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                   LOAN AND SECURITY AGREEMENT
                                
                       DATED JUNE 30, 1997
                                
                         BY AND BETWEEN
               SHOWBOAT MARINA CASINO PARTNERSHIP,
                 AN INDIANA GENERAL PARTNERSHIP,
                          AS BORROWER,
                                
                               AND
                                
                   FINOVA CAPITAL CORPORATION
                            AS LENDER
                                
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                   LOAN AND SECURITY AGREEMENT

      AGREEMENT,  dated  as  of June 30,  1997,  by  and  between
SHOWBOAT   MARINA   CASINO  PARTNERSHIP,   an   Indiana   general
partnership  ("BORROWER"), having its place of  business  at  One
Showboat  Place, East Chicago, Indiana 46312; and FINOVA  CAPITAL
CORPORATION, a Delaware corporation ("LENDER"), having a place of
business at 95 North Route 17 South, Paramus, New Jersey 07652.

                      W I T N E S S E T H :

      WHEREAS,  Borrower has requested Lender to  make  loans  to
Borrower  and  Lender is willing to make such loans  to  Borrower
upon the terms and conditions hereinafter set forth.

      NOW, THEREFORE, in consideration of the premises and of the
mutual  covenants herein contained and intending  to  be  legally
bound hereby, the parties hereto covenant and agree as follows:

              ARTICLE 1.  DEFINITIONS; CONSTRUCTION

      1.1  CERTAIN DEFINITIONS.

      In  addition to other words and terms defined elsewhere  in
this Agreement, as used herein the following words and terms have
the  following meanings, respectively, unless the context  hereof
otherwise clearly requires:

      "ADVANCE"  means any advance made hereunder  by  Lender  to
Borrower.

      "ADVANCE  TERMINATION  DATE"  means  the  earliest  of  (i)
October  1, 1997 or (ii) the date Advances aggregating an  amount
equal to the Maximum Loan have been made or (iii) a date mutually
agreed upon between Lender and Borrower.

      "AGREEMENT"  means  this  Loan and  Security  Agreement  as
amended, modified or supplemented from time to time.

      "BOND PLACEMENT" means the sale of the First Mortgage Notes
due 2003 issued under the Indenture.

      "BUSINESS DAY" means any day other than a Saturday,  Sunday
or  other  day  on which banking institutions are  authorized  or
obligated to close in New Jersey or Arizona.

      "CLOSING  DATE" means the date on which the  parties  enter
into  this  Agreement and all conditions to  the  making  of  the
Initial Advance contained in this Agreement and the other Loan

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Documents  have  been  satisfied in Lender's  sole  and  absolute
discretion.

      "COLLATERAL" means all assets of Borrower in which Borrower
has  granted  or  will grant a Lien to Lender, pursuant  to  this
Agreement  or  otherwise, including those  assets  described  and
defined as Collateral in Section 6.1.

      "CONSTITUENT   DOCUMENTS"    means   the   certificate   of
incorporation,  agreement of partnership or limited  partnership,
organizational agreement, operating agreement, by-laws,  or  such
other  similar  document pursuant to which  Borrower  and/or  the
Guarantors were organized or their affairs are governed.

      "CONVERSION  DATE" means the date, if  any,  on  which  the
outstanding  Advances  automatically  convert  to  a  Term   Loan
pursuant to Section 2.9.2.

      "DEFAULT" means an event which with the giving of notice or
the  passage  of  time,  or both, would constitute  an  Event  of
Default.

      "DELIVERY  AND  ACCEPTANCE RECEIPT" means a certificate  in
form  and  substance  satisfactory to Lender  pursuant  to  which
Borrower  acknowledges delivery of an Item  of  FF&E  to  it  and
receipt and acceptance by it for all purposes.

      "DISBURSEMENT DATE" has the meaning given to  the  term  in
Section 2.5 hereof.

      "ERISA"  means  the Employee Retirement Income Security Act
of 1974, as amended.

      "EVENT  OF  DEFAULT"  means any of the  Events  of  Default
described in Section 7.1 hereof.

      "EXECUTIVE  OFFICER"  means the managing  general  partner,
President,  the  Chief Executive Officer, or the Chief  Financial
Officer of Borrower elected from time to time.

      "FF&E"   means  all   furniture,  fixtures  and   equipment
(including  but  not limited to, kitchen and bar,  communication,
surveillance, computer and office equipment, furniture  fixtures,
and  other  equipment),  heretofore  or  hereafter  acquired   by
Borrower  and  described in any Request for Advance and  financed
(or refinanced by reimbursement to Borrower) with the proceeds of
the  Loan  or  any  Advance and any and  all  additions  thereto,
substitutions and replacements of any of the foregoing, wherever

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located.   Each  item of FF&E is hereinafter referred  to  as  an
"Item of FF&E".

      "GAAP"  means  generally  accepted accounting principles in
the  United States of America (as such principles may change from
time to time)  applied on a consistent basis (except for  changes
in application in which Borrower's independent  certified  public
accountants concur), applied both to classification of items  and
amounts.

      "GAMING COMMISSION" means the Indiana Gaming Commission.

      "GAMING  LICENSE" means the license issued  by  the  Gaming
Commission to Borrower to operate the Vessel as a gaming casino.

      "INDENTURE" means the indenture dated as of March 28,  1996
among  Borrower, SMFC and American Bank National  Association  as
Trustee.

      "INSURANCE LETTER" means the letter from Lender to Borrower
agreed  to  by  Borrower dated June 4, 1997 a copy  of  which  is
annexed hereto.

      "INTEREST  RATE" means the Index Rate plus four and  ninety
hundredths  (4.90%)  percent.  The  "INDEX  RATE"  shall  be  the
highest  yield, as published in THE WALL STREET JOURNAL,  on  the
first  (1st)  Business  Day preceding the  Conversion  Date,  for
Treasury  Notes  having a maturity date  on  or  closest  to  the
Maturity  Date.  Interest shall be calculated on the basis  of  a
year  of 360 days and twelve months of thirty (30) days each  and
charged on a daily basis.

      "INTERIM  INTEREST  RATE"  The rate  of  interest  publicly
announced  by Citibank, N.A. ("Citibank") in New York, New  York,
from  time  to time as its Prime Rate plus two percent  (2%)  per
annum.  The Prime Rate is not intended to be the lowest  rate  of
interest charged by Citibank to its borrowers.

      "ITEM  OF  FF&E" has the meaning given to the term  in  the
definition of FF&E in this Section 1.1.

      "LAW"  means  any law (including common law), constitution,
statute,  treaty, regulation, rule, ordinance, order, injunction,
writ, decree or award of any government or governmental agency.

      "LEASEHOLD   MORTGAGE"  means   the   Leasehold   Mortgage,
Assignment of Rents and Security Agreement dated as of March  28,
1996  made  by Borrower to American Bank National Association  as
Trustee under the Indenture.

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      "LEGAL  REQUIREMENTS" means any and all present and  future
judicial,  and administrative rulings or decisions, and  any  and
all   present   and  future  federal,  state,  and  local   laws,
ordinances, rules, regulations, permits and certificates, in each
case, in any way applicable to Borrower (or the ownership or  use
of the Collateral or its other assets) or this transaction.

      "LIEN"  means any mortgage, pledge, lien, security interest
(including,  without  limitation, any preferred  ships  mortgage,
vessel   chattel  mortgage,  conditional  sale  or  other   title
retention  agreement),  grant of a  leasehold,  charge  or  other
encumbrance of any nature whatsoever, and also means  the  filing
of  or the agreement to give any financing statement or analogous
document under the UCC or analogous law of any jurisdiction.

      "LOAN"   means,  as  of  any  date  of  determination,  the
aggregate amount of all Advances theretofore made hereunder.

      "LOAN  DOCUMENTS" means this Agreement,  the  Requests  for
Advance,  the  Note,  and any other agreements,  instruments  and
documents  required to be, or which are, executed by Borrower  in
connection with this Agreement or the Loan (as the same may  from
time to time be amended, modified or supplemented).

      "LP"   means  Showboat Indiana Investment L.P.  an  Indiana
limited partnership.

      "MANAGEMENT AGREEMENT" means the agreement between Borrower
and  SMP  for  the management by SMP of Borrower's  business  and
operations.

      "MATURITY  DATE"  has the meaning given  to  that  term  in
Section 2.9.2 hereof.

      "MAXIMUM  LOAN" means the maximum aggregate  amount  to  be
loaned  hereunder not to exceed the lesser of (i) Eleven  Million
Dollars  ($11,000,000) or (ii) the actual  cost  to  Borrower  to
acquire the FF&E.

      "NOTE"  means  the  secured  promissory  note  of  Borrower
executed and delivered under this Agreement, in substantially the
form  annexed  hereto as Exhibit A with the blanks  appropriately
filled in.

      "OBLIGATIONS"  means  all  of the indebtedness, liabilities
and obligations of every kind and nature of Borrower  to  Lender,
whether  now  existing  or  hereafter  arising,  whether  or  not
currently  contemplated,  howsoever arising,  including,  without
limitation, all indebtedness, liabilities and obligations arising

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under,  in  connection with or evidenced by this  Agreement,  the
Note, the other Loan Documents, or otherwise.

      "OFFICE",  when used in connection with Lender,  means  its
office  located at 95 North Route 17 South, Paramus,  New  Jersey
07653,  or  such other office of Lender as may be  designated  in
writing from time to time by Lender to Borrower.

      "PARTNERSHIP AGREEMENT" means the partnership agreement  of
the Borrower.

      "PERSON" means an individual, corporation, national banking
association,   partnership,  trust,  unincorporated  association,
joint   venture,   joint-stock  company,  government   (including
political subdivisions), governmental authority or agency, Native
American tribe, or any other entity.

      "PLAN" means any employee benefit plan which is covered  by
ERISA  and which is maintained by Borrower or, in the case  of  a
plan  to  which  more  than one employer  contributes,  to  which
Borrower  made  contributions at any time within  the  five  plan
years preceding the date of termination.

      "PORT" means the port of East Chicago, Indiana.

      "PREMISES"  means  the Vessel and the  related  land  based
support facilities, at the Port to be constructed and operated by
Borrower,  as a gaming casino from the Port as such  facility  is
more  fully described in that certain Redevelopment Project Lease
between  the  City  of East Chicago Redevelopment  Authority  and
Showboat   Marina  Partnership  dated  October   19,   1995    as
subsequently assigned to Borrower.

      "REQUEST  FOR ADVANCE" means a Request for Advance  in  the
form of Exhibit B annexed hereto.

      "SHIP MORTGAGES"  means  collectively  the  First Preferred
Ship Mortgage on the Vessel made by Borrower in favor of American
Bank  National  Association, as Trustee under the Indenture dated
as  of April 9, 1997 and the First Preferred Ship Mortgage on the
Vessel  made  by  Borrower in  favor of PDS Financial Corporation
dated  as  of  February  21,  1997  as  subsequently assigned  to
Donaldson, Lufkin and Jenrette Securities Corporation.

      "SHOWBOAT" means Showboat Inc. a Nevada corporation.

      "SHOWBOAT  ENTITIES"  means  Borrower,  SMP,  LP,  Showboat
Operating Company, Showboat Indiana, Inc., Showboat Development

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Company,  SOC,  Showboat and any present and  future  wholly  and
partially owned subsidiary or affiliate of any of the foregoing.

      "SMFC"   Showboat  Marine  Finance  Corporation  a   Nevada
corporation.

      "SMP"  means Showboat Marina Partnership an Indiana general
partnership owned 45% by Waterfront and 55% by Showboat Operating
Company.

      "SUBORDINATION  AGREEMENTS"  means  the  intercreditor  and
subordination agreements in the form of Exhibit D hereto.

      "TERM"  means  the  period beginning on the Conversion Date
and ending on the Maturity Date.

      "UCC"  means the Uniform Commercial Code as adopted in  the
State of Arizona.

      "VESSEL"  means  that certain vessel called  M/V  Showboat,
Official Number 1052579.

      "VESSEL CHATTEL MORTGAGE" means the vessel chattel mortgage
executed by Borrower in favor of Lender in substantially the form
annexed  hereto  as  Exhibit  C  with  the  blanks  appropriately
completed.

      "WATERFRONT"     means    Waterfront    Entertainment   and
Development, Inc. an Indiana corporation.

      1.2  GENERAL INTERPRETIVE PRINCIPLES.

      For   purposes  of  this  Agreement,  except  as  otherwise
expressly   provided  herein  or  unless  the  context  otherwise
requires:

         (i)    any   pronoun used shall be deemed to cover  both
gender forms as well as the neuter form;

         (ii)   all  references  to the plural shall include  the
singular, the singular the plural and the part the whole;

         (iii) the word "or" has the inclusive meaning frequently
identified by the phrase "and/or";

         (iv)  accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with GAAP;

         (v)   the  words "herein", "hereunder" and "hereof"  and
similar  terms  in this Agreement refer to this  Agreement  as  a
whole and not to any particular provision of this Agreement;

         (vi)   references   herein   to  "Articles", "Sections",
"Subsections", "Paragraphs", and other subdivisions without

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reference  to  a  document are to designated Articles,  Sections,
Subsections, Paragraphs and other subdivisions of this Agreement;

         (vii)  a   reference  to  a Subsection  without  further
reference  to  a  Section is a reference to  such  Subsection  as
contained in the same Section in which the reference appears, and
this rule shall also apply to Paragraphs and other subdivisions;

         (viii)  the  term "include" or "including"  shall  mean,
without limitation, by reason of enumeration; and

         (ix)  the term "satisfactory to Lender" or "satisfaction
of  the  Lender"  or "satisfactory to counsel" or  other  similar
terms means satisfactory to Lender or its counsel in its sole and
absolute discretion.

                      ARTICLE 2. THE CREDIT

      2.1  THE LOAN.

      Subject  to the terms and conditions and relying  upon  the
representations and warranties herein set forth, Lender agrees to
make  a  Loan  to Borrower in a principal amount  of  up  to  the
Maximum Loan.

      2.2  USE OF PROCEEDS.

      The  proceeds  of  the Advances shall be used  by  Borrower
solely to pay suppliers (each, a "Supplier" and collectively, the
"Suppliers")  for  the  purchase and installation  of  non-gaming
Items  of  FF&E  acceptable to Lender in its  sole  and  absolute
discretion  or  reimburse  Borrower  for  the  payments  made  by
Borrower  to  Suppliers  for  such  non-gaming  Items   of   FF&E
acceptable   to  Lender  in  its  sole  and  absolute  discretion
purchased by Borrower, all for and used specifically in or on the
Premises, and all pursuant to and in accordance with the terms of
the  purchase agreements between Borrower and the Suppliers, each
satisfactory to Lender.

      2.3  THE NOTE.

      The  obligation of Borrower to repay the Loan  and  to  pay
interest thereon shall be evidenced by the Note.  The Note  shall
be  dated the Closing Date and shall be executed by Borrower  and
delivered to Lender on the Closing Date.

      2.4  ADVANCES.

      Lender  agrees, on the terms and subject to the  conditions
set  forth herein, to make Advances to Borrower from time to time
on  or prior to the Advance Termination Date so long as the total
Advances  do not exceed the Maximum Loan and no Event of  Default
has  occurred; and Borrower agrees, on the terms and  subject  to
the conditions set forth herein, to accept such Advances from

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Lender  and  apply  them in accordance with  the  terms  of  this
Agreement; PROVIDED, HOWEVER, that Lender shall not be  obligated
to make any Advance hereunder on or after October 1, 1997.

      2.5  REQUESTS FOR ADVANCES.

      Borrower shall, not later than the fifth Business Day  next
preceding the date of any requested Advance, submit to  Lender  a
Request  for  Advance, setting forth (a) the date  requested  for
such  Advance, which date shall be a Business Day, (b) the amount
of the requested Advance, which amount shall not be less than One
Million  Dollars ($1,000,000), (c) the use of proceeds  from  the
Advance requested, (d) a description of the Items of FF&E  (which
such  Items  of  FF&E  to  be eligible for  an  Advance  must  be
acceptable  to  FINOVA in its sole and absolute  discretion)  and
FF&E  costs  to  be  paid  with the Advance,  (e)  the  Suppliers
requested to be paid with the proceeds of such Advance and  their
addresses, and (f) all other information set forth on the Request
for  Advance or as otherwise requested by Lender.  The submission
of   each   Request  for  Advance  shall  constitute   Borrower's
irrevocable  commitment to borrow such  amount.   The  date  each
Advance  is made is the "Disbursement Date".  In addition,  as  a
precondition to making any Advance hereunder, Lender may, in  its
sole  and  absolute  discretion, require that  each  Request  for
Advance  indicate the payee(s) to be paid with  the  proceeds  of
such   Advance   and   be  accompanied  by   such   requisitions,
certificates,  releases  and  waivers  of  liens,  approvals  and
supporting  invoices, copies of agreements with the Suppliers  to
be  paid,  bills or other documents, in each case,  in  form  and
substance  and  from  such Person or Persons  as  are  reasonably
satisfactory to Lender.

      2.6  DISBURSEMENTS.

      Subject  to  the conditions set forth herein, Lender shall,
on  each  Disbursement Date, credit, by wire transfer, the amount
of  the   Advance  to  be  made to the account of Borrower or the
Person or  Persons specified  by  Borrower  in  writing  pursuant
to Section 2.5 hereof.

      2.7  LOAN ACCOUNT.

      Lender  shall maintain a loan account on its books  in  the
name  of  Borrower  for the Loan in which will  be  recorded  all
Advances  made by Lender, all payments of principal  thereof  and
all  accruals and payments of interest thereon.  The  entries  in
the  loan account (in the absence of manifest error in the making
thereof)   shall  be  conclusive  evidence  of  the   outstanding
principal thereof and accrued interest thereon from time to time.
Lender  shall  provide Borrower with statements of  said  account
from time to time on request.

      2.8  INTEREST RATES.

           2.8.1      INTEREST  PRIOR  TO  MATURITY.  During  the
period between the making of an Advance and the Conversion  Date,
Advances  shall  bear  interest at  the  Interim  Interest  Rate.
Thereafter (subject to the provisions of Section 2.8.2 hereof),

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the  unpaid  principal amount of the Loan shall bear interest  at
the Interest Rate.

           2.8.2     INTEREST AFTER MATURITY. Commencing with the
day after the principal amount of any part of the Loan shall have
become due and payable (by acceleration or otherwise), such  part
of  the  Loan or the entire Loan (as the case may be) shall  bear
interest  at the daily rate of four percent (4%) per annum  above
the  then  applicable Interim Interest Rate or Interest Rate  (as
the case may be) (the "Default Rate").

           2.8.3     MAXIMUM RATE. Lender and Borrower intend the
Loan  Documents to comply in all respects with all provisions  of
Law  and  not  to  violate, in any way, any legal limitations  on
interest  charges. Accordingly, if, for any reason,  Borrower  is
required to pay, or has paid, interest at a rate in excess of the
highest rate of interest which may be charged by Lender or  which
Borrower  may legally contract to pay under applicable  law  (the
"Maximum  Rate"), then the Interim Interest Rate or the  Interest
Rate  (as  the  case  may  be) shall be  deemed  to  be  reduced,
automatically and immediately, to the Maximum Rate, and  interest
payable hereunder shall be computed and paid at the Maximum  Rate
and  the  portion of all prior payments of interest in excess  of
the  Maximum Rate shall be deemed to have been prepayments of the
outstanding principal of the Loan and applied to the installments
in the inverse order of their maturities.

      2.9  PAYMENTS.

           2.9.1     TIME; PLACE; MANNER. All payments to be made
in  respect  of  principal, interest, or other amounts  due  from
Borrower  hereunder or under the Note shall become due  at  12:00
o'clock  noon,  New  Jersey time, on the  day  when  due  without
presentment, demand, protest or notice of any kind, all of  which
are  hereby  expressly waived.  Such payments shall  be  made  to
Lender  in  lawful  money  of the United  States  of  America  in
immediately available funds.

           2.9.2     PAYMENTS OF PRINCIPAL AND INTEREST. Prior to
the  Conversion  Date, Borrower shall pay interest  only  on  the
Advances, at the Interim Interest Rate, in arrears, on the  first
day  of  each  month and on the Conversion Date.   Provided  that
there  is  no Default or Event of Default hereunder or under  the
other Loan Documents, Borrower has faithfully observed all of the
terms and conditions hereunder and under the other Loan Documents
and  there  has been no material adverse change in the  business,
operations  or financial condition of Borrower or the Collateral,
the Advances outstanding as of the Advance Termination Date shall
automatically  convert  to a term Loan and  shall  be  repaid  to
Lender as follows: if the Conversion Date is not the first day of
a  month,  Borrower  shall pay, on the first  day  of  the  month
immediately  succeeding the month in which  the  Conversion  Date
occurs,  interest only at the Interest Rate from  the  Conversion
Date  to  the last day of the month in which the Conversion  Date
occurs;   thereafter,   Borrower  shall  make   thirty-six   (36)
consecutive equal monthly payments of principal and interest each
in  an  amount which will fully amortize the Loan at the Interest
Rate over such thirty-six (36) month period (the date upon which

<PAGE>

the  thirty-sixth (36th)  consecutive  equal monthly  payment  of
principal  and  interest  is due is herein  referred  to  as  the
"Maturity Date") commencing on the first day of the second  month
succeeding  the Conversion Date, provided, however, that  if  the
Conversion  Date  is  the  first day  of  a  month,  payments  of
principal  and interest shall commence on the first  day  of  the
immediately succeeding month.  Lender shall compute the amount of
each  payment  and advise Borrower of such amount.  Each  monthly
payment  shall be applied, first to fees, costs and  charges,  if
any,  owing  to Lender, then to interest as may be due hereunder,
and the balance of such payment shall be applied to the principal
balance  of the Loan.  The entire unpaid principal balance  which
was  not  payable  earlier, whether due  to  regularly  scheduled
payments,  acceleration or otherwise, together  with  any  unpaid
interest, fees, costs and charges shall be due and payable on the
Maturity Date.  After the maturity of all or any part of the Loan
(by acceleration or otherwise), interest on the Loan or such part
thereof shall be due and payable at the Default Rate on demand.

           2.9.3      NET  PAYMENTS.  All payments hereunder  and
under  the  Note  shall  be made by Borrower  to  Lender  without
defense, set-off, claim or counterclaim and without deduction for
any  present  or  future income, stamp or  other  taxes,  levies,
imposts,  deductions, charges or withholdings whatsoever imposed,
assessed,  levied  or  collected by or for  the  benefit  of  any
jurisdiction  or taxing authority.  In addition,  Borrower  shall
pay  any and all taxes (stamp or otherwise) payable or determined
to  be  payable in connection with the execution and delivery  of
this Agreement, the Note, and the other Loan Documents and on all
payments to be made by Borrower hereunder and under the Note  and
the  other Loan Documents (other than the Lender's income  taxes)
and  all  taxes  payable in connection with  or  related  to  the
Collateral.

      2.10 PREPAYMENTS.

      Borrower shall not have the right to voluntarily prepay any
outstanding Advance or the Loan, in whole or in part.

      2.11 ADMINISTRATIVE COSTS.

      If Borrower shall fail to make any payment of principal  or
interest  within  ten (10) days after the same is  due,  Borrower
shall  pay  a  late  charge of five percent (5%)  of  the  unpaid
amounts,  but in no event greater than the maximum rate permitted
by  law,  and  such  amount shall be payable upon  demand.   Such
payment  is not interest for the use of money, but is  solely  to
cover Lender's administrative costs occasioned by such delay.

           ARTICLE 3.  REPRESENTATIONS AND WARRANTIES

      BORROWER REPRESENTS AND WARRANTS TO LENDER THAT:

      3.1  ORGANIZATION AND QUALIFICATION.

          (a)  Borrower is duly organized and validly existing as
a general partnership under the Laws of the State of Indiana

<PAGE>

with  full  power  and  authority to own its  properties  and  to
transact its business as now transacted and as contemplated to be
transacted.   The general partner(s) executing this Agreement  on
behalf of Borrower which are general or limited partnerships  are
duly organized and validly existing as general or limited partner
ships  (as the case may be), and the limited partnerships are  in
good standing under the Laws of the State of their formation with
full  power and authority to own their properties and to transact
their businesses as are now transacted and as contemplated to  be
transacted.   Borrower  is  qualified and  in  good  standing  to
transact business in each jurisdiction where the ownership of its
properties  or  the  transaction of its  business  requires  such
qualification.

          (b)  The general partner(s) executing this Agreement on
behalf  of  Borrower which are corporations are  duly  organized,
validly  existing and in good standing as corporations under  the
Laws  of  the  State of their incorporation with full  power  and
authority   to  own  their  properties  and  to  transact   their
businesses   as  now  transacted  and  as  contemplated   to   be
transacted.   The general partner(s) are qualified  and  in  good
standing  to  transact  business in each jurisdiction  where  the
ownership  of  their  properties  or  the  transaction  of  their
businesses require such qualification.

      3.2  AUTHORITY AND AUTHORIZATION.

          (a)  Borrower  has full power and authority to execute,
deliver and carry out the provisions of this Agreement, the  Note
and  the  other Loan Documents to which it is a party, to  borrow
hereunder  and under the other Loan Documents and to  create  the
Liens  provided  for  herein,  and  to  perform  its  obligations
hereunder and thereunder, and all such action has been  duly  and
validly authorized by all necessary proceedings on its part.

          (b)  The general partner(s) executing this Agreement on
behalf  of Borrower have full power and authority to execute  and
deliver this Agreement and the other Loan Documents on behalf  of
Borrower and all such action has been duly and validly authorized
by all necessary proceedings on its/their part.

      3.3  EXECUTION AND BINDING EFFECT.

      This  Agreement,  the  Note and the  other  Loan  Documents
executed  by  Borrower  have been duly and validly  executed  and
delivered by Borrower and constitute the legal, valid and binding
obligation  of  Borrower  enforceable in  accordance  with  their
respective terms.

      3.4  AUTHORIZATIONS AND FILINGS.

      Except  for  the  filing  of UCC financing  statements,  no
authorization,  consent, approval, license,  exemption  or  other
action  by,  and  no  registration,  qualification,  designation,
declaration or filing with, any governmental authority is or will
be necessary or advisable in connection with the execution and

<PAGE>

delivery of this Agreement, the Note, the other Loan Documents or
the  consummation  by  Borrower of the  transactions  herein  and
therein contemplated, or performance by Borrower of or compliance
by Borrower with, the terms and conditions hereof or thereof.

      3.5  ABSENCE OF CONFLICTS.

      Neither  the execution and delivery of this Agreement,  the
Note,  or  the  other  Loan Documents, nor  consummation  of  the
transactions  herein or therein contemplated nor performance  of,
or  compliance  with the terms and conditions hereof  or  thereof
will  (a) result in any violation or breach of (i) the provisions
of  Borrower's  Constituent Documents, or (ii) any  Law,  or  the
order, rule or regulation of any court or governmental agency  or
body having jurisdiction over Borrower, or any of its properties,
or  (iii)  any agreement, bond, note, instrument or indenture  to
which  Borrower  is  a  party or pursuant to  which  any  of  its
properties  are  affected,  or (b)  result  in  the  creation  or
imposition of any Lien upon any property (now owned or  hereafter
acquired)  of  Borrower,  except for the  Lien  created  by  this
Agreement.

      3.6  FINANCIAL STATEMENTS.

      Borrower  has  heretofore   furnished  to  Lender   certain
financial    statements   and   related   financial   information
("Financial  Statements").  Such Financial Statements  (including
the  notes  thereto)  present fairly the financial  condition  of
Borrower as of the dates of the balance sheets contained therein,
and the results of its operations for the periods then ended, all
in  conformity  with  GAAP  on a basis consistent  with  that  of
Financial Statements for corresponding prior periods.  Except  as
disclosed   therein,   Borrower  has   no   material   contingent
liabilities (including liabilities for taxes), unusual forward or
long-term  commitments or unrealized or anticipated  losses  from
unfavorable commitments.

      3.7  NO DEFAULTS.

      There  is  no  Default or Event of Default under  the  Loan
Documents.

      3.8  LITIGATION.

      There is no pending or threatened claim or proceeding by or
before  any  court  or governmental agency against  or  affecting
Borrower  which,  if  adversely decided  would  have  a  material
adverse effect on the business, operations or financial condition
of  Borrower  or  on  the  ability of  Borrower  to  perform  its
obligations  under  this Agreement, the Note or  the  other  Loan
Documents or on the Collateral.

<PAGE>

      3.9  TITLE TO COLLATERAL.

      At  the time each Advance is made, Borrower will have  good
title  to  the  FF&E  described on  the  applicable  Request  for
Advance, or will acquire good title thereto upon the disbursement
of  the proceeds of the Advance, subject to no Lien covering  the
Collateral other than the Liens held by Lender which are and will
be first perfected Liens covering the Collateral.

      3.10 TITLE TO PROPERTY.

      Borrower  has  good  title to all  property  owned  by  it,
including all of the Collateral and other properties reflected in
the  most recent balance sheet referred to in Section 3.6  hereof
(except  as sold or otherwise disposed of in the ordinary  course
of  business),  subject to no Lien other than the Liens  held  by
Lender covering the Collateral which are first perfected Liens on
the  Collateral,  preferred maritime liens  (which  Borrower  has
agreed  as  more  fully set forth herein will  be  discharged  by
filing  of the appropriate satisfaction or release instrument  or
other  required payment or filing within thirty (30) days of  the
creation  of said lien) and liens created by the Ship  Mortgages.
There are no preferred maritime liens affecting the Collateral or
the  Vessel except for possible preferred maritime liens  arising
in  the ordinary course of business which relate to amounts  owed
by Borrower for which Borrower is not delinquent in payment.

      3.11 TITLE TO VESSEL.

      Borrower has good title to the Vessel subject to  no  Liens
other than the Ship Mortgages.

      3.12 TAXES.

      All  tax returns required to be filed by Borrower have been
properly  prepared, executed and filed.  All taxes,  assessments,
fees and other governmental charges upon Borrower or upon any  of
its  properties, incomes, sales or franchises which are  due  and
payable have been paid.

      3.13 FINANCIAL ACCOUNTING PRACTICES.

      Borrower makes and keeps books, records and accounts which,
in  reasonable  detail, accurately and fairly reflect  Borrower's
transactions and dispositions of its assets.

      3.14 POWER TO CARRY ON BUSINESS.

      Borrower has all requisite power and authority to  own  and
operate  its  properties and to carry on its  businesses  as  now
conducted and as presently planned to be conducted.

      3.15 NO MATERIAL ADVERSE CHANGE.

      Since the date of the Financial Statements referred  to  in
Section 3.6, there has been no material adverse change in the

<PAGE>

business,  operations or financial condition of Borrower  or  the
Collateral.

      3.16 COMPLIANCE WITH LAWS.

      Borrower  is  not in violation of any Law, except  for  vio
lations  which  in  the aggregate do not have a material  adverse
effect  on  the  business, operations or financial  condition  of
Borrower or on the Collateral.

      3.17 COMPLIANCE WITH AGREEMENTS.

      Borrower  is not and will not as a result of executing  and
delivering this Agreement and the documents related hereto or  as
a  result of consummation of the transaction contemplated  herein
or  therein  be  in  default  under any  agreement,  bond,  note,
indenture   or  contract,  including,  without  limitation,   the
Indenture,   the First Mortgage Notes due 2003 issued  under  the
Indenture or the Leasehold Mortgage except for defaults which  in
the  aggregate  do  not  have a material adverse  effect  on  the
business, operations or financial condition of Borrower or on the
Collateral.

      3.18 ACCURATE AND COMPLETE DISCLOSURE.

      No  representation  or warranty made by  Borrower  in  this
Agreement  and  no  statement made by Borrower in  the  Financial
Statements furnished pursuant to Section 3.6 hereof or otherwise,
or  any  certificate,  report, exhibit or document  furnished  by
Borrower  to  Lender  pursuant to  or  in  connection  with  this
Agreement  or  the Loan is false or misleading  in  any  material
respect  (including by omission of material information necessary
to   make   such   representation,  warranty  or  statement   not
misleading).

      3.19 REGULATIONS G AND U.

      Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying "margin stock", as such
term  is  used in Regulations G or U promulgated by the Board  of
Governors of the Federal Reserve System as amended from  time  to
time.   No  part  of the proceeds of the Loan  will  be  used  to
purchase or carry any margin stock or to extend credit to  others
for  the  purpose  of purchasing or carrying any "margin  stock".
Borrower does not own any "margin stock".

      3.20 PERFECTION.

      Except for the filings under Article 9 of the UCC specified
in  Section  4.7 hereof (and continuation statements at  periodic
intervals),  and filing of the Vessel Chattel Mortgage  with  the
United  States  Coast  Guard no further filing  or  recording  is
necessary  under  the  UCC  or  under  any  other  Laws  of   any
jurisdiction, in order to perfect in all applicable jurisdictions
the Liens of Lender in the Collateral.  Upon such filings, Lender

<PAGE>

will  be  granted a first perfected Lien covering the Collateral.
There  are  no  other  Liens covering  or  which  may  cover  the
Collateral  other  than liens in favor of the Trustee  under  the
Indenture, preferred maritime liens with respect to amounts  owed
by Borrower in the ordinary course of business for which Borrower
is  not  delinquent in payment and possible liens of the  Trustee
and PDS Financial Corp. or its successors or assigns pursuant  to
the  Ship Mortgages (which liens are subject to the Subordination
Agreements).

      3.21 PLACE OF BUSINESS.

      Both  the  place of business (or chief executive office  if
there  is  more than one place of business) of Borrower  and  the
place  where  it keeps its records concerning the Collateral  and
all  of  its interest in, to and under this Agreement are located
at the address set forth at the beginning of this Agreement.

      3.22 LOCATION OF COLLATERAL.

      For all purposes, including, without limitation, perfection
of  security  interests therein under Article 9 of the  UCC,  the
Collateral is deemed located and at all times shall be located at
the Premises.

                ARTICLE 4.  CONDITIONS OF LENDING

      The  obligation of Lender to make the Loan and each Advance
hereunder is subject to the accuracy in all material respects, as
of   the   date  hereof  and  each  Disbursement  Date,  of   the
representations   and  warranties  herein   contained,   to   the
performance  by  Borrower  of  its obligations  to  be  performed
hereunder  on  or  before  such  Disbursement  Date  and  to  the
satisfaction  of  the  following  further  conditions.    If  all
conditions  contained  herein are not  satisfied  and  the  first
Advance  is  not  made  by July 1, 1997,  Lender  shall  have  no
obligation  whatsoever  to make any Advance  and  shall  have  no
liability for its refusal to do so.

      4.1  REPRESENTATIONS AND WARRANTIES.

      The  representations and warranties contained in Article  3
hereof  are true as of the date hereof and shall be true  on  the
Closing  Date  and on and as of each Disbursement Date  with  the
same  effect as if made on and as of such date, and on such dates
no  Default  or  Event  of Default shall  have  occurred  and  be
continuing  or exist or shall occur or exist after giving  effect
to the Loan or any Advance.

      4.2  BORROWER'S CERTIFICATE.

      On  the  Closing Date, Borrower shall deliver to  Lender  a
certificate  in form and substance satisfactory to Lender,  dated
the  Closing Date, signed by a duly authorized representative  of
Borrower,  certifying as to (a) true copies  of  the  Constituent
Documents of Borrower, all as in effect on such date, (b) true

<PAGE>

copies  of  all  action  taken  by  Borrower  relative  to   this
Agreement,  the Note and the other Loan Documents,  and  (c)  the
names,  true  signatures and incumbency of the general  partners,
authorized  representatives,  officer  or  officers  of  Borrower
authorized  to execute and deliver this Agreement, the  Note  and
the  other  Loan Documents on behalf of Borrower (and Lender  may
conclusively  rely on such certificate unless and until  a  later
certificate revising the prior certificate has been furnished  to
Lender).   Borrower  shall also deliver to Lender  good  standing
certificates for the managing general partners of Borrower issued
by  the respective Secretarys' of State of the State of formation
of  each such entity and each state in which each such entity  is
required by Law to be qualified.

      4.3  OPINION OF COUNSEL.

      On the Closing Date, Lender shall have received a favorable
written  opinion of counsel for Borrower dated the  Closing  Date
and in form and substance satisfactory to Lender and its counsel,
Winick & Rich, P.C.

      4.4  NO CHANGE OF LAW OR FACTS.

      No  change shall have occurred after the date of  execution
and  delivery of this Agreement in applicable Law or  regulations
thereunder  or interpretations thereof by appropriate  regulatory
authorities which, in the opinion of Lender or its counsel, would
make  it illegal for Lender to acquire the Note, make an Advance,
or otherwise to participate in the Loan, nor shall any facts come
to  the  attention  of Lender, concerning Borrower,  its  general
partners,  its  business  or financial condition  which,  in  the
opinion  of Lender would increase the risk to Lender of repayment
of the Loan by Borrower.

      4.5  DOCUMENTS.

      The  following  documents shall have been duly  authorized,
executed  and  delivered  by  the  respective  party  or  parties
thereto,  shall be in form and substance satisfactory  to  Lender
and  its  counsel and shall be in full force and  effect  on  the
Closing  Date  and  on each Disbursement Date,  and  an  executed
counterpart of each thereof shall have been delivered  to  Lender
and its counsel:

          4.5.1     this Agreement;

          4.5.2     the Note;

          4.5.3     the Insurance Letter;

          4.5.4     the Vessel Chattel Mortgage;

          4.5.5     a Request for Advance completed in accordance
                    herewith;

          4.5.6     insurance certificates or policies of
          
<PAGE>
          
                    insurance  evidencing the coverages  required
                    by Section 5.3 hereof;

          4.5.7     the Management Agreement;

          4.5.8     the Subordination Agreements;

          4.5.9     the Partnership Agreement; and

          4.5.10    the other Loan Documents.

      4.6  FF&E.

      With  each  Request for Advance, Borrower shall provide  to
Lender  a complete description of each item of FF&E the  cost  of
which will be paid with the proceeds of the Advance.  Lender  may
reject  any  such  item  of  FF&E, in which  case,  Borrower  may
substitute  other FF&E acceptable to Lender or reduce the  amount
of  the Advance requested, subject to the limitation contained in
Section 2.5(b) hereof.

      4.7  FINANCING STATEMENTS.

      On  the  Closing Date and prior to each Advance,  a  Vessel
Chattel  Mortgage  and  UCC  financing  statements  covering  the
security interest created by this Agreement in the FF&E described
in  such  Request for Advance shall have been duly filed  in  the
office  of the Secretary of State of the State where the FF&E  is
located  with  respect to the financing statements and  with  the
United  States Coast Guard in Falling Waters, West Virginia  with
respect  to  the Vessel Chattel Mortgage and in all other  places
as,  in  the opinion of Lender, or its counsel, are necessary  or
desirable to perfect such Liens.

      4.8  LICENSES AND PERMITS.

      All  appropriate action shall have been taken prior to  the
Closing  Date in order to permit consummation of the transactions
contemplated  herein and hereby and enforcement  of  all  of  the
terms  hereof  and  thereof, and all licenses, permits,  waivers,
exemptions,  authorizations and approvals required  (or,  in  the
opinion  of Lender or its counsel, advisable) to be in effect  on
the   Closing  Date  including,  without  limitation,  those   in
connection  with  the business and operations of  Borrower  shall
have  been issued and shall be in full force and effect  on  such
date, and copies thereof shall have been delivered to Lender.  On
or  prior  to the Closing Date, Lender shall have been  satisfied
that  no  licenses,  permits or approvals  (other  than  Lender's
current  business licenses) are required to permit  consideration
or  consummation of the transaction contemplated  hereby  or  the
exercise by Lender of any rights or remedies pursuant hereto.

      4.9  EQUITY INVESTMENTS AND OTHER FINANCING.

<PAGE>

      On  or prior to the Closing Date Lender shall have received
evidence  satisfactory to Lender that (i) $39,000,000  of  equity
was  invested in Borrower and (ii) Borrower obtained no less than
$140,000,000 from the Bond Placement (less underwriting  expenses
actually  incurred  by  Borrower  in  connection  with  the  Bond
Placement).

      4.10 SUBORDINATE SHIP MORTGAGES.

      On or prior to the Closing Date, Lender shall have obtained
evidence  and documentation satisfactory to Lender that the  Lien
of  the Ship Mortgages is subject and subordinate in all respects
to any present or future Lien of Borrower in the Collateral.

      4.11 OTHER MATTERS.

           4.11.1      Lender  shall  have  received  all   other
agreements,  instruments,  certificates,  projections,   waivers,
releases,   searches,   terminations,   reports,   confirmations,
agreements  with  Suppliers, evidence of payment of  obligations,
evidence   of  ownership  of  the  Collateral,  debt   and   lien
subordination  agreements and other documents as  Lender  or  its
counsel   shall  have  requested  (each  in  form  and  substance
satisfactory  to the Lender and its counsel), including,  without
limitation,  lien waivers, consents, approvals, authorization  to
date  documents,  casualty and liability insurance  policies  and
endorsements  related  thereto, appraisals, financial  statements
and other financial information.

           4.11.2   There shall have occurred no Default or Event
of Default.

           4.11.3    All legal matters incident to the Loan shall
be satisfactory to Lender and its counsel.

                      ARTICLE 5.  COVENANTS

      Borrower covenants that from and after the date hereof  and
until  payment in full of the Note and interest thereon  and  all
other  amounts due from Borrower hereunder or under the  Note  or
the  other Loan Documents, unless Lender shall otherwise  consent
in writing:

      5.1  REPORTING AND INFORMATION REQUIREMENTS.

           5.1.1      ANNUAL  FINANCIAL STATEMENTS.  As  soon  as
practicable, and in any event within one hundred five (105)  days
after  the close of each fiscal year of Borrower, Borrower  shall
furnish or cause to be furnished to Lender the annual report  for
such year, including statements of income, retained earnings  and
changes  in  financial position of Borrower for such fiscal  year
and  a  balance sheet of Borrower as of the close of such  fiscal
year,  and notes to each, all in reasonable detail, setting forth
in comparative form the corresponding figures for the preceding

<PAGE>

fiscal  year  where such presentation is appropriate  under  GAAP
certified by the Chief Financial Officer of Borrower.

           5.1.2     QUARTERLY FINANCIAL STATEMENTS. Within sixty
(60)  days  after  the  end of each of  the  first  three  fiscal
quarters of each fiscal year, Borrower shall furnish to Lender  a
copy of its interim financial statements of the type described in
Section 5.1.1 above, certified by the Chief Financial Officer  of
Borrower.

           5.1.3      FURTHER REQUESTS.  Borrower  will  promptly
furnish to Lender such other information (financial or otherwise)
concerning Borrower, its assets or the Collateral in such form as
Lender may reasonably request.

           5.1.4      COMPLIANCE CERTIFICATES.  At the same  time
Borrower  delivers  the financial statements required  under  the
provisions of paragraphs 5.1.1 and 5.1.2, Borrower shall  furnish
to  Lender  a certificate of its Chief Financial Officer  to  the
effect  that  Borrower is in compliance with the  representation,
warranties and covenants set forth in the Loan Documents and that
no  Default or Event of Default exists, or, if such cannot be  so
certified,  specifying in reasonable detail  the  exceptions,  if
any, to such statement.

           5.1.5     (intentionally left blank)

           5.1.6      NOTICE OF EVENT OF DEFAULT.  Promptly  upon
becoming aware of any Default or Event of Default, Borrower shall
give Lender notice thereof, together with a written statement  of
a  Chief  Executive Officer of Borrower setting forth the details
thereof and any action with respect thereto taken or contemplated
to be taken by Borrower.

           5.1.7     NOTICE OF MATERIAL ADVERSE CHANGE.  Promptly
upon  becoming  aware thereof Borrower shall give Lender  written
notice  about  any  material  adverse  change  in  the  business,
operations  or  financial  condition  of  Borrower  or   on   the
Collateral  or  on  the ability of Borrower or any  Guarantor  to
perform their obligations under this Agreement, the Note  or  the
other Loan Documents.

           5.1.8      NOTICE  OF MATERIAL PROCEEDINGS.   Promptly
upon  becoming  aware thereof Borrower shall give Lender  written
notice of the commencement, existence or threat of any proceeding
by  or  before  any  court or administrative  agency  against  or
affecting   Borrower,  or  the  Collateral  which,  if  adversely
decided,  would have a material adverse effect on  the  business,
operations  or financial condition of Borrower or on the  ability
of  Borrower to perform its obligations under this Agreement, the
Note or the other Loan Documents or on the Collateral.

           5.1.9      VISITATION.   Borrower  shall  permit  such
persons  as  Lender  may  designate  to  visit  and  inspect  the
Collateral  and to examine the books and records of Borrower  and
take  copies  and extracts therefrom, and to discuss its  affairs
with  officers  of Borrower and its independent  accountants,  at
such  reasonable  times  and as often as  Lender  may  reasonably
request.

<PAGE>

      5.2  PRESERVATION OF EXISTENCE AND FRANCHISES.

           5.2.1      Borrower  shall not enter into any  merger,
reorganization  or  consolidation,  or  wind  up,  liquidate   or
dissolve, nor agree to do any of the foregoing.

           5.2.2    Borrower will qualify to do business and will
remain  in  good standing under the laws of each jurisdiction  in
which it is required to be qualified by reason of the location of
the  properties  owned  or leased by it or  the  conduct  of  its
business.

           5.2.3      Borrower will comply with all Laws relative
to  the conduct of its business or the location of the properties
owned or leased by it, the non-compliance with which could have a
material  adverse effect on the business, operations,  assets  or
financial  or  other condition of the Borrower,  as  contemplated
hereby,  or  the  ability of Borrower to perform its  obligations
under  this Agreement, the Note, or the other Loan Documents  and
will  obtain or cause to be obtained as promptly as possible  any
permit,   license,  consent,  privilege  or   approval   of   any
governmental  authority  and  make  any  filing  or  registration
therewith which at the time shall be required with respect to the
performance of its obligations under this Agreement, the Note  or
the other Loan Documents or for the operation of its business  as
presently conducted or as contemplated by it.

           5.2.4     Borrower shall not (a) convey, assign, sell,
mortgage,   encumber,  pledge,  hypothecate,  grant  a   security
interest  in,  grant options with respect to, lease or  otherwise
dispose of all or any part of any legal or beneficial interest in
any part or all of the Collateral or any interest therein; or (b)
directly  or indirectly sell, assign, lease or otherwise  dispose
of or permit the sale, assignment or other disposition of (i) any
legal  or  beneficial interest in the stock  or  other  ownership
interest  of  any  corporation or other entity  which  is  either
Borrower  or is a beneficial owner of all or part of Borrower  or
of  the  Collateral or (ii) any legal or beneficial  interest  in
Borrower  if Borrower is a limited or general partnership,  joint
venture,  tenancy  in common or tenancy by the entirety,  limited
liability  company or other type of entity; or (c) and Guarantors
shall  not,  convey, assign, transfer or otherwise dispose  of  a
material  portion of its assets (other than the  Collateral,  the
prohibition on transfer of which is governed by subparagraph  (a)
above).

           5.2.5      Without limiting anything in the foregoing,
Borrower  further covenants and agrees that in  the  event  there
arises any preferred maritime lien(s) which affects, directly  or
indirectly, the Collateral and/or the Vessel, Borrower shall  not
permit such lien(s) to exist or permit a notice of lien to be  on
file  or  of  record  for more than thirty (30)  days  after  the
creation  of  said  lien(s).  In connection with  the  foregoing,
Borrower  shall cause all satisfaction and/or release instruments
to  be  filed  or  recorded in the appropriate offices  with  the
appropriate parties in order to discharge such liens of record or
otherwise.

<PAGE>

      5.3  INSURANCE.

      Borrower  shall, at its own expense, maintain  and  deliver
evidence to Lender of such insurance required by Lender,  written
by  insurers and in amounts satisfactory to Lender including  all
insurance required by the Insurance Letter.
     
      5.4  MAINTENANCE OF PROPERTIES.

      Borrower shall maintain or cause to be maintained  in  good
repair,  working  order  and  condition  the  properties  now  or
hereafter  owned, leased or otherwise possessed by it,  including
the  Collateral and the Premises, and shall make or cause  to  be
made  all  needed and proper repairs, renewals, replacements  and
improvements  thereto  so  that  the  business  carried   on   in
connection therewith may be properly and advantageously conducted
at all times.

      5.5  PAYMENT OF TAXES AND OTHER POTENTIAL CHARGES.

      Borrower shall pay or discharge

           5.5.1    all taxes, assessments and other governmental
charges  or  levies  imposed upon it or any  of  its  properties,
including the Collateral, or income (including such as may  arise
under ERISA or any similar provision of law), on or prior to  the
date on which penalties attach thereto,

           5.5.2     all lawful claims of materialmen, mechanics,
carriers,    warehousemen,   landlords,   suppliers,    artisans,
employees, and other like Persons which, if unpaid, might  result
in  the  creation of a Lien upon any such property or the Vessel,
on or prior to the date when due;

           5.5.3     all other Liens other than Liens in favor of
Lender  and  the  Ship Mortgages whether recorded or  unrecorded,
imposed  upon  it  or  any  of  its  properties,  including   the
Collateral.

PROVIDED,  that  unless and until foreclosure,  distraint,  levy,
sale  or  similar proceedings shall have been commenced, Borrower
need not pay or discharge any such tax, assessment, charge, levy,
claim or current liability so long as (i) the validity thereof is
contested in good faith and by appropriate proceedings diligently
pursued,  (ii)  in Lender's sole judgment there is no  reasonably
foreseeable risk of forfeiture of the Collateral, and (iii)  such
reserves  or  other appropriate provisions as may be required  by
GAAP  shall have been made therefor, and so long as such  failure
to  pay  or discharge does not have a material adverse effect  on
the business, operations or financial condition of Borrower.

      5.6  FINANCIAL ACCOUNTING PRACTICES.

      Borrower  shall make and keep books, records  and  accounts
which, in reasonable detail, accurately and fairly reflect its

<PAGE>

business,  including  all transactions and  dispositions  of  its
assets, all prepared in accordance with GAAP.  Lender and/or  its
agents  shall have the right to review the books and  records  of
Borrower   and  to  photocopy  the  same  and  to  make  excerpts
therefrom, at all reasonable times and upon reasonable notice and
as often as Lender may reasonably request.

      5.7  COMPLIANCE WITH LAWS AND LEGAL REQUIREMENTS.

      Borrower  shall comply with all applicable Laws  and  Legal
Requirements in all respects, PROVIDED, that Borrower  shall  not
be  deemed to be in violation of this Section 5.7 as a result  of
any   failures  to  comply  which  would  not  result  in  fines,
penalties,   injunctive  relief  or  other  civil   or   criminal
liabilities which, in the aggregate, would not materially  affect
the business or operations of Borrower or the ability of Borrower
to  perform its obligations under this Agreement, the Note or the
other Loan Documents or the Collateral.

      5.8  MATERIAL OBLIGATIONS.  Borrower shall pay and satisfy,
when  due,  all material liabilities and obligations,  including,
without  limitation, all obligations under all  leases  (real  or
personal property) to which it is a party.

      5.9  MAINTENANCE OF COLLATERAL AND PREMISES.

      Borrower will maintain and preserve the Collateral and  the
Premises  in  good condition, repair and working order,  promptly
repairing, replacing or rebuilding any part of the Collateral  or
the  Premises which may be destroyed by any casualty,  or  become
damaged, worn or dilapidated.

      5.10 MAINTENANCE OF PRINCIPAL PLACE OF BUSINESS.

      Borrower  shall  maintain and keep its principal  place  of
business  and chief executive office at the address set forth  at
the beginning of this Agreement, and at no other location without
giving  Lender at least thirty (30) days prior written notice  of
any  move.  Borrower shall maintain and keep its records at  such
address  and at no other location without giving Lender at  least
thirty (30) days prior written notice of any move.


      5.11 FURTHER ASSURANCES.

      Borrower shall cause to be done, executed, acknowledged and
delivered  all  and  every  such  further  act,  conveyance   and
assurance as Lender shall require for accomplishing the  purposes
of  this  Agreement,  the  Note and  the  other  Loan  Documents.
Borrower  will defend and protect its title with respect  to  the
Collateral  and will indemnify Lender with respect thereto.   Any
payment  in  respect of such indemnity shall be made directly  to
Lender on demand in immediately available funds.  Forthwith after
notice from Lender, Borrower shall promptly, without further

<PAGE>

consideration,  execute,  acknowledge and  deliver  such  further
instruments  and  documents and will take such other  actions  as
Lender  may  deem  necessary or advisable from time  to  time  to
ensure  the  enforceability  or priority  of  the  Liens  granted
hereby,  or  otherwise to confirm and carry out  the  intent  and
purpose of this Agreement.

                  ARTICLE 6.  SECURITY INTEREST

      6.1  SECURITY.

      As security for the full and timely payment and performance
of  all of the Obligations of Borrower to Lender, Borrower hereby
assigns,  pledges, transfers and sets over to Lender, and  hereby
agrees  that Lender shall have, and hereby grants to and  creates
in  favor  of  Lender, a first security interest under  the  UCC,
subject to no other Liens, in and to and under the following,  in
each case whether now existing or hereafter arising, now owned or
hereafter acquired, wherever located ("Collateral"):

           6.1.1      All  FF&E  described in every  Request  for
Advance delivered by Borrower pursuant to this Agreement; and

           6.1.2       All   accessions  and  additions  thereto,
substitutions for, and all replacements of, any and  all  of  the
foregoing, and all proceeds of the foregoing, cash and  non-cash,
including insurance proceeds; and

           6.1.3      All maintenance, support, leases and  other
contracts and agreements related to the foregoing; and

           6.1.4      All  books  and records pertaining  to  the
foregoing.

      6.2  LENDER HAS RIGHTS AND REMEDIES OF A SECURED PARTY.

      In  addition to all rights and remedies given to Lender  by
this Agreement and the Vessel Chattel Mortgage, Lender shall have
all the rights and remedies of a secured party under the UCC.

     6.3  PROVISIONS APPLICABLE TO THE COLLATERAL AND THE VESSEL.

     The parties agree that, at all times during the term of this
Agreement,  the following provisions shall be applicable  to  the
Collateral:

           6.3.1      Borrower covenants and agrees that it  will
keep  accurate  and  complete books and  records  concerning  the
Collateral  and the Vessel owned or acquired by it in  accordance
with GAAP.

           6.3.2      Lender shall have the right to  review  the
books  and  records of Borrower pertaining to the Collateral  and
the  Vessel  and to copy the same and to make excerpts therefrom,
all  at such reasonable times upon reasonable notice and as often
as Lender may reasonably request.

<PAGE>

           6.3.3      Borrower  shall   maintain  and  keep   its
principal place of business and its chief executive office at the
address set forth at the beginning of this Agreement, and  at  no
other  location without giving Lender at least thirty  (30)  days
prior  written notice of any move.  Borrower shall  maintain  and
keep its records concerning the Collateral and the Vessel at such
address  and at no other location without giving Lender at  least
thirty  (30)  days  prior written notice of any  move.   Borrower
shall keep all Collateral only at the Premises.  Borrower may not
move  the Collateral without the prior written consent of Lender.
Borrower shall not change, modify or amend its name or assume any
trade, fictitious or other name without the prior written consent
of Lender.

           6.3.4     Except for Liens granted to Lender, Borrower
shall  not  sell,  lease,  transfer or otherwise  dispose  of  or
encumber any of the Collateral.

           6.3.5     Borrower shall cause the FF&E and any  other
Collateral  to be maintained and preserved in the same condition,
repair  and  working order as when new, ordinary  wear  and  tear
excepted,  and  shall  promptly make or  cause  to  be  made  all
repairs,   replacements  and  other  improvements  in  connection
therewith which are necessary or desirable to that end.

           6.3.6      Borrower  shall not  affix  or  permit  the
Collateral  to  become affixed to real estate  or  to  any  other
goods,  and  such  Collateral  shall  remain  personal  property,
whether or not so affixed.

           6.3.7      Borrower   shall  not  sell,  transfer   or
otherwise dispose of the Vessel or its interest in the Premises.

           6.3.8    Borrower shall operate the Vessel only in the
navigable waters of the State of Indiana as permitted pursuant to
the Gaming License.

     6.4  CERTAIN COVENANTS.

     Borrower covenants and agrees with Lender for the benefit of
Lender that:

           6.4.1       Borrower  has  and  will  have  good   and
merchantable   title  to  all  of  its  assets,   including   the
Collateral,  in each case as from time to time owned or  acquired
by it, and shall keep the Collateral free and clear of all Liens,
other  than those granted to Lender and the Ship Mortgages (which
Liens  are subject to the Subordination Agreements) and preferred
maritime liens (subject to paragraph 5.2 hereof).  Borrower  will
defend  such title against the claims and demands of all  Persons
whomsoever.

           6.4.2    Borrower will faithfully preserve and protect
Lender's  Liens in the Collateral and will, at its own  cost  and
expense,   cause  said  Liens  to  be  perfected  and   continued
perfected, and for such purpose Borrower will from time  to  time
at  the  request of Lender and at the expense of Borrower,  make,
execute, acknowledge and deliver, and file or record, or cause to
be filed or recorded, in the proper filing places, all such

<PAGE>

instruments, documents and notices, including without  limitation
financing  statements and continuation statements, as Lender  may
deem necessary or advisable from time to time in order to perfect
and continue perfected said security interest.  Borrower will  do
all such other acts and things and make, execute, acknowledge and
deliver  all  such  other  instruments and  documents,  including
without   limitation   further  security   agreements,   pledges,
endorsements,  assignments  and  notices,  as  Lender  may   deem
necessary or advisable from time to time in order to perfect  and
preserve the priority of said Liens as a first and only  Lien  on
and  security interest in the Collateral prior to the  rights  of
all other Persons therein or thereto.

           6.4.3     Borrower will not, without the prior written
consent  of  Lender, (i) borrow or permit any  Person  to  borrow
against  the  Collateral other than the  Loan  to  Borrower  from
Lender pursuant to this Agreement; (ii) create, incur, assume  or
suffer  to  exist any Lien with respect to any of the Collateral;
(iii) permit any levy or attachment to be made against any of the
Collateral  except  any  levy  or  attachment  relating  to  this
Agreement; or (iv) permit any financing statement, Preferred Ship
Mortgage or Vessel Chattel Mortgage to be on file with respect to
any  of  the Collateral, except financing statements in favor  of
Lender  in  connection with this Agreement and the Ship Mortgages
as  exist  as  of  the  date hereof (which  are  subject  to  the
Subordination Agreements).

           6.4.4     Risk of loss of, damage to or destruction of
the  Collateral is and shall remain upon Borrower.  Borrower will
insure  the  Collateral  as  provided  in  Section  5.3  of  this
Agreement.   If Borrower fails to effect and keep in  full  force
and  effect  such insurance or fails to pay the premiums  thereon
when  due, Lender may do so for the account of Borrower  and  add
the cost thereof to the Obligations and the same shall be payable
to  Lender on demand.  Borrower hereby assigns and sets over unto
Lender  for  the  benefit of Lender all moneys which  may  become
payable   on   account  of  such  insurance,  including   without
limitation any return of unearned premiums which may be due  upon
cancellation of any such insurance, and directs the  insurers  to
pay  Lender  any amount so due.  Lender, its officers,  employees
and  authorized agents and its successors and assigns, are hereby
appointed  attorneys-in-fact  of Borrower,  for  the  purpose  of
endorsing any draft or check which may be payable to Borrower  in
order to collect the proceeds of such insurance or any return  of
unearned  premiums.  Such appointment is irrevocable and  coupled
with an interest.  The proceeds of insurance shall be applied  to
reduction  of the Obligations in any order Lender may choose  or,
in  Lender's sole discretion, to the repair or replacement of the
Collateral, or any part thereof, in which case Lender may  impose
such conditions on the disbursement of the proceeds as Lender  in
its sole discretion deems appropriate.

           6.4.5       Upon  the   occurrence  and   during   the
continuation or existence of any Event of Default, Borrower shall
promptly  upon demand by Lender assemble the FF&E and  any  other
Collateral and make it available to Lender at the place or places
to be designated by Lender.  The right of Lender to have the FF&E
and any other Collateral assembled and made available to it is of
the

<PAGE>

essence  of  this  Agreement and Lender  may,  at  its  election,
enforce such right in equity for specific performance.

           6.4.6       Lender  shall  have  no  duty  as  to  the
collection or protection of the Collateral or the Premises or any
part thereof or any income thereon, or as to the preservation  of
any  rights pertaining thereto, beyond exercising reasonable care
in  the  custody of any Collateral actually in the possession  of
Lender.  Lender shall be deemed to have exercised reasonable care
in  the custody and preservation of such of the Collateral as may
be  in its possession if it takes such action for that purpose as
Borrower  shall request in writing, provided that such  requested
action  shall  not,  in the judgment of Lender,  impair  Lender's
security  interest  in the Collateral or its rights  in,  or  the
value  of, the Collateral, and provided further that such written
request is received by Lender in sufficient time to permit it  to
take the requested action.

           6.4.7      Except as expressly permitted  pursuant  to
Section  4.07 of the Indenture, no present or future indebtedness
of  Borrower  to  any  of  the Showboat Entities  (including  any
management fees) shall be paid or withdrawn in whole or in part.

                      ARTICLE 7.  DEFAULTS

      7.1  EVENTS OF DEFAULT.

      The  occurrence  of one or more of the following  described
events is an Event of Default:

           7.1.1      Borrower  fails  to  make  any  payment  of
principal of or interest on the Note, when due; or

           7.1.2     Borrower fails to perform or observe any  of
its covenants or agreements contained herein or in any other Loan
Documents which cannot be cured; or

           7.1.3      Borrower fails to perform  or  observe  any
other  covenant  or agreement to be performed or observed  by  it
hereunder  or  under the other Loan Documents  and  such  failure
continues  unremedied  for a period of fifteen  (15)  days  after
notice of such failure has been provided to Borrower; or

           7.1.4      Borrower  voluntarily creates,  suffers  to
exist,  incurs or assumes any Lien, security interest, charge  or
encumbrance  on,  or  with respect to, any part  of  or  all  the
Collateral  (other  than liens which are evidenced  by  the  Ship
Mortgages as of the date hereof), or the Liens held by Lender  in
and  to  the  Collateral  shall cease to  be  a  first  and  only
perfected Lien in and to the Collateral; or

           7.1.5    Borrower sells, assigns, leases, or otherwise
disposes of or relinquishes possession of, any Collateral; or

           7.1.6      any  representation  or  warranty  made  by
Borrower  herein or in any other Loan Document or in any document
or certificate furnished by Borrower to Lender in connection

<PAGE>

herewith  or therewith at any time proves to have been  incorrect
in any material respect when made; or

           7.1.7      this Agreement or any Loan Document at  any
time  for any reason ceases to be in full force and effect or  is
declared   by  a  court  or  governmental  agency  of   competent
jurisdiction to be null and void; or

           7.1.8    Borrower breaches or defaults under the terms
of  any agreement, instrument or document with or for the benefit
of  Lender which is not a Loan Document or under any other  loan,
credit  facility or other financial accommodation made by  Lender
to Borrower, including, without limitation, all promissory notes,
guarantees, equipment leases, security agreements, mortgages  and
deeds of trust and such breach or default remains unremedied  for
a  period  of  fifteen (15) days after notice of such  breach  or
default has been provided to Borrower; or

           7.1.9     Borrower is convicted of a felony; or

           7.1.10     there is a material adverse change  in  the
business,  operations or financial condition of Borrower  or  the
Collateral; or

           7.1.11    a proceeding is instituted seeking a  decree
or order for relief in respect of Borrower in an involuntary case
under any applicable bankruptcy, insolvency or other similar  law
now  or hereafter in effect or for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or  other
similar  official)  of Borrower, or for any substantial  part  of
its, his or her properties or for the dissolution, winding-up  or
liquidation of its affairs or any substantial part of any of  its
properties  and such proceeding remains undismissed  or  unstayed
for  a period of sixty (60) consecutive days or such court enters
a  decree or order granting the relief sought in such proceeding;
or

           7.1.12    Borrower voluntarily suspends transaction of
its  business,  commences a voluntary case under  any  applicable
bankruptcy,  insolvency or other similar law now or hereafter  in
effect,  consents  to  the entry of an order  for  relief  in  an
involuntary  case  under  any  such  law  or  consents   to   the
appointment  of  or taking possession by a receiver,  liquidator,
assignee,  trustee,  custodian, sequestrator  (or  other  similar
official)  of  Borrower for any substantial part of  any  of  its
properties,  or  makes a general assignment for  the  benefit  of
creditors,  or  takes any action in furtherance  of  any  of  the
foregoing; or

           7.1.13     there  shall  be a  judgment  or  judgments
against  Borrower  for any amount in excess  of  $25,000  in  the
aggregate,  which  shall  remain  unpaid,  unstayed  on   appeal,
undischarged, unbonded or undismissed for a period of thirty (30)
days or more; or

           7.1.14   Borrower shall have conveyed, sold, assigned,
encumbered or otherwise transferred all or substantially  all  of
its assets (or any interest therein); or

<PAGE>

           7.1.15     Borrower fails, by the Conversion Date,  to
execute and deliver to Lender Delivery and Acceptance Receipts in
form  and substance satisfactory to Lender, for all FF&E financed
by Lender; or

           7.1.16    Borrower defaults or is in breach under  the
Indenture  or  any  bonds  or  notes  issued  thereunder  or   in
connection  therewith or the Leasehold Mortgage or any  agreement
in  connection  with  any  of the foregoing  including  the  Bond
Placement  and  such default or breach remains unremedied  for  a
period of thirty (30) days; or

           7.1.17     The  Management Agreement is terminated  or
assigned; or

           7.1.18     SMP ceases to (i) be a general  partner  of
Borrower or (ii) own at least 99% percent of Borrower; or

           7.1.19     Showboat  ceases to maintain  (directly  or
indirectly)  100% of the legal and beneficial ownership  of  such
entity or entities which own at least 55% of SMP; or

           7.1.20    The Gaming License is suspended, terminated,
revoked,  not  renewed  or is modified in  any  material  adverse
respect; or

           7.1.21    The Advances do not convert to the Term Loan
by the Advance Termination Date; or

           7.1.22    Borrower fails to perform or observe any  of
its  covenants or agreements contained in Section 5.3  hereof  or
any  of  the  terms, conditions or agreements set  forth  in  the
Insurance Letter or any such insurance ceases at any time  to  be
in full force and effect.

      7.2  CONSEQUENCES OF EVENT OF DEFAULT.

           7.2.1    If an Event of Default occurs, Lender may, by
notice  to Borrower, declare the unpaid principal amount  of  the
Note  and interest accrued thereon and all other Obligations  and
liabilities of Borrower hereunder or under the Note or  the  Loan
Documents  to be immediately due and payable and the  same  shall
thereupon  become  and  be immediately due  and  payable  without
presentment, demand, protest or other notice of any kind, all  of
which  are hereby expressly waived, and an action therefor  shall
immediately  accrue.  In addition, if an Event of Default  occurs
prior to the Advance Termination Date, Lender may, at its option,
terminate and cancel its agreement to make Advances.

           7.2.2     In addition, if an Event of Default  occurs,
Lender  shall have all rights and remedies granted herein and  in
the other Loan Documents and all rights or remedies available  at
law or equity, whether as a secured party or otherwise (including
specifically those granted by the Uniform Commercial Code  as  in
effect  in the jurisdiction or jurisdictions where the Collateral
is located) and, except as limited by Law, all remedies of Lender
(i)  shall  be  cumulative and concurrent; (ii)  may  be  pursued
separately, successively or concurrently against Borrower or

<PAGE>

against  all  or  any  portion of the  Collateral,  at  the  sole
discretion of Lender; (iii) may be exercised as often as occasion
therefor  shall  arise,  it being agreed  by  Borrower  that  the
exercise  or failure to exercise any rights or remedies shall  in
no  event be construed as a waiver or release thereof or  of  any
other right, remedy or recourse; and (iv) are intended to be, and
shall  be,  nonexclusive.   To the fullest  extent  permitted  by
applicable  Law,  Lender may resort to the rights,  remedies  and
recourses  set  forth herein and any other security  therefor  in
such order and manner as Lender may elect.

           7.2.3      Without  limiting  any  of  the  foregoing,
Borrower  agrees that (i) Lender may, with or without notice  and
without  legal  process, enter upon the  Premises  or  any  other
property  owned, leased or otherwise under the real  or  apparent
control  of  Borrower or any agent thereof or any other  location
where  the Collateral may be located and disassemble, disconnect,
render  unusable or repossess all or any item of the  Collateral;
(ii)  written  notice  mailed to Borrower, as  provided  in  this
Agreement for the giving of notice, shall be reasonable if  given
ten  (10) days prior to (a) any public sale or (b) the date after
which  a private sale may be made; (iii) a sale of the Collateral
may  be made as a unit or in parcels and for cash and upon terms;
and (iv) Lender may buy the Collateral at any public sale and  at
any private sale as permitted by the UCC.

                    ARTICLE 8.  MISCELLANEOUS

      8.1  FURTHER ASSURANCES.

      Borrower shall at any time and from time to time  upon  the
written  request  of  Lender, execute and  deliver  such  further
agreements,  instruments and documents and do such  further  acts
and  things as Lender may reasonably request in order  to  effect
the purposes of this Agreement.

      8.2  INDEMNITY.

      Borrower  shall indemnify, defend and hold harmless  Lender
from  and  against, and, upon demand, reimburse Lender  for,  all
claims,   demands,   liabilities,  losses,  damages,   judgments,
penalties,  costs  and expenses, including,  without  limitation,
reasonable  attorneys'  fees  and  disbursements,  which  may  be
imposed upon, asserted against or incurred or paid by Lender,  on
account  of  any  act performed or omitted to be performed  under
this  Agreement,  the  Note or the other  Loan  Documents  or  on
account of any transaction arising out of or in any way connected
with the Collateral or this Agreement, the Note or the other Loan
Documents, except as a result of the willful misconduct or  gross
negligence of Lender.

      8.3  NO IMPLIED WAIVER; CUMULATIVE REMEDIES.

      No  course of dealing and no delay or failure of Lender  in
exercising any right, power or privilege under this Agreement,

<PAGE>

the  Note  or  any of the other Loan Documents shall affect  such
right,  power or privilege except as and to the extent  that  the
assertion  of any such right, power or privilege shall be  barred
by  an applicable statute of limitations; nor shall any single or
partial exercise thereof or any abandonment or discontinuance  of
steps  to  enforce such a right, power or privilege preclude  any
further  exercise  thereof  or  of  any  other  right,  power  or
privilege.   The  rights  and  remedies  of  Lender  under   this
Agreement,  the  Note or the other Loan Documents are  cumulative
and  not  exclusive of any rights or remedies which Lender  would
otherwise have.

      8.4  TAXES.

      Borrower agrees to pay or reimburse Lender for any and  all
stamp, document, transfer, recording or filing taxes or fees  and
all similar impositions payable or hereafter determined by Lender
to  be payable in connection with this Agreement, the Note or the
other   Loan  Documents  (including  but  not  limited  to  those
necessary  or advisable to record or to ensure the enforceability
or  priority  of  this  Agreement, the Note  or  the  other  Loan
Documents),  as determined by Lender in its sole discretion  from
time   to   time,   and  any  other  documents,  instruments   or
transactions pursuant to or in connection herewith, and  Borrower
agrees  to  save  Lender harmless from and against  any  and  all
present  or  future  claims or liabilities  with  respect  to  or
resulting  from any delay in paying or omission to pay  any  such
taxes, fees or similar impositions.

     8.5  MODIFICATIONS, AMENDMENTS OR WAIVERS.

     Lender and Borrower may from time to time enter into written
agreements  amending, modifying or supplementing this  Agreement,
the  Note  or the other Loan Documents or changing the rights  of
Lender  or Borrower hereunder or thereunder, and Lender may  from
time  to  time grant waivers or consents to a departure from  the
due  performance of the obligations of Borrower thereunder.   Any
such agreement, waiver or consent must be in writing and shall be
effective only to the extent set forth in such writing.   In  the
case  of  any  such waiver or consent, any Event  of  Default  so
waived  or  consented  to shall be deemed to  be  cured  and  not
continuing,  but no such waiver or consent shall  extend  to  any
subsequent  or  other  Event  of  Default  or  impair  any  right
consequent thereto.

     8.6  HOLIDAYS.

     Except as otherwise provided herein, whenever any payment or
action  to  be made or taken hereunder or the Note or  any  other
Loan  Document shall be stated to be due on a day which is not  a
Business  Day, such payment or action shall be made or  taken  on
the  next  following Business Day (and such day shall be included
in  the calculation of interest due), unless such next succeeding
Business  Day falls in a different calendar month, in which  case
payment  or  action shall be made or taken on the next  preceding
Business Day.

<PAGE>

     8.7  NOTICES.

           8.7.1     Except  as  otherwise provided  herein,  all
notices  and  other communications required under the  terms  and
provisions  of  this  Agreement,  the  Note  or  the  other  Loan
Documents  shall  be in writing and shall become  effective  when
delivered  by  hand  or  received by  overnight  courier,  telex,
facsimile,  telegram  or  registered first  class  mail,  postage
prepaid, addressed as follows:

If to Lender, at:

                    FINOVA Capital Corporation
                    115 West Century Road
                    Paramus, NJ 07652
                    Facsimile No. 201-634-3325
                    Attention:  Pamela Marchant
                                Vice President

with a copy to:     Winick & Rich, P.C.
                    919 Third Avenue
                    New York, New York  10022
                    Facsimile No. 212-308-5945
                    Attention:  Alan C. Winick, Esq.

If to Borrower, at:

                    Showboat Marina Casino Partnership
                    P.O. Box 777
                    East Chicago, Indiana  46132
                    Facsimile No. 219-398-0144
                    Attention:  Mr. Joseph O'Brien

with a copy to:     Ice Miller Donadio & Ryan
                    One American Square
                    P.O. Box 82001
                    Indianapolis, Indiana 46282
                    Attention:  Stephen J. Hackman, Esq.

or  at such other address as either party may, from time to time,
designate in writing to the other party hereto.

           8.7.2      If  any notice is given by telex, facsimile
transmission,  or  telegram, the party giving such  notice  shall
confirm  such notice by a writing delivered by hand or  overnight
courier;  PROVIDED,  HOWEVER, that for  all  purposes  hereunder,
notice  shall  be  deemed effective at the time given  by  telex,
telecopier or telegram.

      8.8  REIMBURSEMENT FOR CERTAIN EXPENSES.

      Borrower  agrees  to pay or cause to be paid  and  to  save
Lender  harmless  against  liability  for  the  payment  of   all
reasonable  out-of-pocket costs and expenses, including,  without
limitation, all counsel fees and costs, incurred by Lender from

<PAGE>

time  to  time  (i)  arising in connection with the  negotiation,
execution, delivery, and recordation of this Agreement, the  Note
and  the  other Loan Documents, and the transactions contemplated
hereby   and   thereby  and  all  recording   or   filing   fees,
(ii) relating to any requested amendments, waivers or consents to
or  in connection with this Agreement, the Note or any other Loan
Document,   and   (iii)  arising  in  connection  with   Lender's
enforcement  or preservation of rights under this Agreement,  the
Note  or  any other Loan Document, including but not  limited  to
such  expenses as may be incurred by Lender in the collection  of
the Note.

      8.9  GOVERNING LAW.

      THIS AGREEMENT, THE NOTE, THE OTHER LOAN DOCUMENTS AND  THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE
GOVERNED  BY  AND CONSTRUED AND ENFORCED IN ACCORDANCE  WITH  THE
LAWS OF THE STATE OF ARIZONA.

      8.10 PERSONAL JURISDICTION AND SERVICE OF PROCESS.

      BORROWER  IRREVOCABLY CONSENTS THAT  ANY  LEGAL  ACTION  OR
PROCEEDING  AGAINST BORROWER UNDER, ARISING OUT  OF,  OR  IN  ANY
MANNER  RELATING TO THIS AGREEMENT, THE NOTE OR  THE  OTHER  LOAN
DOCUMENTS  MAY  BE BROUGHT IN ANY STATE COURT  OF  THE  STATE  OF
ARIZONA  LOCATED IN MARICOPA COUNTY OR ANY UNITED STATES DISTRICT
COURT  LOCATED  IN  THE  STATE  OF  ARIZONA.   BORROWER,  BY  ITS
EXECUTION   AND   DELIVERY  OF  THIS  AGREEMENT,  EXPRESSLY   AND
IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION  OF
ANY  OF  SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING.   BORROWER
FURTHER  AGREES THAT ANY LEGAL ACTION OR PROCEEDING BORROWER  MAY
BRING, ARISING OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT
OR  THE OTHER LOAN DOCUMENTS, SHALL ONLY BE BROUGHT IN ANY  COURT
OF  THE  STATE OF ARIZONA LOCATED IN MARICOPA COUNTY  OR  IN  THE
UNITED  STATES  DISTRICT  COURT  FOR  THE  DISTRICT  OF  ARIZONA.
BORROWER  ALSO  IRREVOCABLY  CONSENTS  TO  THE  SERVICE  OF   ANY
COMPLAINT,  SUMMONS,  NOTICE OR OTHER PROCESS  RELATING  TO  SUCH
ACTION  OR  PROCEEDING BY DELIVERY THEREOF  TO  BORROWER  IN  THE
MANNER  PROVIDED FOR NOTICES IN THIS AGREEMENT.  BORROWER  HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH
ACTION  OR  PROCEEDING  BASED ON ANY  ALLEGED  LACK  OF  PERSONAL
JURISDICTION,  IMPROPER  VENUE OR FORUM  NON  CONVENIENS  OR  ANY
SIMILAR BASIS.  BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION
OR  PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED  UNDER  THE
LAWS  OF  ANY STATE OTHER THAN THE STATE OF ARIZONA, UNLESS  SUCH
DEFENSE  IS  ALSO GIVEN OR ALLOWED BY THE LAWS OF  THE  STATE  OF
ARIZONA.  NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER  OR
TO  ANY  EXTENT THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS
OR  OTHERWISE  PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION
OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

     8.11 WAIVER OF JURY TRIAL.

     BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY  WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING  TO  THIS
AGREEMENT  OR ANY AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED  AND
DELIVERED IN CONNECTION HEREWITH OR THEREWITH, INCLUDING THE LOAN
DOCUMENTS.

<PAGE>

      8.12 SEVERABILITY.

      The  provisions of this Agreement, the Note and  any  other
Loan  Document  are  intended  to  be  severable.   If  any  such
provision is held invalid or unenforceable in whole or in part in
any  jurisdiction, such provision shall, as to such jurisdiction,
be   ineffective   to   the   extent  of   such   invalidity   or
unenforceability without in any manner affecting the validity  or
enforceability thereof in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.

      8.13 PRIOR UNDERSTANDINGS.

      This  Agreement and the other Loan Documents supersede  all
prior  understandings and agreements, whether  written  or  oral,
between  the parties hereto relating to the transactions provided
for herein or therein.

      8.14 SURVIVAL.

      All representations and warranties of Borrower contained in
this  Agreement or any other Loan Document or made in writing  in
connection herewith or therewith shall survive the execution  and
delivery  of  this  Agreement,  the  Note  and  the  other   Loan
Documents, any investigation or inspection by Lender, the  making
of  the Loan hereunder, the payment of the Note or the expiration
of  this  Agreement.   All covenants and agreements  of  Borrower
contained  herein shall continue in full force until  payment  in
full  of  the  Obligations.  Borrower's  obligation  to  pay  the
principal of and interest on the Note and all such other  amounts
shall   be   absolute  and  unconditional  under  any   and   all
circumstances.

      8.15 SUCCESSORS AND ASSIGNS.

      This Agreement shall be binding upon and shall inure to the
benefit  of  Lender and Borrower and their respective  successors
and  permitted  assigns, except that Borrower may not  assign  or
transfer  any  of  its  rights or obligations  hereunder  or  any
interest  herein  without  the written consent  of  Lender  which
Lender  may withhold in its absolute discretion.  Any  actual  or
attempted  assignment by Borrower without Lender's consent  shall
be null, void and of no effect whatsoever.  Lender may assign its
rights and obligations hereunder and under the Note and the other
Loan  Documents  in whole or in part.  If Lender  makes  such  an
assignment,  the  assignee shall have all of the  rights  of  the
Lender  and  Borrower shall not assert against the  assignee  any
defense, counterclaims or setoff which Borrower may have  against
Lender.   Except to the extent otherwise required by its context,
the  word  "Lender" where used in this Agreement shall  mean  and
include  the holder of the Note originally issued to Lender,  and
the holder of such Note shall be bound by and have the benefits

<PAGE>

of this Agreement to the same extent as if such holder had been a
signatory hereto.

     8.16 COUNTERPARTS.

     This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts each
of  which,  when  so  executed  and  delivered  by  the  parties,
constituting  an  original  but all  such  counterparts  together
constituting but one and the same instrument.

      8.17 PUBLICITY.

      Lender  is  hereby  authorized to issue  appropriate  press
releases and to cause a tombstone to be published announcing  the
consummation of the transactions contemplated in this  Agreement,
including the aggregate amount of the Loan.

      IN  WITNESS WHEREOF, the parties hereto, by their  officers
thereunto  duly  authorized,  have executed  and  delivered  this
Agreement effective as of the day and year first above written.


                    SHOWBOAT MARINA CASINO PARTNERSHIP,
                    an Indiana general partnership

                    Federal Tax Identification No. ____________

                    By:  SHOWBOAT MARINA PARTNERSHIP,
                         an Indiana general partnership, its
                         general partner

                    By:  SHOWBOAT INDIANA INVESTMENT LIMITED
                         PARTNERSHIP, a Nevada limited
                         partnership, its general partner

                    By:  SHOWBOAT INDIANA, INC., a Nevada
                         corporation, its general partner

                    By:  ______________________________________
                         Name:  Joseph G. O'Brien
                         Title: Treasurer

                    FINOVA CAPITAL CORPORATION

                    By: _______________________________________
                    Name:  Pamela Marchant
                                Title: Vice President
                                
<PAGE>

                            EXHIBIT A

                          See attached.

<PAGE>

                     SECURED PROMISSORY NOTE

$11,000,000.00                          June     , 1997
                                        Phoenix, Arizona

      FOR VALUE RECEIVED, the undersigned, SHOWBOAT MARINA CASINO
PARTNERSHIP, an Indiana  general partnership ("Borrower"), hereby
promises  to  pay  to  the order of FINOVA  CAPITAL  CORPORATION,
("Lender"),   the   principal  sum  of  Eleven  Million   Dollars
($11,000,000.00),  or  such  lesser  amount  as  represents   the
aggregate of all Advances made by Lender to Borrower pursuant  to
the Loan and Security Agreement between Borrower and Lender dated
the  date  of this Note ("Loan Agreement") together with interest
on  the  unpaid  principal  balance  hereof  from  time  to  time
outstanding  at the rates per annum and all on the dates  and  as
otherwise provided in the Loan Agreement.

      This Note is the Note referred to in the Loan Agreement, is
secured  as  set forth in the Loan Agreement, may not be  prepaid
except  as provided in the Loan Agreement and is entitled to  the
benefits  of the Loan Agreement.  All capitalized terms  used  in
this  Note which are not otherwise defined herein shall have  the
respective meanings ascribed to them in the Loan Agreement.

      All payments of principal and interest on this Note are  to
be  made  in  lawful  money of the United States  of  America  in
immediately  available  funds, without  setoff,  counterclaim  or
deduction  of  any nature, at the office of Lender  at  95  North
Route 17 South, Paramus, New Jersey 07653 (or such other place as
the  holder  hereof shall designate to the Borrower in  writing),
prior to 12:00 Noon, local time, on the day when due.

     If any payment of principal or interest becomes due on a day
which  is not a Business Day, that payment shall be made  on  the
next  Business Day unless such next Business Day falls in another
calendar month in which event that payment shall be made  on  the
next preceding Business Day.

      Lender  and  Borrower intend this Note  to  comply  in  all
respects  with all provisions of law and not to violate,  in  any
way, any legal limitations on interest charges.  Accordingly, if,
for  any  reason,  Borrower is required  to  pay,  or  has  paid,
interest  at  a  rate in excess of the highest rate  of  interest
which  may  be  charged by Lender or which Borrower  may  legally
contract  to pay under applicable law (the "Maximum Rate"),  then
the interest rate shall be deemed to be reduced, automatically

<PAGE>

and  immediately,  to  the  Maximum Rate,  and  interest  payable
hereunder shall be computed and paid at the Maximum Rate and  the
portion  of  all  prior payments of interest  in  excess  of  the
Maximum  Rate  shall  be deemed to have been prepayments  of  the
outstanding   principal  of  this  Note  and   applied   to   the
installments in the inverse order of their maturities.

      If  Borrower  fails  to make any payment  of  principal  or
interest  within ten (10) days after the payment is due, Borrower
shall  pay  a  late  charge of five percent (5%)  of  the  unpaid
amount, but in no event more than the maximum amount permitted by
applicable  law,  and such amount shall be payable  upon  demand.
Such  payment  is  not  interest for the use  of  money,  but  is
intended  to  cover Lender's administrative costs  occasioned  by
such delay.

      Upon  the  occurrence of an Event of Default, Lender  shall
have  all  of  the  rights and remedies  contained  in  the  Loan
Agreement,  including,  without limitation,  the  right,  at  its
option,  to  declare  all indebtedness  under  this  Note  to  be
immediately due and payable.

       Borrower hereby expressly waives presentment for  payment,
demand  for  payment,  notice  of dishonor,  protest,  notice  of
protest,  notice  of non-payment, and all lack  of  diligence  or
delays  in  collection or enforcement of this Note  or  the  Loan
Agreement.

       Lender  may  extend  the time of  payment  of  this  Note,
postpone the enforcement hereof, release any Collateral, or grant
any   other   indulgences  whatsoever,   without   affecting   or
diminishing  Lender's  right  of recourse  against  Borrower,  as
provided  herein and in the Loan Agreement and in the other  Loan
Documents, which right is hereby expressly reserved.  The failure
to  assert  any  right by Lender shall not  be  deemed  a  waiver
thereof.

       Borrower  agrees to pay all costs, fees  and  expenses  of
collection,  including, without limitation,  Lender's  reasonable
attorneys' fees and disbursements, in the event that any  action,
suit  or  proceeding is brought by the holder hereof  to  collect
this Note or if an Event of Default occurs.

      THIS  NOTE  IS DEEMED TO HAVE BEEN MADE IN,  AND  SHALL  BE
CONSTRUED  IN ACCORDANCE WITH THE LAWS OF, THE STATE OF  ARIZONA.
BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST BORROWER UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING
TO  THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY
BE  BROUGHT IN ANY STATE COURT OF THE STATE OF ARIZONA LOCATED IN
MARICOPA COUNTY OR ANY UNITED STATES DISTRICT COURT LOCATED IN

<PAGE>

THE STATE OF ARIZONA.  BORROWER, BY ITS EXECUTION AND DELIVERY OF
THIS NOTE, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO  THE
PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING.   BORROWER FURTHER AGREES THAT ANY  LEGAL  ACTION  OR
PROCEEDING  BORROWER MAY BRING, ARISING OUT OF OR IN  ANY  MANNER
RELATING  TO  THIS  NOTE, THE LOAN AGREEMENT OR  THE  OTHER  LOAN
DOCUMENTS,  SHALL ONLY BE BROUGHT IN ANY COURT OF  THE  STATE  OF
ARIZONA  LOCATED  IN  MARICOPA COUNTY OR  IN  THE  UNITED  STATES
DISTRICT  COURT  FOR  THE  DISTRICT OF  ARIZONA.   BORROWER  ALSO
IRREVOCABLY  CONSENTS TO THE SERVICE OF ANY  COMPLAINT,  SUMMONS,
NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR PROCEEDING  BY
DELIVERY  THEREOF TO BORROWER IN THE MANNER PROVIDED FOR  NOTICES
IN THE LOAN AGREEMENT.  BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES  ANY  CLAIM  OR DEFENSE IN ANY SUCH ACTION  OR  PROCEEDING
BASED  ON  ANY  ALLEGED  LACK OF PERSONAL JURISDICTION,  IMPROPER
VENUE  OR  FORUM  NON CONVENIENS OR ANY SIMILAR BASIS.   BORROWER
SHALL  NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT
ANY  DEFENSE  GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE  OTHER
THAN  THE STATE OF ARIZONA, UNLESS SUCH DEFENSE IS ALSO GIVEN  OR
ALLOWED  BY  THE  LAWS OF THE STATE OF ARIZONA.   NOTHING  HEREIN
SHALL  AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE  RIGHT
OF  LENDER  TO  COMMENCE LEGAL PROCEEDINGS OR  OTHERWISE  PROCEED
AGAINST BORROWER IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN
ANY MANNER PERMITTED BY LAW.

      Lender  is  hereby authorized by Borrower to  record  on  a
schedule  to  be  annexed  to this Note  (or  on  a  supplemental
schedule  thereto) the amount of each Advance made by  Lender  to
Borrower  and  the  amount  of  each  payment  or  prepayment  of
principal  of  the Loan received by Lender, it being  understood,
however, that failure to make any such notation shall not  affect
the rights of Lender or the obligations of Borrower hereunder  in
respect  of  this Note.  Lender may, at its option,  record  such
matters in its internal records rather than on such schedule  and
such records shall be conclusive absent manifest error.

      IN WITNESS WHEREOF, Borrower has duly executed this Note on
the date first above written.

                    SHOWBOAT MARINA CASINO PARTNERSHIP,
                     an Indiana general partnership

                    Federal Tax Identification No._____________

                    By:  SHOWBOAT MARINA PARTNERSHIP,
                         an Indiana general partnership, its
                         general partner

                    By:  SHOWBOAT INDIANA INVESTMENT LIMITED
                         PARTNERSHIP, a Nevada limited
                         partnership, its general partner

<PAGE>

                    By:  SHOWBOAT INDIANA, INC., a Nevada
                         corporation, its general partner

                    By:
                         Name:
                         Title:
                         
<PAGE>

                         SCHEDULE TO
                     SECURED PROMISSORY NOTE

     This Note evidences Advances made under the within described
Loan  Agreement, in the principal amounts, and on the  dates  set
forth below, subject to payments of principal set forth below:

           Principal Amount   Principal      Balance
DATE MADE     OF ADVANCE     AMOUNT PAID   OUTSTANDING   INITIALS

<PAGE>

                            EXHIBIT B

                       REQUEST FOR ADVANCE

                          See attached.

<PAGE>

                       REQUEST FOR ADVANCE

                                            _______________, 1997

To:  FINOVA Capital Corporation

Attention:  Loan Administration

      Pursuant to Section 2.5 of the Loan Agreement, dated as  of
_____________________,  1997  (the  "Loan  Agreement"),   between
SHOWBOAT   MARINA   CASINO  PARTNERSHIP,   an   Indiana   general
partnership  ("Borrower"),  and  FINOVA  CAPITAL  CORPORATION,  a
Delaware  corporation ("Lender"), Borrower hereby  requests  that
Lender make an Advance to Borrower pursuant to the Loan Agreement
as follows:

    1.    The Business Day on which the proposed Advance is to be
made  is ______________, 1997.  Such date shall be a Disbursement
Date  for  purposes of the Loan Agreement. [Must be  at  least  5
Business Days from the date of this Request.]

     2.     The aggregate principal amount of the Advance  to  be
made on such date is $___________.  [Not less than $1,000,000]

     3.     The proceeds of the Advance requested herein will  be
used  to finance the Items of FF&E described on Schedule A hereto
(which  must  be  acceptable to FINOVA in its sole  and  absolute
discretion).   Each  of  such Items of  FF&E  is  Collateral,  as
defined  in the Loan Agreement and is or will be located  at  the
Premises.

     4.      Lender is authorized to remit the proceeds  of  this
Advance   by  wire  transfer  to:   ____________________________,
Account  No.  ____________ at ________________________,  ABA  No.
____________, Attention: __________________________  or  to  such
other  account  or by such other means as shall be designated  on
Schedule A hereto.

    5.     Each of the representations and warranties of Borrower
set  forth in Article 3 of the Loan Agreement is true and correct
on  the date hereof, except to the extent any such representation
and warranty relates to a particular date.

     Capitalized  terms  defined in the Loan Agreement  are  used
herein as therein defined.

     WITNESS the due execution hereof by the undersigned Borrower
on the date first set forth above.

<PAGE>

                         SHOWBOAT MARINA CASINO PARTNERSHIP,
                         an Indiana general partnership

                    By:  SHOWBOAT MARINA PARTNERSHIP,
                         an Indiana general partnership, its
                         general partner


                    By:  SHOWBOAT INDIANA INVESTMENT LIMITED
                         PARTNERSHIP, a Nevada limited
                         partnership, its general partner

                    By:  SHOWBOAT INDIANA, INC., a Nevada
                         corporation, its general partner


                    By:
                         Name:
                         Title:

<PAGE>

                            EXHIBIT C

                     VESSEL CHATTEL MORTGAGE

                          See attached.
                                
<PAGE>

                            EXHIBIT D

                    SUBORDINATION AGREEMENTS

                          See attached.

            INTERCREDITOR AND SUBORDINATION AGREEMENT


       THIS   INTERCREDITOR  AND  SUBORDINATION  AGREEMENT   (the
"Agreement") is entered into as of the _____ day of June, 1997 by
and among FINOVA CAPITAL CORPORATION, a Delaware corporation (the
"Lender") having a place of business at 95 North Route 17  South,
Paramus,  New  Jersey 07652, FIRSTAR BANK OF  MINNESOTA,  N.A.  a
national  banking association (successor in interest to  American
Bank   National  Association)  as  trustee  under  that   certain
Indenture  dated  as  of  March  28,  1996  ("Indenture")    (the
"Preferred  Mortgagee"), having a place of business at  101  East
Fifth  Street,  St.  Paul, Minnesota 55101  and  SHOWBOAT  MARINA
CASINO   PARTNERSHIP,  an  Indiana   general   partnership   (the
"Borrower")  having its place of business at  1  Showboat  Place,
East Chicago, Indiana 46312.

      WHEREAS,  the Borrower has requested the Lender to  provide
financing  in  the  principal amount of  $11,000,000.00  and  the
Borrower  and  Lender have in connection therewith, entered  into
that  certain  Loan  and  Security  Agreement,  dated  even  date
herewith  (the "Loan Agreement") and the related promissory  note
and security documents (specifically including without limitation
that  certain  Vessel Chattel Mortgage (the "Chattel  Mortgage"))
covering those assets of the Borrower as described in Exhibit "A"
attached    hereto   and   incorporated   herein   by   reference
(collectively the "Collateral"); and

      WHEREAS, the Borrower is indebted to the noteholders  under
the Indenture in the principal amount of $140,000,000 pursuant to
certain  First Promissory Notes  issued pursuant to the Indenture
(collectively  the  "Ship  Note") and  secured,  in  part,  by  a
Preferred Ship Mortgage (the "Preferred Ship Mortgage") dated  as
of  April 9, 1997 on the Vessel described in Exhibit "B" attached
hereto and incorporated herein by reference (the "Vessel") and  a
Leasehold  Mortgage, Assignment of Rents and  Security  Agreement
dated as of March 28, 1996 ("Leasehold Mortgage"); and

      WHEREAS,  the Lender has indicated that it is unwilling  to
provide  financing  to  the  Borrower under  the  Loan  Agreement
unless,  among  other  things, the  Borrower  and  the  Preferred
Mortgagee   shall  join  in  this  Agreement  and  the  Preferred
Mortgagee  shall  subordinate, to the extent and  in  the  manner
hereinafter  set forth, its interest (if any) in  the  Collateral
which  arises  under the Preferred Ship Mortgage,  the  Leasehold
Mortgage, any other mortgage or

<PAGE>

security  agreement or otherwise ("Preferred Mortgagee Security")
to  the  liens and security interests granted by Borrower to  the
Lender  pursuant  to  the  Loan Agreement,  Chattel  Mortgage  or
documents,  agreements  or  instruments  executed  in  connection
therewith ("Lender Loan Documents").


      NOW  THEREFORE, in consideration of the premises and as  an
inducement to the Lender to grant financial accommodations to the
Borrower,  and  in  consideration of the  granting  thereof,  the
Borrower and Preferred Mortgagee covenant with and warrant to the
Lender as follows:

     1.   STATEMENT OF PURPOSE.

                          The Preferred Mortgagee has a valid and
               perfected  Preferred Ship Mortgage on  the  Vessel
               which  could be construed as granting an  interest
               in all or part of the Collateral.

                          The Preferred Mortgagee may as a result
               of  the Indenture, Leasehold Mortgage or otherwise
               have  a  valid and perfected security interest  or
               lien  on all or part of the Collateral whether  or
               not located on the Vessel.

                          Simultaneous herewith, the  Lender  has
               been granted a security interest in the Collateral
               pursuant  to various security documents  including
               but  not  limited  to the Loan Agreement  and  the
               Chattel Mortgage on the Vessel.

                          The  parties  wish to  establish  their
               relative priorities of their respective liens  and
               interests in the Collateral.


     2.   RELATIVE PRIORITIES AND SUBORDINATION.

                          Notwithstanding the order in which  the
               documents  granting  the Preferred  Mortgagee  any
               lien,  security interest or other interest in  the
               Collateral  including,  without  limitation,   the
               Indenture,  Preferred Ship Mortgage  or  Leasehold
               Mortgage and the documents granting the Lender any
               lien,  security interest or other interest in  the
               Collateral including, without limitation, the Loan
               Agreement  and Chattel Mortgage (collectively  the
               "Encumbrances")   have  been  or   are   hereafter
               executed,   delivered  or   liens   and   security
               interests   thereunder  have  been  or   will   be
               perfected, and the relative

<PAGE>

               priorities  of  the Encumbrances under  applicable
               law   including,  without  limitation,  any  prior
               perfection  of a security interest or  lien  under
               the  provisions of the Uniform Commercial Code  or
               any  other  law  of  any  jurisdiction  which   is
               applicable  or  the existence of  any  present  or
               future  filing or financing statements  under  the
               Uniform  Commercial Code or any other law  of  any
               jurisdiction  which  is applicable  or  any  other
               recordation  or  filing  of  any  documents,   and
               further,   notwithstanding  any   pledge   to   or
               possession by the Preferred Mortgagee  of  all  or
               any  part  of  the Collateral, the parties  hereto
               acknowledge and agree that:

                              (i)  the Lender shall have a senior
                    position with respect to the Collateral  with
                    respect   to  any  and  all  obligations   of
                    Borrower   pursuant  to   the   Lender   Loan
                    Documents  whether or not the  Collateral  is
                    located  on  the  Vessel  and  the  Preferred
                    Mortgagee shall not make or assert any claims
                    or  rights with respect thereto until  Lender
                    is  indefeasibly  paid in  full  all  of  the
                    amounts  owed  by  Borrower pursuant  to  the
                    Lender  Loan  Documents. To  the  extent  the
                    Preferred   Mortgagee  is   in   control   or
                    possession   of   the   Vessel   or   related
                    facilities,  the  Preferred  Mortgagee  shall
                    allow the Lender to enter onto the Vessel and
                    related  facilities to remove the  Collateral
                    from the Vessel or related facilities; and

                               (ii) the Preferred Mortgagee shall
                    have  a  senior  and absolute  position  with
                    respect to all other security covered by  the
                    Leasehold   Mortgage   and   Preferred   Ship
                    Mortgage  including but not  limited  to  the
                    Vessel.

                          No  party hereunder shall challenge  or
               contravene  the  validity and  perfection  of  the
               Encumbrances of the other party hereunder.

                          Each party hereunder agrees that upon a
               written  request  from the other party,  it  shall
               execute  and deliver to the requesting party  such
               further  instruments and shall take  such  further
               action  as  the requesting party deems  reasonably
               necessary

<PAGE>

               in order to carry out the provisions and intent of
               this Agreement.

                           Preferred  Mortgagee  represents   and
               warrants  that it is the successor in interest  to
               American  Bank  National  Association  (including,
               without   limitation,  said  entity's  status   as
               Trustee   under  the  Indenture)  and   that   UCC
               financing   statements  filed  of   record   which
               identify the Borrower as "Debtor" and (i) American
               Bank   National  Association  (as   "Trustee"   or
               "Attention: Corporate Trust Department")  or  (ii)
               Firstar  Bank  of  Minnesota,  as  secured  party,
               relate   to  the  $140  million  dollar  financing
               evidenced by the Indenture and are all executed by
               the   Preferred   Mortgagee   in   the   Preferred
               Mortgagee's   capacity  as  Trustee   under   said
               Indenture.    The   Preferred  Mortgagee   further
               acknowledges   that   the   security   interest(s)
               perfected by said UCC filings are subject  to  the
               terms of this Agreement.

     3.   DISTRIBUTION OF INSURANCE PROCEEDS

           In the event insurance proceeds hereafter are realized
on  the  Vessel or related facilities, then the proceeds  thereof
shall  be distributed to the Preferred Mortgagee except that  any
and  all insurance proceeds attributable to the Collateral  shall
be  distributed  to the Lender to the extent of  the  Obligations
under the Loan Agreement.

     4.   EXCHANGE OF NOTICES

                    (a)  Each of the parties hereunder shall make
               reasonable  efforts to provide all others  with  a
               copy   of   any  notice  or  demand,  or   similar
               communication,  as  and when given  the  Borrower.
               However,   no  party  hereunder  shall  have   any
               liability to any other party hereunder for failure
               to comply.

                     (b)   All  notices and other  communications
               required  hereunder shall be in writing and  shall
               become   effective  when  delivered  by  hand   or
               received  by overnight courier, telex,  facsimile,
               telegram  or registered first class mail,  postage
               prepaid  addressed to the following:

               LENDER:

<PAGE>

               FINOVA Capital Corporation
               115 Century Road
               Paramus, New Jersey 07652
               Attention: Pamela Marchant, Vice President

               with a copy to:

               Winick & Rich, P.C.
               919 Third Avenue
               New York, NY  10022
               Attention:  Alan C. Winick, Esq.

               BORROWER:

               Showboat Marina Casino Partnership
               1 Showboat Place
               East Chicago, Indiana 46312

               with a copy to:

               Ice Miller Donadio & Ryan
               One American Square
               P.O. Box 82001
               Indianapolis, Indiana 46282
               Attention:  Stephen J. Hackman, Esq

               PREFERRED MORTGAGEE:

               Firstar Bank of Minnesota, N.A.
               101 East Fifth Street
               St. Paul, MN 55101
               Attention: Mr. Frank Leslie


     5.   GOVERNING LAW.

           This Subordination Agreement shall be governed by  and
construed under the laws of Arizona.

     6.   AMENDMENTS AND WAIVERS.

           This  Agreement  or  any provision  hereunder  may  be
effectively  waived,  amended, assigned, or  terminated  only  by
written agreement signed by the party hereunder against whom  the
enforcement  of any waiver, amendment, assignment, or termination
is sought.

     7.   BINDING EFFECT.

           This Agreement shall inure to the benefit of and shall
be binding upon the parties hereto and their

<PAGE>

respective   successors  and  assigns.   Without   limiting   the
foregoing,  this  Section  7  shall be  understood  to  apply  to
assignments  of  the respective loans or any of them  or  of  any
Encumbrance  securing  any  of  the  respective  loans;  no  such
assignment  shall  adversely  affect  the  rights  of  any  party
hereunder  and  any  such  assignment  which  is  deemed  by  the
assigning party or its assignee to so affect such rights shall to
that extent be ineffective.  No assignment by any party shall  be
binding or effective until the assignee has agreed in writing  to
be bound by the terms and conditions of this Agreement.

     8.   SEVERABILITY.

          In the event that any provision of this Agreement shall
be  held  invalid  or  unenforceable by any  court  of  competent
jurisdiction,  such  holding  shall  not  invalidate  or   render
unenforceable any other provisions hereof.

     9.   COUNTERPARTS.

           This  Agreement  may  be executed  in  any  number  of
counterparts,  all of which taken together shall  constitute  one
Agreement  and  any  of  the  parties  hereto  may  execute  this
Agreement   by   signing  a  counterpart.  The  parties   further
acknowledge and agree that telecopy or facsimile signature  pages
shall  be sufficient evidence of said parties execution  of  this
Agreement  and its intent to be bound hereby.  Each party  agrees
to provide original executed signature pages to the other parties
by  overnight  courier delivery after the date the  facsimile  or
telecopy signature pages are executed.

     10.  EFFECT ON BORROWER'S OBLIGATIONS.

           The  provisions of this Agreement are intended  solely
for  the  purpose of defining the relative rights between  Lender
and  Preferred Mortgagee only.  No party, including the Borrower,
is  intended  to be a third party beneficiary of this  Agreement.
Nothing  contained  herein is intended to  or  shall  impair  the
obligations of the Borrower to the Lender or Preferred  Mortgagee
or  either of them; nor shall anything herein prevent any of  the
parties  hereto from accepting any payment from the  Borrower  or
from  exercising all remedies otherwise permitted  by  applicable
law and any agreements with Borrower upon default by the Borrower
under  Borrower's obligations to such party, subject only to  the
rights,  if any, of the parties under this Agreement.  Except  as
otherwise  provided herein, the right of the parties  to  enforce
the  provisions  of  this  Agreement  shall  not  at  anytime  be
prejudiced or impaired by any act or failure to act on  the  part
of any of the parties, including without

<PAGE>

limitation,   any   forbearance,  waiver,  consent,   compromise,
amendment,  extension,  or  renewal with  respect  to  Borrower's
obligations to a party, or any taking or release of or failure to
protect  or  preserve  any  property  of  the  Borrower   or   by
noncompliance by the Borrower with the terms of this Agreement.

     11.  LEGEND.

          Each party, for itself and its successors as holders of
its respective loan or in its capacity as trustee, as applicable,
agrees  to cause such records as the parties may agree to contain
one  or  more  conspicuous notices  which reads substantially  as
follows:
               This instrument is subject to an Intercreditor and
          Subordination  Agreement dated as of  June     ,  1997,
          among  FINOVA  Capital  Corporation,  Firstar  Bank  of
          Minnesota, N.A. and Showboat Marina Casino Partnership,
          which  among  other  things,  determines  the  relative
          priorities of certain security interests or other liens
          in certain assets as more fully set forth therein.

       12.    MEMORANDUM   OF  INTERCREDITOR  AND   SUBORDINATION
AGREEMENT.
           Preferred Mortgagee shall, if so requested by  Lender,
execute and deliver a memorandum of this Agreement in proper form
for   the   purpose   of  recording  with  the  National   Vessel
Documentation  Center  and execute and  deliver  UCC-3  Amendment
filings for the purpose of providing notice of this Agreement and
for  filing in the appropriate Secretary of State and  county  or
other  local offices.  However, the memorandum and UCC-3's  shall
not  in  any  circumstances be deemed to  modify  or  change  any
provisions of this Agreement.

     13.  LENDER'S RIGHT TO MODIFY.

           The  Lender shall be at liberty, without giving notice
to  or  obtaining the assent of the Preferred Mortgagee, to  vary
and/or  modify the terms and grant extensions or renewals of  any
present  or future indebtedness or obligation to the Lender  from
the  Borrower  including without limitation all  such  terms  and
provisions  as  set forth in the Loan Agreement and  all  related
documents  without effecting in any manner any rights  hereunder.
Without limiting the foregoing, the terms of this Agreement,  the
subordination effected hereby, and the rights of Lender  and  the
obligations  of the Preferred Mortgagee arising hereunder,  shall
not be affected, modified or impaired in

<PAGE>

any  manner  or to any extent by: (i) any amendment, modification
or  termination of or supplement to the Lender Loan Documents, or
any  agreement,  instrument  or document  executed  or  delivered
pursuant thereto; (ii) the validity or enforceability of any such
documents;  (iii)  the release, sale, exchange or  surrender,  in
whole  or in part, of any Collateral or collateral security,  now
or  hereafter existing, for any of the indebtedness  owed  Lender
pursuant  to the Lender Loan Documents or any other indebtedness,
liability  or obligation of the Borrower to Lender, now  existing
or  hereafter arising; (iv) any exercise or non-exercise  of  any
right,  power  or remedy under or in respect of the  indebtedness
owed Lender or any of such instruments and documents referred  to
in  clause (i) above or arising at law; (v) any waiver,  consent,
release,  indulgence, extension, renewal, modification, delay  or
other action, inaction or omission in respect of the indebtedness
owed  lender  or any of the agreements, instruments or  documents
referred  to in clause (i) above or in respect of any  collateral
security   for  the  indebtedness  owed  Lender  or   any   other
indebtedness, liability or obligation of the Borrower to  Lender,
now  existing  or  hereafter  arising,  or  whether  or  not  the
Preferred Mortgagee shall have had notice or knowledge of any  of
the foregoing and whether or not it shall have consented thereto;
or  (vi)  any action taken by any trustee in bankruptcy including
any  debtor under the Bankruptcy Code or any other party pursuant
to  Sections  510,  547, 548, 549, 550 or 553 of  the  Bankruptcy
Code.

     14.  PREFERRED MORTGAGEE REPRESENTATION.

           The Preferred Mortgagee hereby represents and warrants
that:  (a) the execution and delivery of this Agreement  and  the
performance  by  said  Preferred  Mortgagee  of  its  obligations
hereunder  have  received all necessary approvals,  corporate  or
otherwise,  and do not and will not contravene or  conflict  with
any   provision  of  law  or  any  provision  of  any  indenture,
instrument  or other agreement to which said Preferred  Mortgagee
is  a  party  or  by which it or its property  may  be  bound  or
affected;  (b) said Preferred Mortgagee has full power, authority
and  legal  right  to make and perform this Agreement;  (c)  said
Preferred   Mortgagee  has  not  assigned  or   transferred   any
indebtedness owing by the Borrower; and (d) this Agreement is the
legal,  valid and binding obligation of the Preferred  Mortgagee,
enforceable  against the Preferred Mortgagee in  accordance  with
its terms.

<PAGE>

      IN  WITNESS WHEREOF, the parties hereto have executed  this
Intercreditor and Subordination Agreement as an instrument  under
seal as of the day and year first above written.

                         LENDER

                         FINOVA CAPITAL CORPORATION


                         BY:


                         PREFERRED MORTGAGEE

                         FIRSTAR BANK OF MINNESOTA, N.A.,
                         TRUSTEE


                         BY:
                                    

                         BORROWER

                         SHOWBOAT MARINA CASINO PARTNERSHIP

                    By:  SHOWBOAT MARINA PARTNERSHIP,
                         an Indiana general partnership, its
                         general partner

                    By:  SHOWBOAT INDIANA INVESTMENT LIMITED
                         PARTNERSHIP, a Nevada limited
                         partnership, its general partner

                    By:  SHOWBOAT INDIANA, INC., a Nevada
                         corporation, its general partner


                    By:
                         Name:  Joseph G. O'Brien
                         Title: Treasurer

<PAGE>

                         ACKNOWLEDGMENT

STATE OF NEW JERSEY

COUNTY OF BERGEN


      BE  IT  REMEMBERED, that on this ______ day of  June,  1997
before  me,  the subscriber, personally appeared PAMELA  MARCHANT
who,  I  am  satisfied,  is  the person  who  signed  the  within
instrument  as  Vice President of FINOVA CAPITAL CORPORATION  the
corporation named therein and she thereupon acknowledged that the
said  instrument made by the corporation was signed and delivered
by  her as such officer and is the voluntary act and deed of  the
corporation.



_________________________________


<PAGE>

                         ACKNOWLEDGMENT

STATE OF

COUNTY OF


      BE  IT  REMEMBERED, that on this ______ day of  June,  1997
before     me,     the     subscriber,    personally     appeared
who,  I  am  satisfied,  is  the person  who  signed  the  within
instrument  as                     of FIRSTAR BANK OF  MINNESOTA,
N.A.  the  national  banking association  named  therein  and  he
thereupon  acknowledged  that the said  instrument  made  by  the
entity and sealed with its corporate seal, was signed, sealed and
delivered  by  him as such officer and is the voluntary  act  and
deed of the entity, made by virtue of authority from its Board of
Directors.



_________________________________

<PAGE>

                         ACKNOWLEDGMENT

STATE OF

COUNTY OF


      BE  IT  REMEMBERED, that on this ______ day of  June,  1997
before me, the subscriber, personally appeared JOSEPH G. O'BRIEN,
who, I am satisfied, is the                                   who
signed  the within instrument as the ____________________________
of  Showboat  Marina  Casino Partnership, the  partnership  named
therein  and they thereupon acknowledged that the said instrument
made  by the partnership, was signed and delivered by him as such
and  is  the voluntary act and deed of the partnership,  made  by
virtue of authority from all of its partners.



________________________________

<PAGE>

                     SUBORDINATION AGREEMENT

                           EXHIBIT "A"


Description of Collateral.

       See   attached                (      )  pages  which   are
incorporated herein by reference.

<PAGE>

                     SUBORDINATION AGREEMENT

                           EXHIBIT "B"


Description of Vessel.

                Official  Gross   Net       Year     Place
NAME             NUMBER  TONNAGE  TONNAGE   BUILT    BUILT

M/V Showboat    1052579   2803     1,906    1997   Jacksonville,
                                                   Florida

<PAGE>

                     DLJ  INTERCREDITOR AND
                     SUBORDINATION AGREEMENT


       THIS   INTERCREDITOR  AND  SUBORDINATION  AGREEMENT   (the
"Agreement") is entered into as of the _____ day of June, 1997 by
and among FINOVA CAPITAL CORPORATION, a Delaware corporation (the
"Lender") having a place of business at 95 North Route 17  South,
Paramus, New Jersey 07652, DONALDSON LUFKIN & JENRETTE SECURITIES
CORPORATION            ("DLJ           Securities")             a
corporation  and DLJ CAPITAL FUNDING, INC. ("DLJ  Capital")  (DLJ
Securities and DLJ Capital are sometimes hereinafter individually
or  collectively referred to as the "Preferred Mortgagee", as the
case  may be), each having an address 277 Park Avenue, New  York,
New York 10172 and SHOWBOAT MARINA CASINO PARTNERSHIP, an Indiana
general  partnership (the "Borrower") having a place of  business
at 1 Showboat Place, East Chicago, Indiana 46312.

      WHEREAS,  the Borrower has requested the Lender to  provide
financing  in  the  principal amount of  $11,000,000.00  and  the
Borrower  and  Lender have in connection therewith, entered  into
that  certain  Loan  and  Security  Agreement,  dated  even  date
herewith  (the "Loan Agreement") and the related promissory  note
and security documents (specifically including without limitation
that  certain  Vessel Chattel Mortgage (the "Chattel  Mortgage"))
covering those assets of the Borrower as described in Exhibit "A"
attached    hereto   and   incorporated   herein   by   reference
(collectively the "Collateral"); and

     WHEREAS, the Borrower is indebted to the Preferred Mortgagee
(as  assignee of PDS Financial Corporation) pursuant to a certain
Master Lease Agreement dated February 21, 1997 (the "Lease")  and
secured,  in  part, by a Preferred Ship Mortgage (the  "Preferred
Ship  Mortgage") dated February 21, 1997 on the Vessel  described
in  Exhibit  "B"  attached  hereto  and  incorporated  herein  by
reference (the "Vessel"); and

      WHEREAS,  the Lender has indicated that it is unwilling  to
provide  financing  to  the  Borrower under  the  Loan  Agreement
unless,  among  other  things, the  Borrower  and  the  Preferred
Mortgagee   shall  join  in  this  Agreement  and  the  Preferred
Mortgagee  shall  subordinate, to the extent and  in  the  manner
hereinafter  set forth, its interest (if any) in  the  Collateral
which  arises  under  the  Preferred  Ship  Mortgage,  any  other
mortgage or security agreement or

<PAGE>

otherwise  ("Preferred  Mortgagee Security")  to  the  liens  and
security interests granted by Borrower to the Lender pursuant  to
the Loan Agreement, Chattel Mortgage or documents, agreements  or
instruments  executed  in  connection  therewith  ("Lender   Loan
Documents").

      NOW  THEREFORE, in consideration of the premises and as  an
inducement to the Lender to grant financial accommodations to the
Borrower,  and  in  consideration of the  granting  thereof,  the
Borrower and Preferred Mortgagee covenant with and warrant to the
Lender as follows:

     1.   STATEMENT OF PURPOSE.

                          The Preferred Mortgagee has a valid and
               perfected  Preferred Ship Mortgage on  the  Vessel
               which  could be construed as granting an  interest
               in all or part of the Collateral.

                          The  Preferred Mortgagee may  otherwise
               have  or  claim  to  have a  valid  and  perfected
               security  interest or lien on all or part  of  the
               Collateral whether or not located on the Vessel.

                          Simultaneous herewith, the  Lender  has
               been granted a security interest in the Collateral
               pursuant  to various security documents  including
               but  not  limited  to the Loan Agreement  and  the
               Chattel Mortgage on the Vessel.

                          The  parties  wish to  establish  their
               relative priorities of their respective liens  and
               interests in the Collateral.


     2.   RELATIVE PRIORITIES AND SUBORDINATION.

                          Notwithstanding the order in which  the
               documents  granting  the Preferred  Mortgagee  any
               lien,  security interest or other interest in  the
               Collateral  including,  without  limitation,   the
               Preferred Ship Mortgage and the documents granting
               the  Lender any lien, security interest  or  other
               interest  in  the  Collateral  including,  without
               limitation,   the  Loan  Agreement   and   Chattel
               Mortgage  (collectively the  "Encumbrances")  have
               been or are hereafter executed, delivered or liens
               and  security  interests thereunder have  been  or
               will be perfected, and the relative priorities  of
               the  Encumbrances under applicable law  including,
               without limitation, any prior perfection of a

<PAGE>

               security interest or lien under the provisions  of
               the  Uniform Commercial Code or any other  law  of
               any   jurisdiction  which  is  applicable  or  the
               existence  of  any  present or  future  filing  or
               financing  statements under the Uniform Commercial
               Code or any other law of any jurisdiction which is
               applicable or any other recordation or  filing  of
               any  documents,  and further, notwithstanding  any
               pledge to or possession by the Preferred Mortgagee
               of  all or any part of the Collateral, the parties
               hereto acknowledge and agree that:

                              (i)  the Lender shall have a senior
                    position with respect to the Collateral  with
                    respect   to  any  and  all  obligations   of
                    Borrower   pursuant  to   the   Lender   Loan
                    Documents  whether or not the  Collateral  is
                    located  on  the  Vessel  and  the  Preferred
                    Mortgagee shall not make or assert any claims
                    or  rights with respect thereto until  Lender
                    is  indefeasibly  paid in  full  all  of  the
                    amounts  owed  by  Borrower pursuant  to  the
                    Lender  Loan  Documents. To  the  extent  the
                    Preferred   Mortgagee  is   in   control   or
                    possession   of   the   Vessel   or   related
                    facilities,  the  Preferred  Mortgagee  shall
                    allow the Lender to enter onto the Vessel and
                    related  facilities to remove the  Collateral
                    from the Vessel or related facilities; and

                               (ii) the Preferred Mortgagee shall
                    have  a  senior  and absolute  position  with
                    respect to all other security covered by  the
                    Preferred  Ship  Mortgage including  but  not
                    limited to the Vessel.

                          No  party hereunder shall challenge  or
               contravene  the  validity and  perfection  of  the
               Encumbrances of the other party hereunder.

                          Each party hereunder agrees that upon a
               written  request  from the other party,  it  shall
               execute  and deliver to the requesting party  such
               further  instruments and shall take  such  further
               action  as  the requesting party deems  reasonably
               necessary in order to carry out the provisions and
               intent of this Agreement.

<PAGE>

     3.   DISTRIBUTION OF INSURANCE PROCEEDS.

           In the event insurance proceeds hereafter are realized
on  the  Vessel or related facilities, then the proceeds  thereof
shall  be distributed to the Preferred Mortgagee except that  any
and  all insurance proceeds attributable to the Collateral  shall
be  distributed  to the Lender to the extent of  the  Obligations
under the Loan Agreement.

     4.   EXCHANGE OF NOTICES

                    (a)  Each of the parties hereunder shall make
               reasonable  efforts to provide all others  with  a
               copy   of   any  notice  or  demand,  or   similar
               communication,  as  and when given  the  Borrower.
               However,   no  party  hereunder  shall  have   any
               liability to any other party hereunder for failure
               to comply.

                     (b)   All  notices and other  communications
               required  hereunder shall be in writing and  shall
               become   effective  when  delivered  by  hand   or
               received  by overnight courier, telex,  facsimile,
               telegram  or registered first class mail,  postage
               prepaid  addressed to the following:

               LENDER:

               FINOVA Capital Corporation
               115 Century Road
               Paramus, New Jersey 07652
               Attention: Pamela Marchant, Vice President

               with a copy to:

               Winick & Rich, P.C.
               919 Third Avenue
               New York, NY  10022
               Attention:  Alan C. Winick, Esq.

               BORROWER:

               Showboat Marina Casino Partnership
               1 Showboat Place
               East Chicago, Indiana 46312

               with a copy to:

<PAGE>

               Ice Miller Donadio & Ryan
               One American Square
               P.O. Box 82001
               Indianapolis, Indiana 46282
               Attention:  Stephen J. Hackman, Esq

               PREFERRED MORTGAGEE:


               Donaldson Lufkin & Jenrette Securities Corporation
               DLJ Capital Funding, Inc.
               277 Park Avenue
               New York, New York 10172

               with a copy to:

               Paul Silverstein, Esq.
               Andrews & Kurth
               425 Lexington Avenue
               10th Floor
               New York, New York 10017


     5.   GOVERNING LAW.

           This Subordination Agreement shall be governed by  and
construed under the laws of Arizona.

     6.   AMENDMENTS AND WAIVERS.

           This  Agreement  or  any provision  hereunder  may  be
effectively  waived,  amended, assigned, or  terminated  only  by
written agreement signed by the party hereunder against whom  the
enforcement  of any waiver, amendment, assignment, or termination
is sought.

     7.   BINDING EFFECT.

           This Agreement shall inure to the benefit of and shall
be   binding   upon  the  parties  hereto  and  their  respective
successors  and  assigns.  Without limiting the  foregoing,  this
Section  7  shall  be understood to apply to assignments  of  the
respective  loans  or any of them or of any Encumbrance  securing
any  of  the respective loans; no such assignment shall adversely
affect  the rights of any party hereunder and any such assignment
which  is  deemed by the assigning party or its  assignee  to  so
affect  such  rights  shall to that extent  be  ineffective.   No
assignment by any party shall be binding or effective  until  the
assignee has

<PAGE>

agreed in writing to be bound by the terms and conditions of this
Agreement.

     8.   SEVERABILITY.

          In the event that any provision of this Agreement shall
be  held  invalid  or  unenforceable by any  court  of  competent
jurisdiction,  such  holding  shall  not  invalidate  or   render
unenforceable any other provisions hereof.

     9.   COUNTERPARTS.

           This  Agreement  may  be executed  in  any  number  of
counterparts,  all of which taken together shall  constitute  one
Agreement  and  any  of  the  parties  hereto  may  execute  this
Agreement   by  signing  a  counterpart.   The  parties   further
acknowledge and agree that telecopy or facsimile signature  pages
shall  be sufficient evidence of said parties execution  of  this
Agreement  and its intent to be bound hereby.  Each party  agrees
to provide original executed signature pages to the other parties
by  overnight  courier delivery after the date the  facsimile  or
telecopy signature pages are executed.

     10.  EFFECT ON BORROWER'S OBLIGATIONS.

           The  provisions of this Agreement are intended  solely
for  the  purpose of defining the relative rights between  Lender
and  Preferred Mortgagee only.  No party, including the Borrower,
is  intended  to be a third party beneficiary of this  Agreement.
Nothing  contained  herein is intended to  or  shall  impair  the
obligations of the Borrower to the Lender or Preferred  Mortgagee
or  either of them; nor shall anything herein prevent any of  the
parties  hereto from accepting any payment from the  Borrower  or
from  exercising all remedies otherwise permitted  by  applicable
law and any agreements with Borrower upon default by the Borrower
under  Borrower's obligations to such party, subject only to  the
rights,  if any, of the parties under this Agreement.  Except  as
otherwise  provided herein, the right of the parties  to  enforce
the  provisions  of  this  Agreement  shall  not  at  anytime  be
prejudiced or impaired by any act or failure to act on  the  part
of   any  of  the  parties,  including  without  limitation,  any
forbearance,  waiver, consent, compromise, amendment,  extension,
or  renewal with respect to Borrower's obligations to a party, or
any  taking  or release of or failure to protect or preserve  any
property of the Borrower or by noncompliance by the Borrower with
the terms of this Agreement.

     11.  LEGEND.

<PAGE>

          Each party, for itself and its successors as holders of
its  respective loan and/or master lease, as appropriate,  agrees
to  cause such records as reasonably agreed to by the parties  to
contain  one or more conspicuous notices which read substantially
as follows:

               This instrument is subject to an Intercreditor and
          Subordination  Agreement dated as of  June     ,  1997,
          among  FINOVA Capital Corporation, Donaldson  Lufkin  &
          Jenrette  Securities Corporation, DLJ Capital  Funding,
          Inc.  and  Showboat  Marina Casino  Partnership,  which
          among  other things, determines the relative priorities
          of certain security interests or other liens in certain
          assets as more fully set forth therein.


       12.    MEMORANDUM   OF  INTERCREDITOR  AND   SUBORDINATION
AGREEMENT.
           Preferred Mortgagee shall, if so requested by  Lender,
execute and deliver a memorandum of this Agreement in proper form
for   the   purpose   of  recording  with  the  National   Vessel
Documentation  Center  and execute and  deliver  UCC-3  Amendment
filings for the purpose of providing notice of this Agreement and
for  filing in the appropriate Secretary of State and  county  or
other  local offices.  However, the memorandum and UCC-3's  shall
not  in  any  circumstances be deemed to  modify  or  change  any
provisions of this Agreement.

     13.  LENDER'S RIGHT TO MODIFY.

           The  Lender shall be at liberty, without giving notice
to  or  obtaining the assent of the Preferred Mortgagee, to  vary
and/or  modify the terms and grant extensions or renewals of  any
present  or future indebtedness or obligation to the Lender  from
the  Borrower  including without limitation all  such  terms  and
provisions  as  set forth in the Loan Agreement and  all  related
documents  without effecting in any manner any rights  hereunder.
Without limiting the foregoing, the terms of this Agreement,  the
subordination effected hereby, and the rights of Lender  and  the
obligations  of the Preferred Mortgagee arising hereunder,  shall
not  be  affected, modified or impaired in any manner or  to  any
extent by: (i) any amendment, modification or termination  of  or
supplement  to  the  Lender  Loan Documents,  or  any  agreement,
instrument  or  document executed or delivered pursuant  thereto;
(ii)  the validity or enforceability of any such documents; (iii)
the release, sale, exchange or surrender, in whole or in part, of
any

<PAGE>

Collateral or collateral security, now or hereafter existing, for
any  of the indebtedness owed Lender pursuant to the Lender  Loan
Documents  or any other indebtedness, liability or obligation  of
the  Borrower to Lender, now existing or hereafter arising;  (iv)
any  exercise or non-exercise of any right, power or remedy under
or  in  respect of the indebtedness owed Lender or  any  of  such
instruments  and  documents referred to in clause  (i)  above  or
arising  at  law;  (v) any waiver, consent, release,  indulgence,
extension, renewal, modification, delay or other action, inaction
or  omission in respect of the indebtedness owed lender or any of
the  agreements, instruments or documents referred to  in  clause
(i)  above  or  in  respect of any collateral  security  for  the
indebtedness owed Lender or any other indebtedness, liability  or
obligation  of the Borrower to Lender, now existing or  hereafter
arising, or whether or not the Preferred Mortgagee shall have had
notice or knowledge of any of the foregoing and whether or not it
shall  have  consented thereto; or (vi) any action taken  by  any
trustee  in  bankruptcy including any debtor under the Bankruptcy
Code  or any other party pursuant to Sections 510, 547, 548, 549,
550 or 553 of the Bankruptcy Code.


     14.  PREFERRED MORTGAGEE REPRESENTATION.

           The Preferred Mortgagee hereby represents and warrants
that:  (a) the execution and delivery of this Agreement  and  the
performance  by  said  Preferred  Mortgagee  of  its  obligations
hereunder  have  received all necessary approvals,  corporate  or
otherwise,  and do not and will not contravene or  conflict  with
any   provision  of  law  or  any  provision  of  any  indenture,
instrument  or other agreement to which said Preferred  Mortgagee
is  a  party  or  by which it or its property  may  be  bound  or
affected;  (b) said Preferred Mortgagee has full power, authority
and  legal  right  to make and perform this Agreement;  (c)  said
Preferred   Mortgagee  has  not  assigned  or   transferred   any
indebtedness owing by the Borrower [except to DLJ]; and (d)  this
Agreement  is  the  legal, valid and binding  obligation  of  the
Preferred  Mortgagee, enforceable against the Preferred Mortgagee
in accordance with its terms.

           IN  WITNESS WHEREOF, the parties hereto have  executed
this  Intercreditor and Subordination Agreement as an  instrument
under seal as of the day and year first above written.


                         LENDER

<PAGE>

                         FINOVA CAPITAL CORPORATION



                         BY:



                         PREFERRED MORTGAGEE

                         DONALDSON LUFKIN & JENRETTE SECURITIES
                          CORPORATION


                         By:

                         DLJ CAPITAL FUNDING, INC.


                         BY:
                                                  ,

<PAGE>

                         BORROWER

                         SHOWBOAT MARINA CASINO PARTNERSHIP

                    By:  SHOWBOAT MARINA PARTNERSHIP,
                         an Indiana general partnership, its
                         general partner

                    By:  SHOWBOAT INDIANA INVESTMENT LIMITED
                         PARTNERSHIP, a Nevada limited
                         partnership, its general partner

                    By:  SHOWBOAT INDIANA, INC., a Nevada
                         corporation, its general partner


                    By:
                         Name:  Joseph G. O'Brien
                         Title: Treasurer

<PAGE>

                         ACKNOWLEDGMENT

STATE OF NEW JERSEY

COUNTY OF BERGEN


      BE  IT  REMEMBERED, that on this ______ day of  June,  1997
before  me,  the subscriber, personally appeared PAMELA  MARCHANT
who,  I  am  satisfied,  is  the person  who  signed  the  within
instrument  as  Vice President of FINOVA CAPITAL CORPORATION  the
corporation named therein and she thereupon acknowledged that the
said  instrument made by the corporation was signed and delivered
by  her as such officer and is the voluntary act and deed of  the
corporation.



_________________________________

<PAGE>

                         ACKNOWLEDGMENT

STATE OF

COUNTY OF



      BE  IT  REMEMBERED, that on this ______ day of  June,  1997
before     me,     the     subscriber,    personally     appeared
who,  I  am  satisfied,  is  the person  who  signed  the  within
instrument as                     of DONALDSON LUFKIN &  JENRETTE
SECURITIES  CORPORATION  the corporation  named  therein  and  he
thereupon  acknowledged  that the said  instrument  made  by  the
corporation  and  sealed  with its corporate  seal,  was  signed,
sealed  and delivered by him as such officer and is the voluntary
act and deed of the corporation, made by virtue of authority from
its Board of Directors.



_________________________________

<PAGE>

                         ACKNOWLEDGMENT

STATE OF

COUNTY OF

      BE  IT  REMEMBERED, that on this ______ day of  June,  1997
before     me,     the     subscriber,    personally     appeared
who,  I  am  satisfied,  is  the person  who  signed  the  within
instrument  as                      of DLJ CAPITAL FUNDING,  INC.
the  corporation named therein and he thereupon acknowledged that
the  said instrument made by the corporation and sealed with  its
corporate seal, was signed, sealed and delivered by him  as  such
officer  and  is  the voluntary act and deed of the  corporation,
made by virtue of authority from its Board of Directors.



_________________________________

<PAGE>

                         ACKNOWLEDGMENT

STATE OF INDIANA

COUNTY OF


      BE  IT  REMEMBERED, that on this ______ day of  June,  1997
before me, the subscriber, personally appeared JOSEPH G. O'BRIEN,
who,  I am satisfied, is the                      who signed  the
within instrument as the ____________________________ of SHOWBOAT
MARINA  CASINO PARTNERSHIP, the partnership named therein and  he
thereupon  acknowledged  that the said  instrument  made  by  the
partnership,   was  signed  and  delivered  by   them   as   such
and  is  the voluntary act and deed of the partnership,  made  by
virtue of authority from all of its partners.



________________________________

<PAGE>

                     SUBORDINATION AGREEMENT

                           EXHIBIT "A"


Description of Collateral.

       All  furniture, fixtures and equipment of Borrower  (which
are not gaming equipment) as more fully described on the attached
(     ) pages which are incorporated herein by reference.

<PAGE>

                     SUBORDINATION AGREEMENT

                           EXHIBIT "B"


Description of Vessel.

                Official  Gross   Net       Year     Place
NAME             NUMBER  TONNAGE  TONNAGE   BUILT    BUILT

M/V Showboat    1052579   2803     1906      1997  Jacksonville,
                                                   Florida

<PAGE>

                     SECURED PROMISSORY NOTE


$11,000,000.00                          June     , 1997
                                        Phoenix, Arizona


      FOR VALUE RECEIVED, the undersigned, SHOWBOAT MARINA CASINO
PARTNERSHIP, an Indiana general partnership ("Borrower"),  hereby
promises  to  pay  to  the order of FINOVA  CAPITAL  CORPORATION,
("Lender"),   the   principal  sum  of  Eleven  Million   Dollars
($11,000,000.00),  or  such  lesser  amount  as  represents   the
aggregate of all Advances made by Lender to Borrower pursuant  to
the Loan and Security Agreement between Borrower and Lender dated
the  date  of this Note ("Loan Agreement") together with interest
on  the  unpaid  principal  balance  hereof  from  time  to  time
outstanding  at the rates per annum and all on the dates  and  as
otherwise provided in the Loan Agreement.

      This Note is the Note referred to in the Loan Agreement, is
secured  as  set forth in the Loan Agreement, may not be  prepaid
except  as provided in the Loan Agreement and is entitled to  the
benefits  of the Loan Agreement.  All capitalized terms  used  in
this  Note which are not otherwise defined herein shall have  the
respective meanings ascribed to them in the Loan Agreement.

      All payments of principal and interest on this Note are  to
be  made  in  lawful  money of the United States  of  America  in
immediately  available  funds, without  setoff,  counterclaim  or
deduction  of  any nature, at the office of Lender  at  95  North
Route 17 South, Paramus, New Jersey 07653 (or such other place as
the  holder  hereof shall designate to the Borrower in  writing),
prior to 12:00 Noon, local time, on the day when due.

     If any payment of principal or interest becomes due on a day
which  is not a Business Day, that payment shall be made  on  the
next  Business Day unless such next Business Day falls in another
calendar month in which event that payment shall be made  on  the
next preceding Business Day.

      Lender  and  Borrower intend this Note  to  comply  in  all
respects  with all provisions of law and not to violate,  in  any
way, any legal limitations on interest charges.  Accordingly, if,
for  any  reason,  Borrower is required  to  pay,  or  has  paid,
interest  at  a  rate in excess of the highest rate  of  interest
which  may  be  charged by Lender or which Borrower  may  legally
contract to pay under applicable

<PAGE>

law  (the "Maximum Rate"), then the interest rate shall be deemed
to  be  reduced,  automatically and immediately, to  the  Maximum
Rate,  and interest payable hereunder shall be computed and  paid
at  the  Maximum  Rate and the portion of all prior  payments  of
interest  in excess of the Maximum Rate shall be deemed  to  have
been  prepayments of the outstanding principal of this  Note  and
applied  to  the  installments in  the  inverse  order  of  their
maturities.

      If  Borrower  fails  to make any payment  of  principal  or
interest  within ten (10) days after the payment is due, Borrower
shall  pay  a  late  charge of five percent (5%)  of  the  unpaid
amount, but in no event more than the maximum amount permitted by
applicable  law,  and such amount shall be payable  upon  demand.
Such  payment  is  not  interest for the use  of  money,  but  is
intended  to  cover Lender's administrative costs  occasioned  by
such delay.

      Upon  the  occurrence of an Event of Default, Lender  shall
have  all  of  the  rights and remedies  contained  in  the  Loan
Agreement,  including,  without limitation,  the  right,  at  its
option,  to  declare  all indebtedness  under  this  Note  to  be
immediately due and payable.

       Borrower hereby expressly waives presentment for  payment,
demand  for  payment,  notice  of dishonor,  protest,  notice  of
protest,  notice  of non-payment, and all lack  of  diligence  or
delays  in  collection or enforcement of this Note  or  the  Loan
Agreement.

       Lender  may  extend  the time of  payment  of  this  Note,
postpone the enforcement hereof, release any Collateral, or grant
any   other   indulgences  whatsoever,   without   affecting   or
diminishing  Lender's  right  of recourse  against  Borrower,  as
provided  herein and in the Loan Agreement and in the other  Loan
Documents, which right is hereby expressly reserved.  The failure
to  assert  any  right by Lender shall not  be  deemed  a  waiver
thereof.

       Borrower  agrees to pay all costs, fees  and  expenses  of
collection,  including, without limitation,  Lender's  reasonable
attorneys' fees and disbursements, in the event that any  action,
suit  or  proceeding is brought by the holder hereof  to  collect
this Note or if an Event of Default occurs.

      THIS  NOTE  IS DEEMED TO HAVE BEEN MADE IN,  AND  SHALL  BE
CONSTRUED  IN ACCORDANCE WITH THE LAWS OF, THE STATE OF  ARIZONA.
BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING
AGAINST BORROWER UNDER, ARISING OUT OF,

<PAGE>

OR IN ANY MANNER RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE
OTHER  LOAN  DOCUMENTS MAY BE BROUGHT IN ANY STATE COURT  OF  THE
STATE  OF ARIZONA LOCATED IN MARICOPA COUNTY OR ANY UNITED STATES
DISTRICT COURT LOCATED IN THE STATE OF ARIZONA.  BORROWER, BY ITS
EXECUTION  AND  DELIVERY OF THIS NOTE, EXPRESSLY AND  IRREVOCABLY
CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF  SUCH
COURTS IN ANY SUCH ACTION OR PROCEEDING.  BORROWER FURTHER AGREES
THAT  ANY LEGAL ACTION OR PROCEEDING BORROWER MAY BRING,  ARISING
OUT OF OR IN ANY MANNER RELATING TO THIS NOTE, THE LOAN AGREEMENT
OR  THE OTHER LOAN DOCUMENTS, SHALL ONLY BE BROUGHT IN ANY  COURT
OF  THE  STATE OF ARIZONA LOCATED IN MARICOPA COUNTY  OR  IN  THE
UNITED  STATES  DISTRICT  COURT  FOR  THE  DISTRICT  OF  ARIZONA.
BORROWER  ALSO  IRREVOCABLY  CONSENTS  TO  THE  SERVICE  OF   ANY
COMPLAINT,  SUMMONS,  NOTICE OR OTHER PROCESS  RELATING  TO  SUCH
ACTION  OR  PROCEEDING BY DELIVERY THEREOF  TO  BORROWER  IN  THE
MANNER  PROVIDED  FOR  NOTICES IN THE LOAN  AGREEMENT.   BORROWER
HEREBY  EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE  IN
ANY  SUCH  ACTION  OR  PROCEEDING BASED ON ANY  ALLEGED  LACK  OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS  OR
ANY  SIMILAR BASIS.  BORROWER SHALL NOT BE ENTITLED IN  ANY  SUCH
ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER
THE  LAWS  OF  ANY STATE OTHER THAN THE STATE OF ARIZONA,  UNLESS
SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF
ARIZONA.  NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER  OR
TO  ANY  EXTENT THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS
OR  OTHERWISE  PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION
OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

      Lender  is  hereby authorized by Borrower to  record  on  a
schedule  to  be  annexed  to this Note  (or  on  a  supplemental
schedule  thereto) the amount of each Advance made by  Lender  to
Borrower  and  the  amount  of  each  payment  or  prepayment  of
principal  of  the Loan received by Lender, it being  understood,
however, that failure to make any such notation shall not  affect
the rights of Lender or the obligations of Borrower hereunder  in
respect  of  this Note.  Lender may, at its option,  record  such
matters in its internal records rather than on such schedule  and
such records shall be conclusive absent manifest error.

      IN WITNESS WHEREOF, Borrower has duly executed this Note on
the date first above written.

                    SHOWBOAT MARINA CASINO PARTNERSHIP,
                     an Indiana general partnership

<PAGE>


                    Federal Tax Identification No._____________

                    By:  SHOWBOAT MARINA PARTNERSHIP,
                         an Indiana general partnership, its
                         general partner

                    By:  SHOWBOAT INDIANA INVESTMENT LIMITED
                         PARTNERSHIP, a Nevada limited
                         partnership, its general partner

                    By:  SHOWBOAT INDIANA, INC., a Nevada
                         corporation, its general partner


                    By:
                         Name:  Joseph G. O'Brien
                         Title: Treasurer

<PAGE>

                               
                     VESSEL CHATTEL MORTGAGE
                                
          THIS VESSEL CHATTEL MORTGAGE made and entered into on
this 30th day of June, 1997 by and between SHOWBOAT MARINA CASINO
PARTNERSHIP, a Indiana general partnership ("Borrower"), having
its place of business at One Showboat Place, East Chicago, IN;
and FINOVA CAPITAL CORPORATION, a Delaware corporation ("Lender")
having a place of business at 95 North Route 17 South, Paramus,
New Jersey 07652.

                                
                           WITNESSETH:
                                
     WHEREAS, the Borrower is simultaneously herewith entering
into that certain Loan and Security Agreement (hereinafter called
the "Loan Agreement") by and between it and the Lender (All
capitalized terms used herein not otherwise defined in this
Vessel Chattel Mortgage shall have the definition ascribed to
them in the Loan Agreement); and

     WHEREAS, the Borrower is simultaneously herewith executing
and delivering to the Lender that Certain Secured Promissory Note
in the original principal sum of $11,000,000 (the "Note"); and

     WHEREAS, the execution, granting and delivery of this Vessel
Chattel Mortgage is a condition precedent to the terms of the
Loan Agreement, the Note and all documents executed in connection
therewith and all Obligations thereunder; and

     WHEREAS, the Borrower is the sole owner of the whole of the
Vessel "M/V Showboat", official number 1052579, having 2803 gross
tons (the "Vessel"), documented under the laws and flag of the
United States of America.

     NOW, THEREFORE, in consideration of the premises and for
other good and valuable consideration, the receipt whereof is
duly acknowledged, and in order to secure the payment of the
Obligations, and to secure the performance of all the covenants
and conditions herein contained as well as set forth in the Loan
Agreement and all documents in any way related thereto, the
Borrower, pursuant to the terms of the Loan Agreement, has
granted to the Lender, and by these presents does hereby grant to
the Lender, a lien and security interest in the property listed
and described in Exhibit "A" attached hereto and by these
presents does grant, bargain, sell, convey, transfer, mortgage,
set over, assign and confirm unto the Lender, its rights in all
of such property:

     The items listed and described in Exhibit "A" attached
hereto and incorporated herein by reference which are located or
installed on the Vessel and any and all additions, improvements
and replacements hereafter made in, or to, the said items or any
part thereof (all collectively referred to as the "Collateral").

     TO HAVE AND TO HOLD the said Collateral unto the Lender
forever:

<PAGE>

     PROVIDED ALWAYS, and the condition of these presents is
such, that if the Obligations shall be paid in full, to the
Lender as and when the same shall become due and payable by
maturity or otherwise, as provided in the said Note all other
documents executed in connection in accordance with their terms
and conditions, then this Vessel Chattel Mortgage and the estate
and rights hereby granted shall cease and be void; otherwise to
remain in full force and effect.

     The Borrower hereby covenants and agrees that the Collateral
and all additions and replacements hereafter made in or to the
same are to be held by the Borrower subject to the further
covenants, conditions and uses hereinafter set forth as follows:

                                
                            ARTICLE I
                                
                THE BORROWER HEREBY RESPECTIVELY
                   COVENANTS AND AGREES THAT:
                                
     SECTION 1. Borrower is and shall continue to be a citizen of
the United States as defined in Section 2 of the Shipping Act of
1916, as amended, entitled to own and operate the Vessel under
her marine documents which Borrower shall maintain in full force
and effect.  The Borrower lawfully owns and is lawfully possessed
of the Vessel.

     SECTION 2. So long as the Borrower has not been released,
neither the Borrower nor anyone on the Borrower's behalf, nor the
Master of the Vessel shall have any right, power or authority to
create, incur, or permit to be placed or imposed on the
Collateral any liens, maritime or otherwise, whatsoever, other
than for crew's wages or salvage.

     SECTION 3. So long as this Vessel Chattel Mortgage has not
been released and the Collateral is on the Vessel (which the
Borrower is not allowed to remove without Lender's prior written
consent, which may be withheld for any reason), the Borrower
shall carry a properly certified copy of this Mortgage with the
Vessel's papers on board the Vessel, shall exhibit the same on
demand to any person having business with the said Vessel, or to
any representative of the Borrower and shall place and keep
prominently displayed in the pilot house, master's cabin and
engine room of the Vessel a framed, printed or typewritten notice
reading as follows:

                                
                      "NOTICE OF MORTGAGE"
                                
     "Certain furniture, fixtures and equipment located on this
vessel are covered by a Vessel Chattel Mortgage recorded pursuant
to the Ship Mortgage Act of 1920 as set forth in 313 of 46
U.S.C., as amended in favor of FINOVA CAPITAL CORPORATION,
Paramus, New Jersey.  Under the terms of said Mortgage, neither
the owner of this Vessel, nor anyone on the owner's, nor the
Master of this Vessel has any right, power or authority to

                                2

<PAGE>

create, incur or permit to be imposed upon the Collateral (as
defined in the said Chattel Mortgage) any liens, maritime or
otherwise, other than for crew's wages or salvage."
                                                           
     SECTION 4. Upon the occurrence and during the continuation
of any event set forth in Section 1 of Article II hereof, the
Borrower shall allow the Lender to enter onto the Vessel to
remove the Collateral from the Vessel.

     SECTION 5. So long as the Collateral is located on the
Vessel, the Borrower will take such actions as are required to
comply with and satisfy all the provisions of the Ship Mortgage
Act, 1920, as amended, and the UCC in order to establish and
maintain this Mortgage as a Chattel Mortgage upon the Collateral
and upon all renewals, improvements, replacements, and additions
made on or to the same.

     SECTION 6. So long as the Collateral is located on the
Vessel, the Borrower will keep the Vessel documented with a U.S.
Coast Guard Certificate of Documentation and at all times the
Vessel is in the possession of the Borrower and the Collateral is
located on the Vessel, will not suffer nor permit it to be
operated in any manner prohibited by such Certificate and will
duly comply with all laws and regulations applicable to the
Vessel and its operation.

     SECTION 7. So long as the Collateral is located on the
Vessel, the Borrower shall at its own expense, maintain and
deliver evidence to Lender of such insurance required by Lender,
written by insurers and in amounts satisfactory to Lender.

     SECTION 8. So long as the Collateral is located on the
Vessel, the Borrower shall maintain and preserve the Collateral
in good condition, repair and working order, promptly repairing,
replacing or rebuilding any part of the Collateral which may be
destroyed by any casualty or become damaged, worn or dilapidated.

                                
                           ARTICLE II
                                
     SECTION 1. Upon the happening of any of the following events
or conditions, Lender shall have the rights set forth in Section
2 of this Article II:

     (a)  The occurrence of an "Event of Default" specified in
the Loan Agreement, the Note and/or any document executed in
connection therewith or the happening of the "Maturity Date" also
as specified in the Loan Agreement and/or the note.

     (b)  Failure by Borrower to observe or perform any covenant
or agreement on its part to be performed as contained in this
Vessel Chattel Mortgage.

     (c)  The falsity in any material respect of any warranty,
representation or statement made or furnished to the Lender by
the Borrower in this Chattel Mortgage.

                                  3
                                
<PAGE>

     (d)  The libel, levy or other taking under legal process of
the Vessel which shall not be released within fifteen (15) days.

     (e)  The abandonment of the Vessel or the removal or attempt
to remove the Vessel beyond the limits of the United States.

     (f)  The termination of the Borrower's status as a citizen
of the United States.

     (g)  The involvement of the Borrower in financial
difficulties as evidenced by:

          (i)   An Assignment by the Borrower for the benefit  of
creditors; or

         (ii)    The appointment, with or without the consent  of
the  Borrower,  of a receiver or trustee of all or  substantially
all of the property of the Borrower: or

       (iii)   Filing by or against the Borrower of a petition
in  bankruptcy or for reorganization or for an arrangement  under
the  Federal Bankruptcy Act or an answer or admission seeking any
relief therein provided; or

         (iv)    Adjudication of the Borrower as  a  bankrupt  or
insolvent on a petition by or against the Borrower; or

          (v)   Involvement of the Borrower in any proceeding for
the  judicial  modification  or  adjustment  of  the  rights   of
creditors of the Borrower.

     (a)  Dissolution of Borrower.
          
     SECTION 2. Upon the occurrence and during the continuance of
any of the Events of Default set forth in Section 1 of this
Article II, the Lender may pursue any or all of the following
remedies hereunder:

     (a)  The Lender may declare all obligations secured hereby
to be immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
expressly waived.

     (b)  The Lender may bring suit against the Borrower at law,
in equity or, to the extent available, in admiralty, as it may be
advised, to receive judgment for any and all amounts due under
said Loan Agreement, Note and/or all documents executed in
connection therewith and collect the same out of the Collateral.
     (c)  The Lender may remove the Collateral from the Vessel in
accordance with and subject to the terms and conditions in
Article I Section 4 hereof.

     (d)  In addition to all rights and remedies given to the
Lender by this Vessel Chattel Mortgage and the Loan Documents,

                                4
                                
<PAGE>

the Lender shall have all the rights and remedies of a secured
party under the UCC.

     The remedies set forth in this Article II Section 2 shall be
Lender's sole and exclusive remedies against Borrower, the Vessel
and the Collateral under the terms or conditions of this Vessel
Chattel Mortgage, and the Lender shall have no right to arrest
the Vessel or to attempt to foreclose this Vessel Chattel
Mortgage against any property of Borrower other than the
Collateral.  Once the Lender has removed the Collateral from the
Vessel, the Lender shall have all rights and remedies available
to it by law or under the Loan Agreement.

     SECTION 3. Each and every power and remedy herein
specifically given to the Lender or otherwise in this Chattel
Mortgage shall be cumulative and shall be in addition to every
other power and remedy herein specifically given, and each and
every power and remedy specifically herein given may be exercised
from time to time and as often and in such order as may be deemed
expedient by the Lender, and the exercise or the beginning of the
exercise of any such power or remedy shall not be construed to be
a waiver of the right to exercise at the same time or thereafter
any other such power or remedy.  No delay or omission by the
Lender upon any Event of Default as above defined shall impair
any such right, power or remedy or be construed to be a waiver of
any such Event of Default or to be any acquiescence therein; nor
shall the acceptance by the Lender of any security or of any
payment of or on account of any installment of the Note maturing
after any Event of Default be construed to be a waiver of any
right to take advantage of any future Event of Default or of any
past Event of Default not completely cured thereby.

                                
                           ARTICLE III
                                
     Until one or more of the Events of Default hereinbefore
described shall happen, the Borrower shall be suffered and
permitted to retain actual possession and use of the Vessel and
the Collateral.

                                
                           ARTICLE IV
                                
     The parties acknowledge that this Mortgage has been entered
into and is designed only to grant Lender a first security
interest in the Collateral, and that the Borrower shall have the
right to place additional liens and/or mortgages on the Vessel
subject to the Loan Documents.  Lender shall have no right or
interest whatsoever in the Vessel itself, except to the extent
that the Collateral may be deemed to be appurtenances to the
Vessel.  This Chattel Mortgage shall be subordinated to any lien
or other mortgage either now or hereafter encumbering the Vessel
or any part thereof except that this Chattel Mortgage shall not
be subordinate to any such liens or mortgages do so encumber the
Collateral to the extent such liens or mortgages do so encumber
the Collateral.  Upon the reasonable request of the Borrower, the
Lender shall execute and deliver any and all documents and take            
all other such actions reasonably necessary or desirable to

                                5

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evidence such subordination.

                                
                            ARTICLE V
                                
     The Borrower agrees not to restrain or deny access to the
Lender or its representatives to the Vessel in order to remove
the Collateral.

                                
                           ARTICLE VI
                                
     SECTION 1. This Vessel Chattel Mortgage may be executed
simultaneously in any number of counterparts and all such
counterparts executed and delivered each as an original shall
constitute but one and the same instrument.  The invalidity of
any provision of this Chattel Mortgage shall not affect the
remainder, which shall in such event be construed as if the
invalid provisions had not been inserted.

     SECTION 2. All the covenants, promises, stipulations and
agreements of the Borrower in this Chattel Mortgage shall bind
the Borrower, and the successors and assigns of the Borrower and
all of the covenants, promises, stipulations and agreements of
the Lender shall bind the Lender and its successors and assigns
and shall inure to the benefit of the Borrower and the Lender and
their respective successors and assigns, whether so expressed or
not.  Whenever used, the singular number shall include the plural
and the plural is singular.

     SECTION 3. For the purpose of recording this Vessel Chattel
Mortgage pursuant to the Title 46 United States Code Sec. 31301 ET
SEQ., the maximum amount of direct or contingent obligations that
is or may become secured by this Vessel Chattel Mortgage,
excluding interest, expenses and fees, is $11,000,000.00.  The
discharge amount is the same as the maximum amount.

          IN WITNESS WHEREOF, THE BORROWER AND THE LENDER have
executed this Mortgage as an instrument under seal as of the day
and year first above written.

Witness:                          SHOWBOAT MARINA
                                  CASINO PARTNERSHIP
                                    SEE ATTACHMENT I
                                  
                                  
/s/Robin J. Medlock               By:  /s/Joseph G. O'Brien
                                  
                                  Title:  Vice President
                                          Finance and Treasurer
                                  


                                6
                                
<PAGE>

                                
                        STATE OF INDIANA
                                
COUNTY OF MARION                                    June 30, 1997

    Then  came Joseph G. O'Brien, who, being duly sworn,  deposes
and  said  that he is the Vice President of Finance and Treasurer
of  Showboat Marina Casino Partnership which is described  herein
and executed the within instrument, and that he knows the seal of
the corporation, and that the seal is affixed and was so affixed
to the within instrument by order of the Board of Directors of
said corporation at whose order, he signed his name and
acknowledged the within instrument to be the free act and deed of
the said corporation.

                                  Michelle L. Thompson
                                  
                                  
Marion                            /s/ Michelle L. Thompson
County of Residence               Notary Public
                                  My commission expires: 12/15/97
     
    The  terms  of  this Chattel Mortgage and the agreements  and
obligations of the Lender hereunder are hereby agreed to  by  the
Lender.

                                  FINOVA CAPITAL CORPORATION
                                  
                                  
                                  BY:  /s/Pamela Marchant
                                       Pamela Marchant
                                  
                                  TITLE:  Vice President

NATIONAL VESSEL DOCUMENTATION CENTER
                USCG
           RECEIVED/FILED

   30 JUN '97           10:50 AM

RECORDED:  BOOK 97-34  PAGE  473

/s/
Documentation Clerk  
                                
                       STATE OF NEW JERSEY
                                
COUNTY OF BERGEN                                    June 30, 1997

    Then  came  Pamela Marchant, who, being duly  sworn,  deposes
and  said  that  she  is  the Vice President  of  Finova  Capital
Corporation  which  is described herein and executed  the  within
instrument,  and that she knows the seal of the corporation,  and
that  the  seal  is  affixed and was so  affixed  to  the  within
instrument  by  order  of  the BOARD of said corporation at whose
order, she signed his name and acknowledged the within instrument
to be the free act and deed of the said partnership.

                                  /s/ Helene Siskind
                                  Notary Public
                                  My commission expires:  1/7/98
                                
                                
                                
                                
                                7
                                
<PAGE>

                                
                           EXHIBIT "A"
                                
     DESCRIPTION OF COLLATERAL COVERED UNDER THE VESSEL CHATTEL
MORTGAGE.

     All furniture, fixtures and equipment which are located on
the Vessel but which are not gaming equipment, whether now owned
or hereafter acquired by Borrower together with all proceeds of
and accessions and additions thereto of any of the foregoing
wherever located.

     Specifically included as Collateral (without limitation) are
the following:  substitutions for and all replacements of, any
and all of the foregoing, cash and non-cash, including insurance
proceeds.

                                
                                
                                8
                                
<PAGE>



                            ATTACHMENT I
                            
                            SHOWBOAT MARINA CASINO
                            PARTNERSHIP, an Indiana general
                            partnership
                            
                            By: SHOWBOAT MARINA PARTNERSHIP
                                an Indiana general partnership
                            
                                By:  SHOWBOAT INDIANA INVESTMENT
                                     LIMITED PARTNERSHIP, a
                                     Nevada
                                     limited partnership
                                     
                                By:  SHOWBOAT INDIANA, INC., a
                                     Nevada
                                     corporation, its general
                                     partner
                                     
                                By:  /s/ Joseph G. O'Brien, III
                                     Joseph G. O'Brien III,
                                     Treasurer
     
     
                                9
                                
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