horseshoe Companies is aware that it is releasing claims as to which it may be
currently unaware and only may come to learn, but are nevertheless willing to
enter into this release. It is the intention of the Company and the Horseshoe
Companies that, notwithstanding the possibility that the Company, the Horseshoe
Companies or their counsel might discover or gain a more complete understanding
of the facts, events or law which, if presently known or fully understood, would
have affected this release, this release shall be deemed to have fully, finally
and forever settled any and all claims without regard to the existence or
subsequent discovery of different or additional facts, events or laws. For
purposes of determining whether the purchase price for the Employee's entire
ownership in the LLC is due in a lump sum or in installments, the purchase price
shall be considered without taking account of any offset to which the Company or
the Horseshoe Companies are entitled as described above. The Company and the
Horseshoe Companies may elect to offset amounts due to the Company or the
Horseshoe Companies from whichever payments (other then the payments described
in Section 2.1 above) are due to the Employee as the Company or the Horseshoe
Companies shall determine.

               (3) Notwithstanding the provisions of Sections 4.1(a) and (b)
above, but subject to Section 2.4 of this Agreement pursuant to which the
Employee and the Company agreed not to exercise the Put Right or the Call Right,
each of the Employee, the Company and the LLC agree that if the Put Right or the
Call Right are exercised pursuant to Section 2.4 or by mutual agreement, that
they shall bring and resolve finally their disputes relating to the
determination of all amounts owed in respect of the Employee's entire interest
in the LLC exclusively in valuation proceedings in accordance with his
Employment Agreement ("Allen's Valuation Proceedings"). The release of claims
pursuant to the provisions of Section 4.1(a) and (b) above is effective so as to
prevent either party from asserting any claim for damages or seeking any relief
as a result of any of the matters released pursuant to this Agreement in any
proceeding other than Allen's Valuation Proceedings or, in the case of the
Company or the LLC, the Valuation Proceedings of the Other Employees, but shall
not render inadmissible in Allen's Valuation Proceedings or, in the case of the
Company or the LLC, the Valuation Proceedings of the Other Employees any
evidence relevant to the issue of value. Each party shall bear his or its own
costs in connection with Allen's Valuation Proceedings and each will split the
costs of any third party appraiser and arbitration. The appraisals shall be
commenced and conducted as provided in the Employment Agreement.

               (4) The Employee, the Company and the LLC agree that the LLC
Agreement has not been modified since June 30, 1998 and that the LLC Agreement
as of June 30, 1998 remains in full force and effect. The Company and the
Horseshoe Companies agree that until 



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Employee's interest in the LLC is reacquired by the LLC pursuant to this
Agreement, the Employee shall be entitled to continue receiving his pro rata
portion of distributions, if any, increases in capital accounts, if any, and all
other benefits of ownership (including current information as to said matters)
in a non-discriminatory manner as and when received or conferred upon the other
members of the LLC, and the Employee agrees to continue to be bound by the terms
of the LLC Agreement as in effect from time to time in the same manner as the
other members of the LLC. In connection with the acquisition of Empress, the LLC
will be reorganized as a corporation ("NEWCO") which elects to be treated as an
S corporation for federal income tax purposes pursuant to Section 1362(a) of the
Internal Revenue Code of 1986, as amended. The members of the LLC will
contribute to NEWCO their interests in the LLC in exchange for shares of NEWCO.
The Employee agrees to contribute his interest in the LLC to NEWCO on the same
economic basis as the other members of the LLC. The Employee will obtain the
same percentage of economic interest in NEWCO as he had in the LLC and will not
suffer economic dilution on account of the exchange. The LLC and the Company
agree that NEWCO shall assume the obligations of the LLC to the Employee under
the Employment Agreement and this Agreement.

               (5) The Employee, the Company and the Horseshoe Companies as a
Releasor hereby waives the provisions of Section 1542 of the California Civil
Code only to the extent it applies to the releases given by such Releasor in
this Section 4.1. Section 1542 of the California Civil Code provides as follows:

               A general release does not extend to claims which the credit does
               not know or suspect to exist in his favor at the time of
               executing the release, which if known by him must have materially
               affected his settlement with the debtor.

        IV.2 Disclosure of Agreement. The parties hereto agree that, subject to
Section 4.3, the existence and substance of this Agreement may be disclosed to
any person or organization as the party disclosing determines, including,
without limitation, members of the Employee's immediate family, the parties'
legal counsel and accountants, present and former Employees and affiliates of
the Company, the Horseshoe Companies, Hollywood Park and persons providing
financing to the Company, the Horseshoe Companies, or any of their respective
affiliates. Disclosure of the existence and substance of this Agreement also may
be made to the public as required by law and as otherwise may reasonably be
determined by the disclosing party in the furtherance of its business interests.

        IV.3 Non-Disparagement. From the Termination Date until December 31,
2001, the Employee and the Company hereby agree not to make any statements, in
writing or otherwise, that may disparage the reputation or character of the
other or any of the Company's or the Horseshoe Companies' respective
subsidiaries, affiliates, officers, directors, employees, agents, stockholders,
partners, members, successors and assigns, both individually and in their
official capacities with such party at any time for any reason whatsoever,
except as (a) required by law, 



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<PAGE>   12

(b) in connection with any litigation or administrative proceeding by or between
the Company, the Horseshoe Companies and the Employee in which the party making
such statement has been subpoenaed and is required by law to give testimony, (c)
and in any litigation or administrative proceeding by and among the Company, the
Horseshoe Companies, and the Employee or (d) in connection with any competitive
licensing or comparable proceeding in which the Employee in his capacity as an
employee of Hollywood Park or other employer, may testify or otherwise submit
evidence.

        IV.4 Knowledge and Consent of the Parties. The parties hereby mutually
warrant and represent that they have read and understand this Agreement and that
this Agreement is executed voluntarily and without duress or undue influence on
the part of or on behalf of any party hereto. The parties hereby acknowledge
that they have been represented in negotiations and for the preparation of this
Agreement by counsel of their own choice; that they have read this Agreement;
and that they are fully aware of the contents of this Agreement and of the legal
effect of each and every provision hereof. It is acknowledged and agreed by each
party to this Agreement that each party has participated in the drafting of this
Agreement and that any claimed ambiguity should not be construed for or against
any such party on account of such drafting.

        IV.5   Representations.

               (1) The Employee hereby represents that in the course of his
employment by the Company he has not intentionally performed any ultra vires act
and has not intentionally engaged in any intentional misconduct or criminal act
materially adversely affecting the Company or any of the Horseshoe Companies
(collectively, "Bad Actions").

               (2) The Company and each of the Horseshoe Companies hereby
represent that other than the actions of the Employee to become employed by
Hollywood Park, which is being released hereby and which the Company and the LLC
contend may constitute "Bad Actions," they have no knowledge that the Employee
has committed Bad Actions.

        IV.6 Availability. Employee further agrees that he will submit to a
single pre-hearing deposition, to be taken by counsel to the Company, on a
single business day in Las Vegas, Nevada, in relation to any arbitration,
appraisal or other proceeding or proceedings in which the Company, on the one
hand, and one or more of the Other Employees, on the other, are parties. Such
deposition shall take place on a mutually convenient date, it being agreed that
the deposition will take place no later than one month prior to the scheduled
initiation of the first arbitration proceeding, if any. It is understood that
following such deposition, additional factual disputes may arise in said
proceeding or proceedings, and accordingly, if requested by the Company counsel,
the Employee will, on a reasonable basis, continue to make himself available for
interview.

                                    ARTICLE V



                                       12
<PAGE>   13

                                  MISCELLANEOUS

        V.1 Notice. All notices, requests, demands and other communications
required or permitted hereunder, shall be in writing and shall be deemed to have
been duly given when received. Notice shall be delivered either by hand,
facsimile or mailed, certified mail, return receipt requested with postage
prepaid, addressed to the parties at the following addresses, or such other
address as may be designated by notice in accordance with the provisions of this
Section:

               (1)    If to the Company or the Horseshoe Companies:

                      4024 Industrial Road
                      Las Vegas, Nevada 89103
                      Attn: Jack B. Binion
                      (702) 650-0080
                      (702) 650-0081

               (2)    If to the Employee:

                      8408 Turtle Creek Circle
                      Las Vegas, Nevada 89113

                      With a copy to:

                      Cox, Castle & Nicholson, LLP
                      2049 Century Park East, 28th Floor
                      Los Angeles, CA 90067-3284
                      Attn: Matthew A. Wyman, Esq.

        V.2 Indemnification. The Employee and his heirs, executors,
administrators and family members shall continue to be indemnified and defended
by the Company and the Horseshoe Companies or any of them, from costs, expenses
and liabilities arising out of claims brought against them by third parties in
respect of the actions taken or not taken by the Employee on behalf of any of
the Company and the Horseshoe Companies during and in the course of his
employment or other relationships with any of the Company and the Horseshoe
Companies to the same extent they were entitled to be so indemnified prior to
the Termination Date.

        V.3 Entire Agreement; Further Assurances. Except as expressly set forth
herein, this Agreement constitutes the entire agreement between the parties
hereto with respect to the specific subject matter herein and supersedes all
prior agreement and undertaking, both written and oral, with respect to the
specific subject matter hereof and thereof, including, without limitation, the
Employment Agreement. Each of the parties hereto mutually agrees to deliver all
such other 



                                       13
<PAGE>   14

documents and to do and perform all such other acts as may reasonably be
required from time to time in connection with this Agreement or to implement or
carry out the terms hereof.

        V.4 Severability. If any provisions (or portion hereof) of this
Agreement would be deemed to be invalid or unenforceable for any reason,
including, without limitation, the geographic or business scope or the duration
thereof, such provision (or portion thereof) shall be construed in such a way as
to make it valid and enforceable to the maximum extent possible. Any invalidity
or unenforceability of any provision (or portion thereof) of this Agreement
shall attach only to such provision (or portion thereof) and shall not affect or
render invalid or unenforceable any other provision (or portion thereof) of this
Agreement or any other agreement or instrument.

        V.5 Amendment. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by each of the parties hereto, and it shall not be reasonable
for any party to rely on any oral statements or representations made by any
other party.

        V.6 Arbitration. In the event of any dispute or controversy between the
parties with respect to any of the matters set forth herein, such dispute or
controversy shall be submitted to binding arbitration, to be conducted in Las
Vegas, Nevada, pursuant to the then prevailing rules and regulations of the
American Arbitration Association. This provision does not, in any way, affect
Section 3.3 or 4.1(c) of this Agreement, or the provisions of the Employment
Agreement that survive.

        V.7 Admission; Evidence. The execution of this Agreement shall not be
deemed an admission of any wrongdoing, liability or unlawful conduct on the part
of the Employee, the Horseshoe Companies and/or the Company, its affiliates,
divisions, officers, employees, agents, successors or assigns. Neither this
Agreement nor any portion hereof shall be admissible evidence in any proceeding
whatsoever involving any party other than the Employee, the Company, the
Horseshoe Companies, Hollywood Park or their respective representatives or
successor hereto.

        V.8 Successors and Assigns. This Agreement shall inure to the benefit
of, and be binding upon, the Company and the Horseshoe Companies and their
respective successors and permitted assigns under Section 5.9 and the Employee,
his executors, administrators, heirs, and legal representatives.

        V.9 Assignment. This Agreement may not be assigned by the parties hereto
other than, in the case of each party that is an entity, to a successor to the
business of such party or the purchaser of all or substantially all of its
assets; provided, that such successor or purchaser shall have agreed to assume
all of the transferring party's obligations under this Agreement. This Agreement
may not be assigned by the Employee.



                                       14
<PAGE>   15

        V.10 Waiver. No waiver of any term or condition of this Agreement shall
be construed as a waiver of any other term or condition; nor shall the waiver of
any default under this Agreement be construed as a waiver of any other default;
nor, unless otherwise provided in this Agreement as to timing, shall any delay
or omission of any party to exercise any right hereunder in any manner waive
such right or impair the exercise of such right thereafter.

        V.11 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

        V.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original, but
all of which when taken together shall constitute one and the same agreement.

        V.13 Legal Fees. Each party to this Agreement agrees to be solely
responsible for its respective legal fees and disbursements and other expenses
in connection with the negotiation and preparation of this Agreement and in
connection with any disputes, claims, litigation and other matters relating to
this Agreement.



                                       15
<PAGE>   16

               IN WITNESS WHEREOF, the undersigned have executed this Agreement
as of the day and year first above written.

                                        HORSESHOE GAMING, INC.
                                        a Nevada corporation


                                        By:_____________________________________
                                               Jack B. Binion
                                               Chief Executive Officer and
                                               Chairman of the Board


                                        HORSESHOE GAMING, LLC
                                        a Delaware limited liability company

                                        Horseshoe Gaming, Inc., Manager


                                        By:_____________________________________
                                               Jack B. Binion
                                               Chief Executive Officer and
                                               Chairman of the Board


                                        ________________________________________
                                                     JOHN M. ALLEN



                                       16
<PAGE>   17
                                                                       EXHIBIT A


                          HOW TO CALCULATE THE VALUE OF
                         THE LLC FOR PURPOSES OF VALUING
                      ALLEN'S OWNERSHIP INTEREST IN THE LLC

        For example purposes only, assume that at the end of eighteen months the
Valuation Proceedings for Ostrow and Alanis have been completed and Allen elects
to base his valuation on an average of the valuations of the LLC based on the
value of the ownership interests of Alanis and Ostrow in their completed
Valuation Proceedings. The value of Allen's interest in the LLC will be
determined as follows:

        Assume:

        Alanis has a 3% interest in the LLC and it is determined in Alanis'
Valuation Proceeding that his 3% interest in the LLC is worth $6,000,000.00,
that means 1% of Alanis' interest in the LLC is worth $2,000,000.00 (the "Alanis
Value").

        Ostrow has a 1.5% interest in the LLC and it is determined in Ostrow's
Valuation Proceeding that his 1.5% interest in the LLC is worth $6,000,000.00,
that means 1% of Ostrow's interest in the LLC is worth $4,000,000.00 (the
"Ostrow Value").

        Therefore:

        The average of the Alanis Value and the Ostrow Value equals
$3,000,000.00 per 1% interest in the LLC. ($2M + $4M = $6M/2= $3M)

        The aggregate value of the LLC for purposes of valuing Allen's ownership
interest in the LLC would be $300,000,000.00.

        The valuations included in this Exhibit A are used solely for
demonstrating the methodology for determining the value of the LLC for purposes
of valuing Allen's ownership interest in the LLC and are specifically not
intended to reflect any actual valuation of the LLC or any member's interest
therein. Accordingly, none of such valuations shall be admissible in any
arbitration proceeding or Valuation Proceeding, or otherwise used to establish
or impact in any manner the value of the LLC, the Other Employees' interests in
the LLC or Allen's interest in the LLC.




                                      -i-
<PAGE>   18

                                                                       EXHIBIT B


                                 PROTECTED LIST


Joe Ahern                                                  Robin Hamlin
Gary Anderson                                            Robert Horlein
Angela Barrera                                             Zenna Holden
Alex Atchison                                            Charles Hulick
Farris Baughman                                              Jay Jordan
Mark Golding                                                Frank Kersh
Gary Borden                                                 Leo Kessler
Brett Borek                                                   Miles Lim
Greg Bradley                                             Shawn Matthews
Debbie Brantley                                             Bob McQueen
Pete Brascia                                                 John Moran
Johnny Bridges                                              Wesley Nell
Glenn Buxton                                           Kevin O'Sullivan
Kevin Byrd                                                  Don Perkins
David Carroll                                          Patrick Quintano
Rich Christian                                            Joe Robertson
Byron Clouarte                                             Mark Sicilia
Rick Cook                                                  John Sisinni
George Corchis                                          Shiela Stafford
Issac Dyas                                             Angelus Thompson
Wayne Edwards                                                  UrsVogel
Richard Fazio                                                Jerry West
Dennis Gentry                                          Greg Westmorland
Kenneth Gibson                                             Vernon White
Larry Gregson                                                 Jon Wolfe



                                      -ii-