FORBEARANCE AGREEMENT DATED JANUARY 11, 1999

                                  BY AND AMONG

                        PNC BANK, NATIONAL ASSOCIATION 

                                     AND

                  COLONIAL DOWNS, L.P.; STANSLEY RACING CORP.;
                       COLONIAL DOWNS HOLDINGS, INC.;
                         JEFFREY P. JACOBS; RICHARD E. JACOBS;
                and THE TRUST CREATED UNDER THE RICHARD E. JACOBS
                     DECLARATION OF TRUST DATED APRIL 23, 1987

                         Effective as of December 1, 1998




<PAGE>  1

                           FORBEARANCE AGREEMENT

     THIS FORBEARANCE AGREEMENT (the "Agreement"), made this 11th day of
January, 1999, by and among PNC Bank, National Association ("Lender"),
Colonial Downs, L.P., a Virginia limited partnership ("Borrower"), Stansley
Racing Corp., a Virginia corporation ("SRC"), Colonial Downs Holdings, Inc.,
a Virginia Corporation ("CDH"), Jeffrey P. Jacobs ("Jeffrey Jacobs"),
Richard E. Jacobs ("Richard Jacobs"), and The Trust Created Under The Richard
E. Jacobs Declaration of Trust dated April 23, 1987 (the"Jacobs Trust") (SRC,
CDH, Jeffrey Jacobs, Richard Jacobs and the Jacobs Trust are collectively
referred to herein as the "Guarantors".)

                                WITNESSETH:

     1.  WHEREAS, Borrower is the owner of leasehold interest in certain
land and the owner of improvements thereon which are used to operate a
thoroughbred and standardbred race track and related facilities located in
New Kent County, Virginia (the "Property"); and

     2.  WHEREAS, pursuant to a Construction Loan Agreement dated as of
 June 26, 1997, by and between Borrower and Lender, Lender made a
Construction loan to Borrower in the principal amount of $10,000,000 (the
"Construction Loan Agreement"); and

     3.  WHEREAS, the obligation to repay the Construction Loan is evidenced
by a Deed of Trust Note in the principal amount of $10,000,000 (the
"Construction Note"); and

     4  WHEREAS, pursuant to a Revolving Line of Credit Agreement dated
as of June 26, 1997, by and between Borrower and Lender, Lender extended to
Borrower a revolving line of credit in a maximum principal amount not to
exceed $5,000,000 (the "Revolving Credit Agreement"); and

     5.  WHEREAS, the obligation to repay the Line of Credit is evidenced
by a Revolving Credit Note in the amount of $5,000,000 (the "Revolving Credit
Note"); and

     6.  WHEREAS, each of SRC, CDH, Jeffrey Jacobs and Richard Jacobs,
(each an "Original Guarantor" and collectively, the "Original Guarantors")
have executed and delivered to Lender: (i) an Agreement of Guaranty and
Suretyship (Payment) dated as of June 26, 1997 (each a "Payment Guaranty"
and collectively the "Payment Guaranties") pursuant to which each Original
Guarantor has among other things, guaranteed the payment and performance by
the Borrower of its obligations under and in connection with the Construction
Loan Agreement and the Line of Credit Agreement; and (ii) an Agreement of
Guaranty and Suretyship (Completion) dated as of June 26, 1997 (each a
"Completion Guaranty" and collectively the "Completion Guaranties") pursuant
to which each Original Guarantor has, among other things, guaranteed
completion of certain improvements to the Property (the Payment Guaranties
and the Completion Guaranties are collectively referred to herein as the
"Original Guaranties"); and

     7.  WHEREAS, the Borrower's obligations under the Credit Agreements
and the Notes (each as hereinafter defined) are secured by, among other
things, a Deed of Trust and Security Agreement dated as of June 26, 1997,
from the Borrower and CDH to lawyers Title Realty Services, Inc. as Trustee
for the benefit of Lender (the "Deed of Trust"); and

     8.  WHEREAS, pursuant to an Assignment of Leases and Rents dated
as of June 26, 1997, Borrower assigned to Lender its rights under certain
leases and rents as security for the Borrower's obligations under the Credit
Agreements and the Notes ("Assignment of Leases"); and



<PAGE>  2
     9.  WHEREAS, the Deed of Trust and the Assignment of Leases were
recorded in the Clerk's office in the Circuit Court of New Kent County,
Virginia in order to perfect the Lender's interest therein; and

     10.  WHEREAS, pursuant to a Hazardous Material Certificate and
Indemnity Agreement dated as of June 26, 1997, Borrower, CDH, Jeffrey Jacobs
and Richard Jacobs made certain warranties about, and agreed to indemnify
Lender against, damages or claims caused by the presence of hazardous
material or environmental claims related to the Property (the
"Indemnification Agreement"); and 

     11.  WHEREAS, pursuant to an Assignment of Construction and Development
 Documents dated as of June 26, 1997, Borrower assigned to Lender its rights
to certain documents and agreements related to the construction of
improvements to the Property as security for the obligations under the Credit
Agreements and Notes (the "Construction Assignment"); and

     12.  WHEREAS, pursuant to an Assignment of Management Agreement dated
as of June 25, 1997, Borrower assigned to Lender its rights under a
Management Consulting Agreement dated April 22, 1996, and a side letter
amendment thereto between Borrower and Maryland-Virginia Racing Circuit,
Inc., as security for the Borrower's obligations under the Credit Agreements
and Notes (the "Assignment of Management Agreement"); and

     13.  WHEREAS, pursuant to an Assignment of Development Agreement dated
as of June 26, 1997, Borrower assigned to Lender its rights under a
Development Agreement, dated October 16, 1996 between Borrower and Delmarva
Properties, Inc., as security for Borrower's obligations under the Credit
Agreements and Notes (the "Assignment of Development Agreement"); and

     14.  WHEREAS, pursuant to a Pledge Agreement dated as of June 26, 1997,
SRC pledged to Lender its general partnership interest in Borrower as
security for SRC's performance under its Guaranties (the "SRC Pledge"); and

     15.  WHEREAS, pursuant to a Pledge Agreement dated as of June 26, 1997,
CDH pledged to Lender its partnership interests in Borrower and 100% of the
stock of SRC as security for CDH's performance under its Guaranties (the "CDH
Pledge"); and

     16.  WHEREAS, the Borrower and Original Guarantors have provided Lender
with a list of defaults under various provisions of the Credit Agreements and
Original Guaranties as of December 18, 1998, which list is attached hereto as
Exhibit A; and

     17.  WHEREAS, each of Borrower and SRC have advised Lender that it
may file a petition for relief under Chapter 11 of the Bankruptcy Code, which
filing will constitute an Event of Default under the Credit Agreements; and

     18.  WHEREAS, Borrower and Guarantors have requested that Lender
forbear from exercising its rights and remedies under the Credit Agreements
and Original Guaranties; and

     19.  WHEREAS, Lender has agreed to such request on the terms and
conditions hereinafter set forth.

     NOW, THEREFORE, Borrower, Guarantors and Lender, in consideration of
their mutual covenants contained herein and intending to be legally bound
hereby, agree as follows:



<PAGE>  3

                                     Article I
                                    Definitions

     In addition to terms defined elsewhere in this agreeement, as used herein,
the following terms shall have the following meanings.  Otherwise, capitalized
terms used herein shall have the meanings set forth in the Transaction
Documents:

     1.1  "Adequate Protection Order" shall mean a Final Order of the
Bankruptcy Court, in form and substance acceptable to the Lender, directing
the Borrower (and/or SRC) and its Estate to pay current interest on the
Obligations as adequate protection of the Lender's interests under the Loan
Agreements.

     1.2  Bankruptcy Code" shall mean Title 11 of the United States Code,
11 U.S.C. Sections 1101 et sea.

     1.3  "Bankruptcy Court" shall mean the United States Bankruptcy Court
with jurisdiction over the Bankruptcy Proceeding.

     1.4  "Bankruptcy Proceeding(s)" shall mean a case under the Bankruptcy
Code commenced by a petition for relief filed by or against the Borrower or
SRC.

     1.5  "Credit Agreements" shall mean the Construction Loan Agreement and
the Revolving Credit Agreement.

     1.6  "Effective Date" shall mean December 1, 1998.

     1.7  "Eligible Collateral" shall mean either cash, certificates of
deposit of Lender, or United States Treasury obligations.

     1.8  "Estate" shall mean the Borrower's estate, and the estate of
SRC, if applicable, created upon the commencement of the Bankruptcy
Proceeding(s).

     1.9  "Final Order" shall mean an order entered by the Bankruptcy
Court, which shall not be subject to appeal or certiorari.

     1.10  "Guaranties" shall mean the Original Guaranties and the Jacobs
Trust Guaranty.

     1.11  "Guarantor Pledge Agreement" shall mean an agreement substantially
in the form of Exhibit B hereto, executed and delivered by each of the
Guarantors in accordance with Section 3.1(e) hereof, pursuant to which the
Guarantors shall pledge to Lender Eligible Collateral.

     1.12  "Interest/Fees Letter of Credit" shall mean an unconditional,
irrevocable standby letter of credit issued for the benefit of Lender by an
issuer acceptable to Lender at its sole discretion.  An Interest/Fees Letter
of Credit shall be payable at sight, and shall have an expiration of July 31,
2000. An Interest/Fees Letter of Credit shall be substantially in the form
of Exhibit E hereto with blanks appropriately filled.

     1.13  "Jacobs Trust Guaranty" shall mean a guaranty and suretyship
agreement executed and delivered to Lender by the Jacobs Trust pursuant to
Section 3.1 (c) hereof, substantially in the form of Exhibit C hereto.



<PAGE>..4

     1.14  "Letter of Credit No. 1" shall mean an unconditional,
irrevocable standby letter of credit issued for the benefit of Lender
in the stated amount $5,000,000 minus any Principal Amount Letters of Credit
theretofore provided to Lender or Eligible Collateral delivered to Lender in
lieu thereof.  Letter of Credit No. 1 shall be issued by an issuer acceptable
to Lender in its sole discretion, shall be payable at sight and shall have an
expiration of 400 days from the Petition Date.  Letter of Credit No. 1 shall
be substantially in the form of Exhibit D hereto with blanks appropriately
filled.

     1.15  "Letter of Credit No. 2" shall mean an unconditional, irrevocable
standby letter of credit issued for the benefit of Lender in the stated
amount of $5,000,000.  Letter of Credit No.2  shall be issued by an issuer
acceptable to lender in its sole discretion, shall be payable at sight and
shall have an expiration of 400 days form the Petition Date.  Letter of
Credit No. 2 shall be substantially in the form of Exhibit D hereto with
blanks appropriately filled.

     1.16  "Notes" shall mean the Construction Note and the Revolving
Credit Note.

     1.17  "Obligation" shall mean all of Borrower's liabilities and
indebtedness to Lender of any and every kind and nature arising under this
Agreement, the Transaction Documents or any other agreements among any of the
parties, whether heretofore, now or hereafter owing, arising, due or payable
from Borrower to Lender and however evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or otherwise,
including obligations of performance.

     1.18  "Petition Date" shall be the date on which a petition for relief
under the Bankruptcy Code is filed by the Borrower in a voluntary case or
an order for relief is entered against the Borrower in an involuntary case

     1.19  "Plan of Reorganization" shall mean a plan of reorganization
filed by the Borrower or SRC, as the case may be, in a Bankruptcy Proceeding
which has been approved by the Bankruptcy Court in accordance with Section 1129
of the Bankruptcy Code and which is acceptable to Lender.

     1.20  "Principal Amount Letter of Credit" shall mean an unconditional,
irrevocable standby letter of credit issued for the benefit of Lender by an
issuer acceptable to Lender at its sole discretion.  A Principal Amount
Letter of Credit shall be payable at sight and shall have an expiration of
July 31, 2000.  A Principal Amount Letter of Credit shall be substantially in
the form of Exhibit E hereto with blanks appropriately filled.

     1.21  "Termination Event" shall mean those events specified in Article
VIII hereof.

     1.22 "Transaction Documents" shall mean this Agreement, the Construction
Loan Agreement, the Line of Credit Agreement, the Notes, the Deed of Trust,
the Assignment of Leases, the Construction Assignment, the Assignment of
Management Agreement, the Assignment of Development Agreement, the CDH
Pledge, the SRC Pledge, the Guaranties, the Indemnification, and the Guarantor
Pledge Agreement.



<PAGE>  5
                                    Article II
                                   Forbearance
 
     2.1  Agreement to Forbear.  Borrower and Original Guarantors acknowledge
that certain Events of Default as set forth in Exhibit A hereto have occurred
under the Credit Agreements and Original Guaranty of Holdings and that an
Event of Default will occur upon the filing of a Bankruptcy Proceeding by
either the Borrower and/or SRC.  As a result of such existing Events of
Default the Borrower and Original Guarantors hereby agree that Lender has
the right to exercise its remedies under the Credit Agreement and all
Original Guaranties.

     Without waiving any of the above-described existing Events of Default or
its rights under the Credit Agreements or the original Guaranties and subject
to the terms and conditions set forth herein, Lender hereby agrees to forbear
as of the Effective Date from exercising its remedies under the Credit
Agreement and Original Guaranties until the termination of this Agreement in
accordance with Article VIII hereof.  Notwithstanding such forbearance,
Borrower and Original Guarantors agree that Lender may take such actions
in a Bankruptcy Proceeding as may be reasonably necessary to protect its
interests in a manner consistent with this Agreement, including but not
limited to, actions such as filing proof(s) of claim, objecting to any
attempts to challenge Lender's claims, liens or rights under the Transaction
Documents, voting on any proposed plan of reorganization, and otherwise
appearing and being heard in the Bankruptcy Proceedings in any matter in
which the Lender's interests may be affected.

                                 Article III
                    Conditions Precedent to Forbearance

     3.1  Conditions.  This Agreement shall become effective upon the
satisfaction of the following conditions in form and substance reasonably
satisfactory to the Lender and its counsel:

     (a)  No Event of Defaults shall have occurred under the Credit
Agreements or Guaranties other than those referred to in Exhibit A hereto
or continuing defaults of the same covenants or conditions so long as there
is no material adverse change in the financial condition of Borrower and
Original Guarantors from their respective financial conditions at the
execution and delivery hereof.

     (b)  All representations and warranties contained herein shall
be true and correct as of the Effective Date and as of the date of the execution
and delivery hereof.

     (c)The Jacobs Trust shall have executed and delivered to Lender the Jacobs
Trust Guaranty.

     (d)  The Guarantors shall have executed and delivered to the Lender
a Principal Amount Letter of Credit in the face amount of $1,000,000.

     (e)  The  Guarantors shall have executed and delivered to Lender the
Guarantor Pledge Agreement

     (f)  The Borrower and the Guarantors shall have delivered to
Lender financial statements and other reports required under the Transaction
Documents which have not previously been delivered.

     (g)  CD Entertainment Ltd., an Ohio limited liability company
("Entertainment") shall have reaffirmed the Subordination Agreement (Deed of
Trust) dated June 26, 1997, by and among Entertainment, David Belkowitz and
James W. Theobald, as Trustees, CDH, the Borrower and the Lender, pursuant
to a letter in the form of Exhibit F hereto.



<PAGE>  6

     (h)  One or more of the Borrower and/or Guarantors shall have
reimbursed Lender for its costs and expenses related to the preparation and
execution of this Agreement, including but not limited to, all filing fees
and taxes, fees and expenses of Lender's in-house and outside legal counsel,
auditors, appraisers and environmental consultants.

     (i)  The Borrower and Guarantors shall have delivered to the
Lender an opinion of counsel substantially in the form of Exhibit G hereto.

                                Article IV
                      Payment of Principal, Interest and Fees


     4.1  Principal Amount.  During the term hereof, Borrower shall pay
to Lender on the due date all principal amounts required to be paid pursuant
to the terms of the Credit Agreements and Notes. In lieu thereof, on the date
of such principal payment any Guarantor may deliver to Lender a Principal
Amount Letter of Credit in the face amount of the principal payment then due
under the Credit Agreements and Notes.

     4.2  Interest and Fees.  During the term hereof, Borrower shall
pay to Lender on the due date all interest and fees required to be paid
pursuant to the terms of the Credit Agreements and Notes.  In lieu thereof,
within 10 days after the due date thereof, any Guarantor may deliver to
Lender an Interest/Fees Letter of Credit in the face amount of the interest
and fees then due under the Credit Agreements and Notes.

     4.3  Eligible Collateral.  (a) So long as a Termination Event has not
occurred, any Guarantor other than SRC may deliver to Lender Eligible
Collateral in place of Letter of Credit No. 1,Letter of Credit No. 2, any
Principal Amount Letter of Credit or Interest/Fees Letter of Credit.  Such
Eligible Collateral shall be delivered to Lender on the due date if
substituted for Letter of Credit No. 1,Letter of Credit No. 2, or a Principal
Amount Letter of Credit and within ten (10) days after the due date
if substituted for an Interest/Fees Letter of Credit.  All such Eligible
Collateral shall be subject to the Guarantor Pledge Agreement.

     (b)  Lender, in its sole discretion, may draw on an Interest/Fees
Letter of Credit and/or liquidate Eligible Collateral delivered in lieu
thereof and apply the proceeds to satisfy the amount of interest and fees
then due on the later of sixty (60) days after the delivery of such
Interest/Fees Letter of Credit or Eligible Collateral or the last business
day of the calendar quarter in which the payment of interest or fees was due.

                                 Article V
                          Representations and Warranties

     In order to induce Lender to enter into this Agreement, the Borrower
and each Guarantor, for itself or himself, as the case may be, and for its
or his heirs, personal representatives, successors and assigns, hereby
acknowledges, represents and warrants to Lender the following insofar as
it is applicable to it or him:

     5.1  Borrower Status.  Borrower is duly organized, validly existing
and in good standing under the Laws of the Commonwealth of Virginia, and has
full power and authority to own or lease and operate its properties and
assets, and to conduct its affairs as now being conducted and as proposed
to be conducted.   The sole general partner of Borrower is SRC and the sole
limited partner of Borrower is CDH.



<PAGE>  7

     5.2  Corporate Status.  CDH and SRC are corporations duly organized
and validly existing and in good standing under the laws of the Commonwealth
of Virginia; both CDH and SRC have the power to carry on their businesses
as now being conducted.

     5.3  Power and Authority.  Borrower and the Guarantors have full
power and authority to enter into, execute,deliver and carry out this Agreement
and the Transaction Documents being executed and delivered pursuant hereto, and
to perform their respective obligations hereunder and thereunder, and
all such actions have been duly authorized by all necessary proceedings on
their parts.

     5.4  Enforceability of Documents.  This Agreement and the
Transaction Documents being executed and delivered hereto constitute the
legal, valid and binding obligations of the Borrower and each
of the parties hereto and thereto, enforceable in accordance with their
respective terms, except as may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws
of general application affecting creditors', rights and (b) general principals
of equity.

     5.5  No Conflict.  Neither the execution and delivery of this
Agreement nor the Transaction Documents being executed and delivered pursuant
hereto nor the consummation of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or thereof,
has constituted or resulted in or will constitute or result in a breach of
the partnership agreement of the Borrower, the articles of incorporation or
the by-laws of CDH and SRC or the governing document of the Jacobs Trust, or
the violation of any law, order, writ, injunction or decree of any court or
governmental department, commission, board, bureau, agency or instrumentality
applicable to Borrower or Guarantors, or will conflict or will be
inconsistent with or will result in any breach of, any of the terms,
covenants, conditions or provisions thereof, or will constitute a default
under, any indenture, deed of trust, instrument, document, agreement or
contract of any kind to which Borrower or any Guarantor may be bound or
Subject.

     5.6  Litigation.  Except as set forth in Schedule 5.6, there is no
litigation, at law or in equity, nor any proceeding before any federal, state
or other governmental or administrative agency or any arbitrator pending or,
to the knowledge of Borrower or Guarantors threatened against Borrower or
Guarantors which may have a material adverse effect on the assets,
properties, business or operations of Borrower or Guarantors.

     5.7  Solvency of Borrower.  Borrower represents that (i) Lender
holds a valid, enforceable, perfected security interest and lien on the
Borrower's assets as more particularly described in the Transaction
Documents, and (ii) the fair value of the Borrower's assets securing the
Obligations exceeds the stated amount of the Obligations.


     5.8  Solvency of Each Guarantor.  Each Guarantor represents that he
or its is solvent on the date hereof and will not be rendered insolvent by
virtue of the execution and delivery hereof or the consummation of the
transactions contemplated hereby.

     5.9  Compliance with Law.  Except as provided in Schedule 5.9
Borrower and Guarantors are in compliance with all material laws, ordinances,
rules and regulations of all governmental entities 	(and all agencies,
bodies and subdivisions thereof), and Borrower and Guarantors have not
received any notice of noncompliance from any such governmental entity.

     5.10  Benefits. Borrower and Guarantors have derived direct and
substantial benefit from this Agreement and the transactions contemplated
hereby.


     5.11  Full Disclosure.  All documents, reports, certificates and
statements furnished to Lender by or on behalf of Borrower and Guarantors in
connection with the transactions contemplated hereby are true, correct and
complete, do not contain any untrue statement of material fact and do not
omit any fact necessary to make the information contained therein not
misleading.



<PAGE>  8

     5.12  Environmental Matters.  To the best of Borrower's and 
Guarantors'knowledge based upon the prepared reports and information that
have come to their attention during Borrower's operation of the Property,
the Property is free from all Hazardous Materials (as defined in the
Indemnification Agreement) which may have a material adverse effect on the
use and operation of the Property or its value.

     5.13  Property Taxes.  All real property taxes and other taxes,
assessments levies, license fees, permit fees and all other charges
heretofore levied, assessed, confirmed or imposes upon, or in respect to,
or which might become a lien upon, the Property have been paid in full
except for real estate taxes due and owing on December 5, 1998 in the
amount of $287,000 as more fully described on Schedule 5.13.  Such unpaid
taxes have become a first lien on the Property.

     5.14  Insurance.  All insurance coverages required by Section 4.7 of the
Construction Loan Agreement are in full force and effect and no notice
canceling, modifying or suspending any such insurance coverages has been
received or threatened.


                                  Article VI
                              Releases and Waivers

     6.1  Reaffirmation.  Notwithstanding anything to the contrary in
this Agreement, the Borrower and the Original Guarantors hereby agree that
all Transaction Documents to which they are a party are in full force and
effect in accordance with their respective terms, remain valid and binding
obligations of Borrower and the Original Guarantors.  Such Transaction
Documents are hereby reaffirmed and ratified by the Borrower and Original
Guarantors in all respects, except defaults set forth an Exhibit A and
continuing defaults described in Section 3.1(a).  The liens, security
interests and assignments created by the Transaction Documents are and
continue to be valid, effective, properly perfected, enforceable and such
liens, security interests and assignments are hereby ratified and confirmed
in all respects.

     6.2  No Defenses.  Borrower and Guarantors hereby acknowledge that
Borrower and Guarantors have no defenses of any nature whatsoever to the
acceleration by Lender of all indebtedness under the Credit Agreements or the
enforcement of the Transaction Documents including the Guaranties, and
Borrower and Guarantors have no claims, counterclaims or offsets against
Lender in respect of the amounts owed under the Transaction Documents, or
which could be asserted against Lender, nor shall this Agreement or the
forbearance contemplated by this Agreement give rise to any such defenses,
claims, counterclaims or offsets.  Borrower and Guarantors have no defenses,
affirmative defenses, setoffs, claims, counterclaims, actions or causes of
action of any kind or nature whatsoever against Lender or any of its past,
present or future directors, officers, employees, agents, attorneys, legal
representatives, predecessors, affiliates, successors or assigns directly or
indirectly, arising out of, based upon, or in any manner connected with any
transaction, event, circumstance, action, failure to act or occurrence of any
sort or type, whether known or unknown, which occurred, existed, was taken,
permitted or begun prior to the execution of this Agreement and occurred,
existed, was taken, permitted or begun in accordance with, pursuant to or by
virtue of the Transaction Documents, or any of the terms of any of the
Transaction Documents, or which directly or indirectly relate to or arise
out of or in any manner are connected with any of the Transaction Documents,
or any part thereof.

     6.3  No Waiver of Rights Under Transaction Documents. Except as
provided in this Agreement, neither the failure nor delay by Lender to
exercise its remedies nor the acceptance of partial payments or the payments
described in this Agreement or any other partial performance nor the
discussions (whether any of the foregoing is before or after the date of
this Agreement) nor any provision



<PAGE>  9

of this Agreement shall amend, modify, supplement, extend, delay, renew,
terminate, waive, release or otherwise limit or prejudice Lender's rights
and remedies or Borrower's or Original Guarantor's obligations under the
Transaction Documents (including, but no limited to, Lender's right to
receive full payment of principal and interest as well as late charges,
delinquent interest, attorneys' fees and expenses, and other charges to the
extent provided in the Transaction Documents) or Original Guarantors'
obligations under the Original Guaranties, nor shall it affect the priority
of Lender's security interests created under the Transaction Documents.  In
particular, each of the Borrower and Guarantors understands that nothing
referred to above shall operate to prohibit, restrict or otherwise inhibit
Lender from exercising any right or remedy it may have under the Transaction
Documents (except to the extent provided herein ) or constitute a cure of any
existing default and, without limitation, shall not extend any applicable
reinstatement or redemption period.

     6.4  Release.  Borrower and each Original Guarantor, for itself and its
successors and assigns hereby, on Original Guarantor's behalf and not on
behalf of other parties hereto, knowingly and voluntarily releases,
 discharges and forever waives and relinquishes any and all claims, demands,
obligations, liabilities, defenses, affirmative defenses, setoffs,
counterclaims, actions and causes of action of whatsoever kind and nature,
whether known or unknown, which he or it has, may have, or might have or may
assert now or in the future against the Lender directly or indirectly,
arising out of, based upon, or in any manner connected with any transaction,
event, circumstance, action, failure to act or occurrence of any sort or
type, whether known or unknown, which occurred, existed, was taken, permitted
or begun prior to the execution of this Agreement and occurred, existed, was
taken, permitted or begun in accordance with, pursuant to, or by virtue of
any of the terms of any of the Transaction Documents, or which was related
or connected in any manner, directly or indirectly, to the Property, the
Transaction Documents, or any part thereof.  Borrower and Original Guarantors
acknowledge and agree that the execution of this Agreement by Lender shall not
constitute an acknowledgement of or admission by Lender of the existence of
any such claims or of liability for any matter or precedent upon which any
liability may be asserted.  Each of the Borrower and Original Guarantors
hereby further acknowledges and agrees that, to the extent that any
such claims may exist, they are of a speculative nature so as to be incapable
of objective valuation and that, in any event, the value to Borrower of the
covenants and obligations of Lender contained in this Agreement and the other
documents and instruments executed and delivered in connection herewith
substantially and materially exceeds any and all value of any kind or nature
whatsoever of any such claims.  Notwithstanding the foregoing, the release
herein shall not effect any subrogation rights that any Original Guarantor
may have or become entitled to in respect of the Obligations.


     6.5  Voluntary Agreement.  Borrower and each Guarantor represents
and warrants to the Lender that it is represented by legal counsel of its
choice, that it has consulted with counsel regarding this Agreement, that it
is fully aware of the terms contained herein and that it has voluntarily and
without coercion or duress of any kind entered into this Agreement.

                                    Article VII
                                Additional Agreements

     7.1  Reporting Requirements.  The Jacobs Trust shall deliver to the
Lender annual tax returns and current financial statements within one hundred
fifty (150) days of the end of each calendar year hereunder required by
Section 10 of the Jacobs Trust Guaranty and quarterly compliance certificates
required by Section 11 of the Jacobs Trust Guaranty.

     7.2  Negative Covenant.  CDH agrees not to declare or make any dividend
or distribution or payment of any nature in respect of the Class A Common
Stock or Class B Common Stock held by CD Entertainment Ltd.  The foregoing
limitation shall include a purchase, acquisition, redemption or retirement of
such Class A Common Stock or Class B Common Stock.




<PAGE>  10
     7.1  Additional Party.  The parties agree that for all purposes the term
"Guarantors" as used in the Transaction Documents shall include the Jacobs
Trust.

     7.2  Indefeasible Payment.  To the extent any payment due under the
Transaction Documents or hereunder is deemed to be a fraudulent or preferential
transfer, set aside or required to be paid under any insolvency, bankruptcy or
similar law, the payment shall be deemed reinstated and outstanding as if no
such payment had occurred.

                                    Article VIII
                                  Termination Events

     8.1  Termination Event.  The occurrence of any one or more of the following
shall constitute a "Termination Event" under this Agreement:

     (a)  Failure of Borrower or any Guarantor to observe or perform any
covenant, agreement, term of this Agreement.

     (b)  If any representation or warranty made herein or in any Transaction
Documents, or in any report, certificate, financial statement or other
instrument or document furnished in connection with this Agreement or the
Transaction Documents shall prove to have been materially false or misleading on
the date as of which it was made.

     (c)  The Borrower or any Guarantor repudiates, or asserts a defense to, any
obligation or liability under the Credit Agreements, Notes or the Guaranties or
makes or pursues a claim against Lender.

     (d)  If Letter of Credit No. 1 has not been delivered to Lender within two
business days of the filing of a Bankruptcy Petition.

     (e)  (i) In the event of a filing of a Bankruptcy Petition, if the
Bankruptcy Court has not entered an Adequate Protection Order within sixty (60)
days after the Petition Date or (ii) if the Adequate Protection Order is
terminated, revoked, suspended, discontinued or amended, and within ten (10)
days after either of (i) or (ii) Letter of Credit No. 2 shall not have been
delivered to Lender.

     (f)  In the event Eligible Collateral is substituted for Letter of Credit
No. 1, Letter of Credit No. 2, or a Principal Amount Letter of Credit or an
Interest/Fees Letter of Credit and in the case of Eligible Collateral consisting
of cash or certificates of deposit such Eligible Collateral is less than the
face amount of the obligation for which the Eligible Collateral is substituted,
and in the case of Eligible Collateral consisting of United States Treasury
Obligations, the market value of such Eligible Collateral is less than 120% of
the face amount of the obligation for which it was substituted.

     (g)  In the event of the filing of a Bankruptcy Petition, all Obligations
are not paid in full on the earlier of twelve (12) months after the Petition
Date unless a Plan of Reorganization shall have been confirmed prior to that
time.

     (h)  In the event a Bankruptcy Petition is not filed during the term
hereof, all Obligations are not paid by June 30, 2000.

     (i)  The value of the real property pledged under the Deed of Trust is
determined to be less than $17,000,000 by the Bankruptcy Court.



<PAGE>  11

     (j)  A Chapter 11 Trustee is appointed in a Bankruptcy Proceeding; a
Bankruptcy Proceeding is converted to a case under Chapter 7 of the Bankruptcy
Code; or a Bankruptcy Proceeding is dismissed.

     (k)  Borrower, CDH or SRC ceases operation of its business.

     (l)  The Jacobs Trust liquidates its assets or ceases its operations.


                                   Article IX
                                     Remedies

     9.1  Remedies on Termination.  Immediately upon the occurrence of any
Termination Event, the obligation and agreements of Lender set forth in this
Agreement shall terminate and Lender shall have the right to exercise any and
all rights and remedies available to it hereunder, under the Transaction
Documents including the Guaranties and under applicable law.  Such remedies
shall include, but not be limited to, upon twenty (20) days prior written notice
to Richard Jacobs, drawing on any of Letter of Credit No. 1, Letter of Credit
No. 2, any Principal Amount Letter of Credit, any Interest/Fees Letter of Credit
and/or liquidating and applying Eligible Collateral to the Obligations.

     9.2  Remedies Cumulative.  All rights and remedies available to Lender
under any of the Transaction Documents and applicable law may be asserted
concurrently, cumulatively or successively, from time to time, as long as any of
the Obligations shall remain unpaid or outstanding.


                                       Article X
                            Buy-Out and Release of Collateral

     10.1  Buy-Out.  At any time prior to payment in full of the amounts owed
under the Credit Agreements and Notes, the Lender will assign all of its rights
and interests under the Transaction Documents to Richard Jacobs or his nominee
upon receipt of an indefeasible payment equal to the then unpaid Obligations.

     10.2  Release of Collateral.  Upon consummation of the transaction
contemplated by Section 10.1, or upon consummation of the Plan of Reorganization
on or before the first anniversary of the Petition Date or upon payment in full
of the obligations, the Lender shall return the Jacobs Trust Guaranty, Letter of
Credit No. 1, Letter of Credit No. 2, any Principal Amount Letters of Credit,
any Interest/Fees Letters of Credit and any remaining Eligible Collateral.


                                       Article XI
                                     Miscellaneous

     11.1  Incorporation of Recitals.  The recitals set forth immediately
preceding Article I of this Agreement are hereby incorporated in their entirety
and are a material part of this Agreement.

     11.2  Only Written Amendments.  This Agreement may be amended or modified
only by a written agreement, fully executed and delivered by the parties hereto.

     11.3  Survival; Successors and Assigns.  All covenants, agreements,
representations and warranties made in this Agreement and in the Transaction
Documents delivered hereunder shall survive closing hereunder and shall continue
in full force and effect until the payment in full of the Obligations.  Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party, but this shall
not be deemed to permit assignment by the Borrower of any or all of its
interests in the Property or any part thereof.  All covenants, agreements



<PAGE>  12
representations and warranties by or on behalf of the Borrower and any
Guarantors that are contained in this Agreement or any of the Transaction
Documents shall inure to the benefit of Lender and its successors and assigns
and shall bind Borrower and its respective heirs, personal representatives,
successors and assigns.  Borrower nor any Guarantor may assign this Agreement or
any of its rights hereunder.

     11.4  Notices:  Any notice, demand or other communication which
any party may desire or may be required to give to any other party shall be in
writing, and shall be deemed given if and when personally delivered (personal
delivery shall include delivery by messenger or expedited delivery service
regularly providing proof of delivery, such as Federal Express or Airborne), or
when delivered (whether accepted or refused) by United States registered or
certified mail, postage prepaid and return receipt requested, addressed to a
party at its address set forth below, or to such other address as the party to
receive such notice may have designated to all other parties by notice in
accordance herewith:





                              (a) If to Lender:


                               Mr. Robert G. Radermacher
                               PNC Bank, National Association
                               One PNC Plaza, 18th Floor
                               249 Fifth Avenue
                               Pittsburgh, PA  15222
                               Tel:  (412) 762-7868
                               Fax:  (412) 762-4157

                               and

                               Paul M. Singer, Esquire
                               Reed Smith Shaw & McClay LLP
                               435 Sixth Avenue
                               Pittsburgh, PA 15219
                               Tel:  (412) 288-3114
                               Fax:  (412) 288-3069

                               (b) If to Borrower:

                               Colonial Downs, L.P.
                               67201 North Courthouse Road
                               P.O. Box 456
                               Providence Forge, VA  23140
                               Tel:  (804) 966-2477
                               Fax:  (804) 966-2063

                               and




<PAGE>  13


                               Frank J. Santoro, Esquire
                               Marcus, Santoro, Kozak & Melvin, P.C.
                               355 Crawford Parkway, Suite 7000
                               P.O. Box 69
                               Portsmouth, VA 23705-0069
                               Tel:  (757) 393-2555
                               Fax:  (757) 399-6870


                               (c) If to a Guarantor:

                                Colonial Downs, Inc.
                                67201 North Courthouse Road
                                P.O. Box 456
                                Providence Forge, VA 23140
                                Tel:  (804) 966-2477
                                Fax:  (804) 966-2063

                                and

                                Stansley Racing Corp.
                                67201 North Courthouse Road
                                P.O. Box 456
                                Providence Forge, VA 23140
                                Tel:  (804) 966-2477
                                Fax:  (804) 966-2063

                                and

                                Jeffrey P. Jacobs
                                c/o Jacobs Entertainment, Inc.
                                425 West Lakeside Ave., Suite 601
                                Cleveland, Ohio 44113
                                Tel:  (216) 861-4080
                                Fax: (216) 861-6315

                                and

                                James L. Weinberg, Esquire
                                Hirschler, Fleischer, Weinberg, Cox & Allen
                                Federal Reserve Bank Building
                                701 East Byrd Street
                                Richmond, VA 23219
                                Tel: (804) 771-9500
                                Fax: (804) 644-0957

                                and




<PAGE>  14

                                Richard E. Jacobs and
                                The Richard E. Jacobs Trust
                                c/o The Richard E. Jacobs Group
                                25425 Center Ridge Road
                                Cleveland, Ohio 44145-4122

                                with a cc to:

                                Matthew R. Goldman, Esquire
                                Baker & Hostetler LLP
                                3200 National City Center
                                1900 East Ninth Street
                                Cleveland, OH 44114
                                Tel: (216) 621-0200
                                Fax: (216) 696-0740


     11.5  Entire Agreement, Modifications.  This Agreement constitutes
the entire agreement concerning this subject matter and supersedes any prior or
contemporaneous representations or agreements not contained herein concerning
the subject matter of this Agreement.  No modification of this Agreement shall
be binding unless it is in writing and executed by all parties or their
authorized representative.

     11.6  Governing Law.  This Agreement, the Credit Agreements, and the
Guaranties shall be governed by Pennsylvania law without giving effect to the
principles of conflicts of laws.

     11.7  Counterparts.  This Agreement may be executed in one or more
counterparts,each of which shall constitute an original and all of which taken
together shall constitute one agreement.

     11.8  Consent to Jurisdiction.  EACH OF THE BORROWER (SO LONG AS IT
IS NOT SUBJECT TO A BANKRUPTCY PROCEEDING) AND EACH GUARANTOR HEREBY IRREVOCABLY
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF
ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT
OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
AGREES THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL
DIRECTED TO THE BORROWER AT THE ADDRESSES PROVIDED FOR IN SECTION 11.4 HEREOF
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF,
BORROWER AND EACH GUARANTOR WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF
ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY
DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.

     11.9  Waiver of Jury Trial.  BORROWER, THE GUARANTORS AND LENDER EACH
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR
RELATED TO, THE SUBJECT MATTER OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS RELATED TO ANY OF THE LOAN DOCUMENTS.
THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY BORROWER THE
GUARANTOR AND LENDER AND EACH ACKNOWLEDGES THAT NONE OF THEM NOR ANY PERSON
ACTING ON BEHALF HAS OR HAVE MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.
BORROWER, THE GUARANTOR AND LENDER



<PAGE>  15

EACH FURTHER ACKNOWLEDGES THAT EACH OF THEM HAD BEEN REPRESENTED (OR HAS HAD THE
OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THIS AGREEMENT AND IN THE
MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED BY ITS OWN FREE
WILL,AND THAT BORROWER, GUARANTORS AND LENDER EACH HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.  BORROWER, THE GUARANTORS AND LENDER EACH
AGREES THAT THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT ARE EXEMPTED
TRANSACTIONS UNDER THE TRUTH-IN-LENDING ACT, 15 U.S.C. SECTION 1061, ET SEQ.
BORROWER, THE GUARANTOR AND THE LENDER EACH FURTHER ACKNOWLEDGES THAT IT HAS
READ AND UNDERSTANDS THE MEANING OF THIS WAIVER PROVISION.

     11.10  Confession of Judgment.  Each of the Borrower and Guarantors hereby
agree that the following paragraph shall be incorporated in and become a part of
this Agreement and all other Transaction Documents as if originally stated
therein.

     THE UNDERSIGNED BORROWER AND GUARANTORS HEREBY EMPOWER THE PROTHONOTARY OR
ANY ATTORNEY OF ANY COURT OF RECORD WITHIN THE UNITED STATES OR ELSEWHERE TO
APPEAR FOR THE UNDERSIGNED AND, WITH OR WITHOUT ONE OR MORE DECLARATIONS FILED,
TO CONFESS JUDGMENT AS OFTEN AS NECESSARY AGAINST THE UNDERSIGNED IN FAVOR OF
THE LENDER IN ANY SUCH COURT, AFTER AN  EVENT OF DEFAULT HEREUNDER, FOR THE
OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS, TOGETHER WITH COSTS OF SUIT AND
REASONABLE ATTORNEY'S FEES, AND WITH RELEASE OF ALL ERRORS AND DEFECTS
WHATSOEVER IN ENTERING SUCH ACTION OR JUDGMENT AND IN CAUSING ANY WRIT OR WRITS
TO BE ISSUED, AND IN ANY PROCEEDING THEREON OR CONCERNING THE SAME, AND HEREBY
AGREEING THAT NO WRIT OF ERROR OR OBJECTION SHALL BE MADE OR TAKEN THERETO,

     The Lender agrees to exercise the foregoing confession of judgment only
after ten  (10) days prior written notice to the party against whom such action
is to be taken.



<PAGE>  16
     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.

                                    BORROWER:

                                    Colonial Downs, L.P. a Virginia
                                    Limited Partnership

                                    By:  STANSLEY RACING CORP., A
                                         Virginia Corporation, Its
ATTEST/WITNESS:                          Sole General Partner



/s/  Linda M. DeCoursey            By:    /s/  Jeffrey P. Jacobs
------------------------                  --------------------------
Name:  Linda M. DeCoursey          Name:  Jeffrey P. Jacobs
Title:                             Title: Chairman, CEO



                                   LENDER:

                                   PNC BANK, NATIONAL ASSOCIATION, a
ATTEST/WITNESS:                    National Banking Association



/s/  Dennis P. Herdenreich         By:   /s/  Robert G. Radermacher
----------------------------             -------------------------------
Name: Dennis P. Herdenreich        Name: Robert G. Radermacher 
Title:  Vice President             Title: Vice President 



                                   GUARANTORS:

                                   STANSLEY RACING CORP., a
ATTEST/WITNESS:                    Virginia Corporation




/s/  Linda M. DeCoursey            By:    /s/  Jeffrey P. Jacobs
------------------------                  --------------------------
Name:  Linda M. DeCoursey          Name:  Jeffrey P. Jacobs
Title:                             Title: Chairman, CEO 



                                  COLONIAL DOWNS HOLDINGS, INC., a
ATTEST/WITNESS:                   Virginia Corporation



/s/  Linda M. DeCoursey            By:    /s/  Jeffrey P. Jacobs
------------------------                  --------------------------
Name:  Linda M. DeCoursey          Name:  Jeffrey P. Jacobs
Title:                             Title: Chairman, CEO