September 26, 1996




Emerald Gaming, Inc.
Bayport One, Suite 300
Yacht Club Drive
West Atlantic City, New Jersey  08232

Attn:  Doug Wellington

         Re:      Sale of the Harold's Club Casino
                  --------------------------------

Gentlemen:

         Shamrock  Holdings Group,  Inc.  ("Shamrock") is attempting to sell the
Harold's Club Casino (the "Club") in Reno,  Nevada. In connection with such sale
(the "Sale"), the parties agree as follows:

         1. Emerald Gaming,  Inc.  ("Emerald Gaming") hereby agrees that it will
     cooperate with Shamrock in  consummating  the Sale.  Except as set forth in
     paragraph  2  below,  all net  proceeds  from  the  Sale  shall  be paid to
     Shamrock.

         2. At the closing,  Shamrock  shall use a portion of the purchase price
     to pay all of the following costs and expenses:

         (a) all amounts  outstanding  under the ground  leases  relating to the
     Club  (the  "Ground  Leases")  on  the  closing  date,   including  without
     limitation,  all unpaid rent, late charges,  interest,  attorneys' fees and
     real estate taxes payable thereunder;

         (b) all of the  costs and  expenses  incurred  by  Emerald  Gaming  and
     American Gaming &  Entertainment,  Ltd.  ("American  Gaming") in connection
     with the Sale, including without limitation, all attorneys fees relating to
     the Sale,  provided  however that such costs and expenses shall in no event
     exceed $15,000;

         (c) all  reasonable  attorneys'  fees  incurred  by Emerald  Gaming and
     American  Gaming in  connection  with certain  litigation  commenced by the
     lessors under the Ground Leases against Emerald Gaming and American Gaming;

         (d) all  reasonable  costs and expenses  hereafter  incurred by Emerald
     Gaming  and/or  American  Gaming  in  connection  with  the  operation  and
     maintenance of the Club; and

<PAGE>


         (e) the  accounts  payable  and other  costs set  forth on  Schedule  A
     attached hereto.

         3. Shamrock  will use good faith efforts to obtain  releases of Emerald
Gaming  and  American  Gaming  from  various   indemnification   agreements  and
guaranties in favor of Fitzgerald's Reno, Inc.

         4. Shamrock  will use good faith efforts to obtain  releases of Emerald
Gaming from continuing liability under the Ground Leases.

         5.  Shamrock  acknowledges  that  certain  Ground  Leases  require  the
lessor's  consent to any assignment of such Ground Leases.  American  Gaming and
Emerald  Gaming will use good faith efforts to obtain such  consents,  provided,
however,  that  American  Gaming and Emerald  Gaming do not represent or warrant
that they will be able to obtain such consents. The parties acknowledge that the
Sale  might not occur if one or more of the  Ground  Leases is  terminated  as a
result of the lessee's default thereunder.

         Please  acknowledge  your  agreement to the foregoing by signing in the
space indicated below.

                                    Very Truly Yours,

                                    SHAMROCK HOLDINGS GROUP, INC.


                                    By:/s/ Richard C. Breedan
                                       -------------------------
                                           Richard C. Breedan

Agreed and Accepted to this 10th
day of October, 1996

EMERALD GAMING, INC.


By:/s/ J. Douglas Wellington
   ----------------------------
       J. Douglas Wellington


AMERICAN GAMING & ENTERTAINMENT, LTD.

By:/s/ J. Douglas Wellington
   ----------------------------
       J. Douglas Wellington


<PAGE>



Harolds Club Expenses (paid by AGEL)
January 1, 1996 through  September 17, 1996
SCHEDULE A


<TABLE>
<CAPTION>

                                                                                    HC
             Vendor                             Description                   Related Expenses
----------------------------------          ---------------------             --------------
<S>                                         <C>                               <C>
Nevada Bell                                 HC phone bill                     $     4,915.15
Carchman, Sochor & Schwartz                 Legal services                    $     5,170.00
Federal Express                             Postage                           $        10.75
Desert Security                             Security service                  $    42,238.73
State Industrial Insurance Systems          Tax                               $        30.00
Willis Corroon                              Insurance                         $   157,500.00
Black & Gemgross                            Legal                             $     7,000.50
Clark & Dicky                               Legal                             $     5,000.00
Sierra Power                                Utilities                         $   108,414.93
Easy Footer                                 Plumbing                          $       337.50
Barker Business Wire                        Human Resource Exps.              $       288.90
Garner Mechanical                           Pump                              $        68.50
----------------------------------          ---------------------             --------------

Total                                                                         $   331,962.96

</TABLE>