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Exhibit 10.9    
    


 
  EMPLOYMENT AGREEMENT    
    


        THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 15th day of August, 2007, by and between MTR Gaming Group, Inc./Presque Isle Downs, Inc.
("MTR/PIDI" or the "Company"), having an address of State Route 2, South, Chester, West Virginia 26034, and Patrick J. Arneault, having an address of c/o MTR Gaming Group, Inc., State Route 2
South, Chester, WV 26034 ("Executive"). 


        WHEREAS,
Executive is currently an at-will employee of the Company serving as Executive Vice President of Development; and 


        WHEREAS,
the Company wishes to continue to employ Executive in Executive's current capacity and further wishes to enter into an agreement with Executive in order to afford Executive
certain long-term benefits as well as to reflect the terms and conditions of Executive's employment relationship to the Company: 


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



        1.    Term.    The Company hereby agrees to employ Executive, and Executive agrees to serve the Company, in the
capacity indicated above for a two year period commencing on January 1, 2007 (the "Employment Date"), and ending on January 1, 2009 (such period, subject to earlier termination as
provided herein, being referred to as the "Period of Employment"); provided, however, that Executive's
employment hereunder may be terminated by the Company at any time within ninety (90) days after the date first written above in the Company's sole discretion. 



        2.    Duties and Services.    During the Period of Employment, Executive agrees to serve the Company as its Executive
Vice President of Development, and in such other office of MTR/PIDI and/or its Affiliates to which Executive may be elected or appointed, and to perform such other reasonable and appropriate
duties as may be requested of Executive by the President and CEO of the Company (the "CEO"), in accordance with the terms herein set forth. Executive shall devote such of his/her time, energy and
skill during regular business hours to the business and affairs of the Company and its Affiliates and to the promotion of their interests as is required. Executive shall report directly to and shall
be subject to the direction of Edson R. Arneault. 


        3.    Compensation.    



        (a)    Base Salary.    The base salary of the Executive for services pursuant to the terms of this Agreement shall be
$351,979.00 per year, payable in bi-monthly installments or on such other terms as may mutually be agreed upon by the Company and Executive. Executive's base salary shall be subject to an
automatic cost-of-living increase of five percent (5%) on the first anniversary of this Agreement, and shall be subject to periodic increase by the Company's Compensation
Committee in its sole discretion. 


        (b)    Discretionary Cash Bonus.    Executive shall be entitled to periodic cash bonuses in the sole discretion of the
Company's Compensation Committee. 


        (c)    Benefit Plans and Fringe Benefits.    Executive shall receive such employment fringe benefits and shall be
entitled to participate in other employee benefit plans, including without limitation any health insurance, pension plan, profit-sharing plan, savings plan, life insurance and disability insurance
plans and the like made available by the Company now or in the future to its executives as the Company's Compensation Committee may periodically award in its discretion based on the Executive's
performance, subject to and on a basis consistent with the terms, conditions and overall administration of such benefit plans. 


        (d)    Long Term Incentives.    In connection with this Agreement, on April 27, 2007 MTR Gaming
Group, Inc. issued to Executive non-qualified options to purchase 20,000 shares of MTR's common stock. The exercise price of those options was $16.27, the Nasdaq Official Close
Price of 








 




the
stock on the date of grant as evidenced by a resolution of the Compensation Committee of MTR Gaming Group, Inc., as disclosed to Executive on or about April 27, 2007. Provided that
this Agreement has not been terminated pursuant to Section 2, Section 4(a), or Section 4(b), and provided further that Executive shall not have resigned his/her employment, then
the options will vest on the second anniversary of the Employment Date. This section 3(d) is intended only to provide a summary of the terms of the options; all of the terms and conditions will
be set forth in a separate Non-Qualified Incentive Stock Option Agreement ("NQSO") in a form acceptable to the Company and Executive. In the event the shareholders of MTR Gaming
Group, Inc. approve that company's 2007 Stock Incentive Plan (the matter is scheduled to be voted upon at the annual meeting of shareholders on June 19, 2007), and provided that this
Agreement shall not have been terminated, then on a date chosen by the Compensation Committee of MTR Gaming Group, Inc., the Company will cause MTR Gaming Group to issue to Executive
non-qualified options to purchase 20,000 shares of MTR's common stock (the "Second Tranche"). The exercise price of those options will be the Nasdaq Official Close Price of the stock on
the date of grant as evidenced by a resolution of the Compensation Committee of MTR Gaming Group, Inc. Provided that this Agreement has not been terminated pursuant to Section 2,
Section 4(a), or Section 4(b), and provided further that Executive shall not have resigned his/her employment, then the options will vest on the second anniversary of the Employment
Date. This section 3(d) is intended only to provide a summary of the terms of the options; all of the terms and conditions will be set forth in a separate Non-Qualified Incentive
Stock Option Agreement ("NQSO") in a form acceptable to the Company and Executive. In the event the shareholders do not approve the 2007 Stock Incentive Plan, then the Company shall have no further
obligation pursuant to this Section 3(d) with respect to the Second Tranche. 


        (e)    Automobile Allowance.    During the Period of Employment, Executive shall be entitled to $600 per month toward
the lease or purchase, insurance and maintenance of an automobile. 


        (f)    Vacation.    Executive shall be entitled to four (4) weeks of paid vacation annually to be taken at a
time or times mutually satisfactory to Executive and the Company. Accrued vacation time not utilized by Executive due to business commitments may be carried over to the following year (provided,
however, that Executive shall not in any event utilize more than six weeks of vacation in any twelve month period) or paid to Executive at the end of the year as additional compensation at Executive's
election. 


        (g)    Expenses.    All travel and other expenses incident to the rendering of services by Executive hereunder,
including the expenses associated with gaming licensing in any state in which the Company or one of its affiliates requests Executive to become licensed, shall be paid by the Company. The Company
shall also provide Executive a Company cellular telephone, or, at the Company's election, reimburse Executive for the cost of a cellular phone and monthly service charges maintained by Executive. If
any such expenses are paid in the first instance by Executive, the Company shall reimburse him/her therefore on presentation of the appropriate documentation required by the Internal Revenue Code of
1986, as amended (the "Code"), or Treasury Regulations promulgated thereunder, or otherwise required under the Company's policy with respect to such expenses. 


        (h)    Working Facilities.    The Company shall provide Executive with an office, secretarial, administrative and
other assistance, and such other facilities and services as shall be suitable to his/her position and appropriate for the performance of his/her duties. 




        4.    Early Termination.    



        (a)   This
Agreement will terminate automatically, and neither party shall have any further obligations or duties under this Agreement, in the event that state regulatory
authorities find 



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Executive
unsuitable to hold the position provided herein, except for obligations accrued under Section 3(a) and 3(b) as of the date of termination. 


        (b)   Notwithstanding
the provisions of Section 2 hereof, Executive may be discharged by the Company for Cause (as defined in Section 4(d) hereof), in which
event the Period of Employment hereunder shall cease and terminate and neither party shall have any further obligations or duties under this Agreement, except for obligations accrued under
Section 3(a) and 3(b) as of the date of termination. In addition, the Period of Employment shall cease and terminate upon the earliest to occur of the following events: (i) the death of
Executive or (ii) at the election of the CEO (subject to the Americans With Disabilities Act), the inability of Executive by reason of physical or mental disability to continue the proper
performance of his/her duties hereunder for a period of 180 consecutive days. Upon termination of the Period of Employment as a result of the Executive's death or disability, in consideration for
Executive or his/her heirs and beneficiaries releasing the Company from any claims, damages or causes of action, the Company shall pay to Executive or his/her estate, as the case may be, a lump sum
amount equal to the lesser of (i) the base salary described in Section 3(a) hereof for the remaining term of the Agreement, or (ii) the amount of base salary to which Executive
would have been entitled to receive for the one (1) year following his/her death or disability. 



        (c)   In
the event Executive is discharged by the Company other than for the reasons set forth in Paragraph 4(b) above, Executive shall have no further obligations or
duties under this Agreement, provided, however, that Executive shall continue to be bound by the
provisions of Section 5 hereof if the Company performs its obligations under this Section 4(c). In the event of termination of the Period of Employment pursuant to the preceding
sentence, unless such termination is in connection with a change in control of the Company or a sale of all or substantially all of the assets of MTR Gaming Group, Inc. (individually or
collectively, a "Change in Control") (in which case Executive's severance will be as set forth in the last sentence of this Paragraph 4(c)), in consideration for Executive or his/her heirs and
beneficiaries releasing the Company from any claims, damages or causes of action, the Company shall continue to pay Executive the entire compensation otherwise payable to him/her under the provisions
of Section 3 hereof for the otherwise remaining Period of Employment without any duty on the part of Executive to mitigate such payments; provided, however, that if Executive should die prior
to the end of such period, the provisions of Section 4(b) hereof shall be applicable as though Executive's employment hereunder had not been so terminated. In the event such termination is in
connection with a Change in Control, then the Company shall pay Executive severance in an amount equal to the greater of (i) the entire compensation otherwise payable to him/her under the
provisions of
Section 3 hereof for the remainder of the Period of Employment hereof; and (ii) one year's salary—in either case without any duty on the part of Executive to mitigate such
payments, in consideration for a mutual release from any further obligations of either party hereunder. 


        (d)   For
purposes of this Section 4, the term "Cause" shall mean (i) conviction of a felony, (ii) embezzlement or misappropriation of funds or property
of the Company or any of its affiliates (the "Affiliates"), (iii) Executive's consistent refusal to substantially perform, or willful misconduct in the substantial performance of, his/her
duties and obligations hereunder; (iv) Executive's engaging in activity that the CEO determines in his reasonable judgment would result in the suspension or revocation of any video lottery,
parimutuel, or other gaming license or permit held by MTR or any of its subsidiaries; or (v) a determination by any state gaming regulatory agency that Executive is not suitable to hold his/her
position or otherwise to participate in a gaming enterprise in the state in question. 




        5.    Confidentiality and Non-Competition:    



        (a)   The
Company and Executive acknowledge that the services to be performed by Executive under this Agreement are unique and extraordinary and, as a result of such
employment, Executive 



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will
be in possession of confidential information and trade secrets (collectively, "Confidential Material") relating to the business practices of the Company and its Affiliates. Executive agrees that
he/she will not, directly or indirectly, (i) disclose to any other person or entity either during or after his/her employment by the Company or (ii) use, except during his/her employment
by the Company in the business and for the benefit of the Company or any of its Affiliates, any Confidential Material acquired by Executive during his/her employment by the Company, without the prior
written consent of the Company or otherwise than as required by law or any rule or regulation of any federal or state authority. Upon termination of his/her employment with the Company for any reason,
Executive agrees to return to the Company all tangible manifestations of Confidential Materials and all copies thereof, not to disparage the Company, and for a period of two (2) years from the
date of such termination not to solicit for employment any employee of the Company. All programs, ideas, strategies approaches, practices or inventions created, developed, obtained or conceived of by
Executive during the term hereof by reason of his/her engagement by the Company, shall be owned by and belong exclusively to the Company, provided that they are related in any manner to the Company's
business or that of any of its Affiliates. Executive shall (i) promptly disclose all such programs, ideas, strategies, approaches, practices, inventions or business opportunities to the
Company, and (ii) execute and deliver to the Company, without additional compensation, such instruments as the Company may require from time to time to evidence its ownership of any such items. 


        (b)   Executive
agrees that during the term hereof he/she will not become a stockholder, director, officer, employee or agent of or consultant to any corporation, or member of
or consultant to any partnership or other entity, or engage in any business as a sole proprietor or act as a consultant to any such entity, or otherwise engage, directly or indirectly, in any
enterprise, in each case which competes with any business or activity engaged in, or known by Executive to be contemplated to be engaged in, by the Company or any of its Affiliates within one hundred
(100) miles of any location in which the Company
or any Affiliate does business or in which Executive has knowledge that the Company or any of its Affiliates contemplates doing business; provided,  however,
 that competition shall not include the ownership (solely as an investor and without any other participation in or contact with the management
of the business) of less than five percent (5%) of the outstanding shares of stock of any corporation engaged in any such business, which shares are regularly traded on a national securities exchange
or in an over-the-counter market. 


        (c)   Executive
agrees that the remedy at law for any breach by him/her of this Section 5 will be inadequate and that the Company shall be entitled to injunctive
relief. 




        6.    General.    This Agreement is further governed by the following provisions: 



        (a)    Notices.    Any notice or other communication required or permitted to be given hereunder shall be made in
writing and shall be delivered in person, by facsimile transmission or mailed by prepaid registered or certified mail, return receipt requested, addressed to the parties at the address stated above or
to such other address as either party shall have furnished in writing in accordance with this Section. Such notices or communications shall be effective upon delivery if delivered in person or by
facsimile and either upon actual receipt or three (3) days after mailing, whichever is earlier, if delivered by mail. 


        (b)    Parties In Interest.    This Agreement shall be binding upon and inure to the benefit of Executive and his/her
heirs and beneficiaries, and it shall be binding upon and inure to the benefit of the Company and any corporation succeeding to all or substantially all of the business and assets of the Company by
merger, consolidation, purchase of assets or otherwise. 


        (c)    Arbitration.    Any disputes arising under the terms of this Agreement shall be settled by binding arbitration
between the parties in the Weirton/Chester, West Virginia area in a proceeding 



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held
under the rules of the American Arbitration Association. In such proceeding, each party shall choose one arbitrator and the two so chosen shall choose a third arbitrator. The vote of two of the
arbitrators shall be sufficient to determine an award. Arbitration proceedings shall be commenced within thirty (30) days from the date of the claimant's request for arbitration to the other
party. Notwithstanding anything herein to the contrary, the arbitrators shall have no authority to grant either party any consequential, incidental, punitive or special damages. 


        (d)    Entire Agreement.    This Agreement supersedes any and all other agreements, either oral or in writing, between
the parties hereto with respect to the employment of Executive by the Company and contains all of the covenants and agreements between the parties with respect to such employment in any
manner whatsoever. Any modification of this Agreement will be effective only if it is in writing signed by the parties. 


        (e)    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
West Virginia without giving effect to the choice of law or conflicts of law rules and laws of such jurisdiction. 


        (f)    Severability.    In the event that any term or condition contained in this Agreement shall for any reason be
held by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other term or condition of this
Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable term or condition had never been contained herein. 


        (g)    No Breach.    Executive warrants and represents to the Company that neither his/her entering nor performing
this Agreement will violate the terms of any contract or covenant to which Executive is a party or by which he/she is bound. 



        (h)    Indemnification.    The Company shall indemnify, defend and hold the Executive harmless, to the extent
permitted by law, including the payment of reasonable attorneys' fees, if the Company does not directly provide Executive's defense, from and against any and all civil claims made by anyone,
including, but not limited to, a corporate entity, company, other employee, agent, patron or member of the general public with respect to any claims that assert as a basis, any acts, omissions or
other circumstances involving the performance of Executive's employment duties hereunder unless such claim is finally determined by a court of competent jurisdiction to arise from Executive's gross
negligence or willful, intentional and/or wanton act. 



[signature
page follows] 


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



	 	 	MTR Gaming Group, Inc./Presque Isle Downs, Inc.
	

 	
 	

By:	

/s/ Edson R. Arneault

	 	 	Its:	 
	

 	
 	

/s/ Patrick J. Arneault
 Patrick J. Arneault




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Exhibit 10.9


EMPLOYMENT AGREEMENT