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                                                                   Exhibit 10.38


                          EXECUTIVE SEVERANCE AGREEMENT

        EXECUTIVE SEVERANCE AGREEMENT dated as of November 30, 2001 (this
"Agreement"), by and between Horseshoe Gaming Holding Corp., a Delaware
corporation (the "Company"), and Dominic F. Polizzotto (the "Executive").

        WHEREAS, the purpose of this Agreement is to afford the Executive
additional security concerning his employment with the Company by providing for
certain payments to the Executive in the event that there is a Change in Control
(as defined below) of the Company;

        WHEREAS, the provisions of this Agreement shall only be effective in the
event that there is a Change in Control, and nothing in this Agreement extends
or expands the Executive's present rights concerning employment with the Company
in the absence of a Change in Control or is intended to create a contract,
guarantee or promise of continued employment by the Company or alter the
compensation that the Executive could reasonably expect in the absence of a
Change in Control; and

        NOW, THEREFORE, in consideration of the premises and mutual covenants
herein, and for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:

        SECTION 1. Term of Agreement; Certain Definitions.

            1.1 Term of Agreement. This Agreement shall be effective immediately
upon its execution by the parties hereto and shall remain in effect until the
earliest of: (A) the termination of the Executive's employment with the Company
for any reason whatsoever prior to the announcement of a transaction which, if
consummated, would constitute a Change in Control (an "Announcement"); (B) the
termination of Executive's employment with the Company for Cause after an
Announcement and within ninety (90) days following a Change in Control; or (C)
ninety (90) days after the date of a Change in Control.

            1.2 Certain Definitions. The following terms, as used in this
Agreement, shall be deemed to mean the following:

                (1) "Cause" shall have the meaning ascribed to it in the
            Employment Agreement, except that "Cause" does not include for
            purposes of this Agreement death or Disability (as defined in the
            Employment Agreement).


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                (2) "Change in Control" shall mean each of the following
            occurring:

                    (1) prior to the completion of an Initial Public Offering by
                the Company, the failure at any time of (a) Jack B. Binion, (b)
                Phyllis Cope, (c) Peri Cope Howard or any Affiliate of the
                persons described in clause (a), (b) or (c) above (collectively,
                "Excluded Persons") as a group to own and control at least forty
                percent (40%) of the issued and outstanding Equity Interests of
                the Company;

                    (2) after the completion of an Initial Public Offering by
                the Company, the acquisition, in one or more transactions, of
                beneficial ownership by (i) any person or entity (other than an
                Excluded Person) or (ii) any group of persons or entities
                (excluding any group in which Excluded Persons beneficially own
                in the aggregate at least seventy-five percent (75%) of the
                equity and voting interests beneficially owned by the group) who
                constitute a group (within the meaning of Section 13(d)(3) of
                the Securities Exchange Act of 1934, as amended (the "Exchange
                Act")), in either case, of Equity Interests of the Company such
                that, as a result of such acquisition, such person, entity or
                group beneficially owns (within the meaning of Rule 13d-3 under
                the Exchange Act), directly or indirectly, thirty percent (30%)
                or more of the voting power of Equity Interests of the Company
                entitled to vote in the election of directors of the Company
                then outstanding; provided, however, that no Change of Control
                shall be deemed to have occurred if (x) Excluded Persons
                beneficially own, in the aggregate, at such time, a greater
                percentage of the total voting power of Equity Interests of the
                Company entitled to vote in the election of directors of the
                Company than such other person, entity or group or (y) at the
                time of such acquisition, Excluded Persons (or any of them)
                possess the ability (by contract or otherwise) to elect, or
                cause the election of, a majority of the members of the Board of
                Directors of the Company;

                    (3) any merger or consolidation of the Company with or into
                any person or any sale, transfer or other conveyance, whether
                direct or indirect, of all or substantially all of the assets of
                the Company on a consolidated basis, in one transaction or a
                series of related transactions, if immediately after giving
                effect to such transaction or transactions, any person or group
                (excluding any group in which Excluded Persons beneficially own
                in the aggregate at least seventy-five percent (75%) of the
                equity and voting interests beneficially owned by the group) is
                or becomes the beneficial owner, directly or indirectly, of
                thirty percent (30%) or more of the total voting power of Equity
                Interests of the surviving or transferee person; provided,
                however, that no Change of Control shall be deemed to have
                occurred if (A) Excluded Persons beneficially own, in the
                aggregate, at such time, (x) forty


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                percent (40%) or more of the total voting power of Equity
                Interests of the surviving or transferee person and (y) a
                greater percentage of the total voting power of Equity Interests
                of the surviving or transferee Person than such other person or
                group or (B) after giving effect to such transaction, Excluded
                Persons (or any of them) possess the ability (by contract or
                otherwise) to elect, or cause the election of, a majority of the
                members of the Board of Directors of the Company;

                    (4) during any period of twelve (12) consecutive months
                after January 1, 1999, individuals who at the beginning of any
                such twelve (12) month period constituted the Board of Directors
                of the Company (together with any new directors whose election
                by such Board of Directors or whose nomination for election by
                shareholders of the Company was approved by a vote of a majority
                of the directors then still in office who were either directors
                at the beginning of such period or whose election or nomination
                for election was previously so approved, including new directors
                designated in or provided for in an agreement regarding the
                merger, consolidation or sale, transfer or other conveyance, of
                all or substantially all of the assets of the Company, if such
                agreement was approved by a vote of such majority of directors),
                cease for any reason to constitute a majority of the Board of
                Directors of the Company then in office;

                    (5) the Company owns or operates fewer than two (2) gaming
                facilities; or

                    (6) the Company adopts a plan of liquidation.

                For all purposes of this Agreement, an Announcement in respect
            of a Change in Control shall be deemed to have been made on the date
            the Company (or a person authorized by the Company) shall have
            issued a press release or otherwise made a statement intended for
            public dissemination describing or announcing the execution of a
            definitive agreement relating to a transaction which, if
            consummated, will have constituted a Change in Control, provided
            that either that transaction or another transaction constituting a
            Change in Control and resulting from such announcement is
            subsequently consummated.

                For purposes of the foregoing, the "Equity Interest" of any
            person means any shares, interests, participations or other
            equivalents (however designated) in such person's equity, and shall
            in any event include any and all shares, interests, rights to
            purchase (other than convertible or exchangeable Indebtedness that
            is not itself otherwise capital stock), warrants, options,
            participations or other equivalents of or interests (however,
            designated) in stock issued by, or partnership, participation or
            membership interests in such person.


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                For purposes of the foregoing, "Affiliate", as applied to any
            person, means any other person directly or indirectly controlling,
            controlled by, or under common control with, that person, any
            spouse, immediate family member or relative of such person or any
            trust for the benefit of, or established by, any of such persons.
            For the purposes of this definition, "control" (including, with
            correlative meanings, the terms "controlling", "controlled by" and
            "under common control with"), as applied to any person, means the
            possession, directly or indirectly, of the power to direct or cause
            the direction of the management and policies of that person, whether
            through the ownership of voting securities or by contract or
            otherwise.

                    (3) "Employment Agreement" shall mean the employment
            agreement by and between the Company and the Executive dated as of
            November 30, 2001, as the same may be amended from time to time.

        SECTION 2. Compensation Upon Change in Control.

            2.1 Payment Upon Change in Control. If Executive is employed by the
Company on the date of an Announcement and either (i) Executive is employed by
the Company ninety (90) days following the Change in Control or (ii) the
Executive's employment is terminated by the Company, at any time after an
Announcement and prior to the expiration of ninety (90) days after the Change in
Control (x) for any reason other than Cause or (y) by reason of the Executive's
death or Disability (as defined in the Employment Agreement), then ninety (90)
days following the closing of the transaction constituting the Change in Control
the Company shall pay to the Executive (or in the event of the Executive's
death, the Executive's estate) a lump-sum cash amount equal to the product of
(x) 2.99 and (y) the sum of (1) Executive's annual base salary as then in effect
and (2) the maximum amount of any bonus or incentive compensation to which the
Executive would be entitled for the year in which the Change in Control occurred
(calculated by assuming that all performance goals or targets are satisfied and
that the Executive was employed for the entire year).

            2.2 Re-instatement of Equity Incentives. In the event of a Change in
Control where the Executive's employment by the Company had been terminated for
any reason other than Cause after the date of the announcement of a transaction
which, if consummated, would constitute a Change in Control, then,
notwithstanding any term or provision in any stock option or stock appreciation
right or any equity incentive plan or agreement to the contrary, on the date of
the Change of Control any stock options or stock appreciation rights which were
canceled by reason of such termination of employment shall be re-instated and
instead treated as if for all purposes of such stock options or stock
appreciation rights the Executive had remained in the employ of the Company
until one day after such Change in Control.

            2.3 Termination of Employment Agreement and Rights to Other
Severance Payments. In the event of a Change in Control, then notwithstanding
any inconsistent term or provision of the Employment Agreement, the Executive
and the Company agree that the Executive's Employment Agreement shall terminate
as of the date of such Change in Control. Thereupon, the Executive shall become
an "at will" employee of the Company, and neither the Company nor the


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Executive shall have any further duties, obligations or liabilities to the other
under, or by reason of, such Employment Agreement, except in respect of the
liability of the Executive under those provisions of the Employment Agreement
that survive its termination as set forth therein. Furthermore, the receipt by
the Executive of the payments under this Agreement shall be in lieu of any other
severance payments then or thereafter required to be made to the Executive
pursuant to Subsection 8C of the Employment Agreement.

            2.4 Limitation on Payments. If, prior to the closing of the
transaction that would constitute a Change in Control, the Company shall not be
exempt from the provisions of Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code"), then the provisions of this Section 2.4 shall apply.
Notwithstanding any other provision herein to the contrary if the Company shall
not be exempt from the provisions of Section 280G of the Code, then, in the
event that the Executive becomes entitled to any payments under this Agreement
and any portion of such payments or benefits, when combined with any other
payments or benefits provided to the Executive (including, without limiting the
generality of the foregoing, by reason of any stock options and any amounts
payable to the Executive pursuant to SARs or any compensation realized by the
Executive upon the exercise of Options, granted under the Company's Equity
Incentive Plan), in the absence of this Section 2.4, would be subject to the tax
(the "Excise Tax") imposed by Section 4999 of the Code, then the amount payable
to the Executive under this Agreement shall be reduced such that none of the
amounts payable to the Executive under this Agreement and any other payments or
benefits received or to be received by the Executive in connection with a Change
in Control or the termination of the Executive's employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a Change in Control or any person
having such a relationship with the Company or such person as to require
attribution of stock ownership between the parties under Section 318(a) of the
Code) shall be treated as "parachute payments" within the meaning of Section
280G(b)(2) of the Code. For purposes of applying the foregoing sentence, if in
the opinion of tax counsel selected by the Company's independent auditors and
acceptable to the Executive, such payments or benefits (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code, then such amounts shall be excluded
from any such calculation. Furthermore, in determining the maximum amount of the
payments to the Executive which would not constitute a parachute payment within
the meaning of Sections 280G(b)(1) and (4), the value of any non-cash benefits
or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.

            2.5 Escrow. To facilitate and ensure the payment of the amount
provided in Section 2.1 hereof to Executive and other executives of the Company
who are parties to executive severance agreements with the Company substantially
similar to this Agreement (collectively, the "Affected Executives") as a result
of the Change in Control, the Company agrees to establish, upon the closing of
any Change in Control, an escrow arrangement to provide for the payment upon
satisfaction of the applicable conditions of all amounts payable to the Affected
Executives by reason of such Change in Control under this Agreement and all
substantially similar agreements. The Company shall pay all of the costs and
expenses associated with any such escrow arrangement.


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        SECTION 3. Arbitration. In the event of any dispute or controversy
between the Company and Executive with respect to any of the matters set forth
herein, both the Company and Executive agree to submit such dispute or
controversy to binding arbitration, to be conducted in Indiana pursuant to the
then prevailing rules and regulations of the American Arbitration Association.
In such arbitration, the prevailing party shall be entitled, in addition to any
award made in such proceeding, to recover all of its costs and expenses incurred
in connection therewith, including, without limitation, attorneys' fees.

        SECTION 4. No Mitigation. The Executive shall have no obligation to take
any action to mitigate or offset any amounts payable by the Company hereunder by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date of
termination of the Executive's employment or otherwise.

        SECTION 5. Notices. All notices required or desired to be given under
this Agreement shall be in writing and shall be deemed to have been duly given:
(i) on the date of service if served personally on the party to whom notice is
to be given; (ii) on the date of receipt by the party to whom notice is to be
given if transmitted to such party by courier or by telefax, provided that in
the case of a copy sent by telefax, a copy is mailed as set forth below on the
date of transmission; or (iii) on the third day after mailing if mailed to the
party to whom notice is given by registered or certified mail, return receipt
requested, postage prepaid to the following addresses, or to such other address
as may be provided from time to time by one party to the other:

                      To the Company:

                             Horseshoe Gaming Holding Corp.
                             18454 S. West Creek Drive
                             Tinley Park, Illinois 60477
                             Attention: Kirk C. Saylor
                             Telecopy: (708) 429-8301
                             Phone: (708) 429-8320

                      with a copy to:

                             Swidler Berlin Shereff Friedman, LLP
                             The Chrysler Building
                             405 Lexington Avenue
                             New York, New York 10174
                             Attention:  Martin Nussbaum, Esq.
                             Telecopy:  (212) 891-9598
                             Phone:  (212) 973-0111

                      To the Executive:

                             Dominic F. Polizzotto, Esq.


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                             22455 Ledgestone Way
                             Frankfort, IL  60423

        SECTION 6. General Provisions

            6.1 Amendments. This Agreement may be amended only pursuant to a
written instrument executed by the Company and Executive. It shall not be
reasonable for either the Company or Executive to rely on any oral statements or
representations by the other party that are in conflict with the terms of this
Agreement.

            6.2 Severability. If any provision of this Agreement shall be
determined to be invalid or unenforceable by a court of competent jurisdiction,
the remaining provisions of this Agreement shall remain in full force and effect
to the fullest extent permitted by law.

            6.3 Successors and Assigns. This Agreement and the obligations of
the Company hereunder shall be binding upon and shall be assumed by any
successor of the Company including without limitation, any corporation or
corporations acquiring directly or indirectly all or substantially all of the
assets of the Company, whether by merger, consolidation, sale or otherwise (and
such successor shall thereafter be deemed "the Company" for purposes of this
Agreement), but shall not otherwise be assignable by the Company. The Company
shall take all actions necessary to insure that such corporation or transferee
is bound by the provisions of this Agreement. The term "the Executive" shall
wherever appropriate be interpreted to include the Executive's estate.

            6.4 Governing Law. This Agreement shall be construed, interpreted
and governed in accordance with the internal laws of the State of Delaware,
without reference to rules relating to conflicts of law.

            6.5 Entire Agreement. This Agreement and the Employment Agreement
contain the entire agreement between the parties hereto with respect to the
matters contemplated herein and supersedes all prior agreements or
understandings among the parties related to such matters.

            6.6 Headings. The section headings contained in this Agreement are
for the convenience of reference only and shall not affect the construction of
any provision of this Agreement.

            6.7 Survival. Notwithstanding the termination of the term of this
Agreement, the duties and obligations of the Company, if any, following the
termination of the Executive's employment following a Change in Control shall
survive indefinitely.

            6.8 Withholding. The Company may deduct and withhold from any
payments hereunder the amount which the Company, in its reasonable judgment, is
required to deduct and withhold for any federal, state or local income or
employment taxes.

            6.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute a


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single instrument.


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


                                            HORSESHOE GAMING HOLDING CORP.

                                            By:_________________________________
                                                     Name:  Peri Howard
                                                     Title: Vice Chairman of the
                                                            Board of Directors


                                            EXECUTIVE

                                            ____________________________________
                                                   Dominic F. Polizzotto


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