<PAGE>

                                EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
March 24, 1997, by and between Robert J. Stephens (the "Executive") and Colorado
Gaming & Entertainment Co., a Delaware corporation (the "Company").
     
                                  R E C I T A L S:
     
     A.   The Company desires to retain the services of the Executive as its
Vice President of Finance, and the Executive is willing to serve in such
capacity on the terms and conditions set forth below.
     
     NOW, THEREFORE, in consideration of the promises, mutual covenants and
agreements contained herein, the Company and the Executive do hereby agree as
follows:
     
     1.   EMPLOYMENT AND DUTIES.  On the terms and subject to the conditions set
forth in this Agreement, the Company agrees to employ the Executive during the
Employment Period (as hereinafter defined) as its Vice President of Finance to
perform such duties and responsibilities as are customarily assigned to such
position and such other duties and responsibilities not inconsistent therewith
as may be assigned to the Executive from time to time by the President of the
Company.
     
     2.   PERFORMANCE.
     
          (a)  GENERAL.  The Executive accepts the employment described in
SECTION 1 of this Agreement and agrees to devote substantially all of his
working time and efforts to the faithful and diligent performance of the
services described therein; provided, however, that the Executive may
participate in charitable activities and may, subject to SECTION 15 hereof,
participate in holding investments and in businesses owned by members of the
Executive's family, provided that such participation does not have an adverse
impact on the Executive's performance of his duties for the Company.
          
          (b)  CONDUCT.  The Executive agrees that he will conduct his
activities, and will cause any activities conducted on his behalf, to be
conducted in a lawful manner and specifically will not engage in the following
transactions:

               (i)    make payment or offers of payment, directly or indirectly,
     to any domestic or foreign government official or employee in order to
     obtain business, retain business or direct business to others, or for the
     purpose of inducing such government official or employee to fail to perform
     or to perform improperly his official functions;
               
               (ii)   receive, pay or offer anything of value, directly or
     indirectly, from or to any private party in the form of a commercial bribe,
     influence payment or kickback for any such purpose; or 
               
               (iii)  use, directly or indirectly, any funds or other assets
     of the Company for any unlawful purpose, including, without limitation,
     political contributions in violation of applicable law.

     3.   TERM.  The term of employment under this Agreement shall commence on
March 24, 1997 (the "Commencement Date") and shall remain in effect for a period
ending on June 7, 1999, (such date and the last day of any extended term of
employment pursuant to this SECTION 3 being referred to as the "Termination
Date"), unless sooner terminated hereunder (the "Employment Period").  The
Employment Period shall be automatically renewed on the then current Termination
Date for successive one (1) year periods unless terminated by either the
Executive or the Company by giving written notice of termination ninety (90)
days in advance of the then current Termination Date.

<PAGE>

     4.   COMPENSATION.
     
          (a)  BASE SALARY.  As base salary hereunder ("Base Salary"), the
Company agrees to pay, during the Employment Period, a salary at an initial rate
of Eighty Thousand Dollars ($80,000) per annum, payable in the manner and
frequency in which the Company's payroll is customarily paid.  The Company and
the Executive agree that the Base Salary shall be subject to review at least
annually, but may not be reduced without the Executive's prior written consent.
          
          (b)  MANAGEMENT INCENTIVE PLANS.  The Executive shall be a participant
in the Company's previously adopted (i) Cash Bonus Plan, to such degree and at
such level as approved by the Compensation Committee of the Board of Directors
in their sole discretion, and (ii) the Management Incentive and Non-Employee
Director Stock Plan at a level such that the Executive will be entitled to an
award of 6.67% of the shares of stock of the Company subject to award under such
plan.
          
          (c)  VACATION AND SICK LEAVE.  The Executive shall be entitled to
vacation and sick leave in accordance with the Company's policies for senior
executive employees.
          
          (d)  DISABILITY.  If at any time during the Employment Period the
Executive is substantially unable to perform his duties hereunder by reason of
illness, accident or other disability (as confirmed by competent medical
evidence) ("Temporary Disability"), the Executive shall continue to be treated
as an employee hereunder for all purposes and be entitled to receive periodic
payments of Base Salary to which he would otherwise be entitled pursuant to
SECTION 4(a) of this Agreement for at least the lesser of the balance of the
Employment Period or the period of such Temporary Disability.  If such
disability is expected to last for a period of more than six (6) months (as
confirmed by competent medical evidence) ("Permanent Disability"), the Executive
shall continue to be treated as an employee hereunder for all purposes and be
entitled to receive periodic payments of Base Salary to which he would otherwise
be entitled pursuant to SECTION 4(a) of this Agreement for at least the lesser
of the remaining balance of the Employment Period or six (6) months.  Any
payments under any long term disability plan maintained by the Company shall be
an offset against any payments to the Executive hereunder.
          
          (e)  DEATH.  In the event of the death of the Executive during the
Employment Period, his designated successors shall be entitled to receive, as a
survivor's benefit, the periodic payments of Base Salary that would otherwise be
payable to the Executive pursuant to SECTION 4(a) of this Agreement by reason of
his employment for the lesser of the balance of the Employment Period or six (6)
weeks.  In the event of the Executive's death, the Company will use its best
efforts to advance up to three (3) months Base Salary to the Executive's
beneficiaries of any life insurance provided pursuant to SECTION 4(f) hereof,
provided that such advances are to be repaid by such beneficiaries upon
receiving such insurance proceeds.
          
          (f)  OTHER BENEFITS.
               
               (i)  GENERAL.  Except as otherwise specifically provided herein,
during the Employment Period, the Employee shall be eligible for all non-wage
benefits the Company provides generally for its senior executives, including
retirement, medical, life insurance and long term disability benefits.  The
Company reserves the right to alter, amend or terminate its standard benefit
programs for senior executives and to alter or amend coverages thereunder.
               
               (ii) LEGAL COUNSEL.  During the term of the Agreement, the
Company agrees to pay for the reasonable costs of the Executive's legal counsel
in circumstances where legal representation for the Executive is necessary or
appropriate with regard to actions taken by the Executive in his capacity as an
officer of the Company.
     
     5.   BUSINESS EXPENSES--REIMBURSEMENT.  The Company shall reimburse the
Executive for the reasonable, ordinary and necessary business expenses incurred
by him in connection with the performance of his duties hereunder, including,
but not limited to, ordinary and necessary travel expenses and entertainment
expenses and car phone expenses.  In addition, the Company shall reimburse the
Executive the full cost of obtaining and 


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continuing any licenses which must be obtained or continued by the Executive 
due to his employment by the Company. The Executive shall provide the Company 
with an accounting of his expenses, which accounting shall clearly reflect 
which expenses are reimbursable by the Company.  The Executive shall provide 
the Company with such other supporting documentation and other substantiation 
of reimbursable expenses as will conform to Internal Revenue Service or other 
requirements.  All such reimbursements shall be payable by the Company to the 
Executive within a reasonable time after receipt by the Company of appropriate
documentation therefor; provided, however, the Company shall have no 
obligation to reimburse any expense for which appropriate and customary 
back-up documentation is not provided within sixty (60) days following 
accrual of the obligation in question.
     
     6.   TERMINATION.
     
          (a)  TERMINATION FOR JUST CAUSE.  The Company shall have the option to
terminate the employment of the Executive hereunder, effective upon the
effective date set forth in written notice of such termination to the Executive,
for Just Cause.  For purposes of this Agreement, the term "Just Cause" shall
mean the occurrence of any one or more of the following events: (i) the material
breach by the Executive of his covenants under this Agreement, and the failure
by the Executive to promptly cure the breach or failure of performance upon
written notice thereof from the Company; (ii) the Executive's willful refusal to
perform, or his substantial neglect of, the duties assigned to the Executive
pursuant to SECTION 1 hereof, and the failure by the Executive to promptly cure
the breach or failure of performance upon written notice thereof from the
Company; (iii) the commission by the Executive of theft or embezzlement of
Company property or other acts of dishonesty relating to his employment; (iv)
the commission by the Executive of a crime resulting in injury to the business,
property or reputation of the Company or any affiliate of the Company or
commission of other significant activities harmful to the business or reputation
of the Company or any affiliate of the Company; (v) any significant violation of
any statutory or common law duty of loyalty to the Company; (vi) failure of the
Executive to comply with any provision of the gaming or liquor laws of Colorado
or any other jurisdiction in which the Company or any affiliate conducts
operations or is applying for a gaming or liquor license or failure of the
Executive to comply with any rule or regulation of any administrative body
having jurisdiction, which may materially and negatively affect the gaming or
liquor license of the Executive or the Company or any affiliate of the Company;
or (vii) the failure of the Executive to obtain or retain any permit, license or
approval required by any governmental authority and such failure is not the
result of any negligence or omission by the Company.  A termination of
employment of the Executive for Just Cause shall be effectuated by giving the
Executive written notice of the termination setting forth in reasonable detail
the specific conduct of the Executive that constitutes Just Cause and the
specific provision(s) of this Agreement on which the Company relies, and shall
be given within ninety (90) days of the date on which the Company first acquires
knowledge of occurrence of the conduct giving rise to the Just Cause.  Upon
termination of the Executive for Just Cause, the Company shall pay the Executive
the unpaid portion of Base Salary attributable to periods up to and including
the effective date of such termination and any other amounts to which the
Executive may be entitled under any benefit plan maintained by the Company or as
otherwise may be provided by law, and the Executive shall not be entitled to any
severance benefits pursuant to SECTION 10 hereof and all obligations of the
Company hereunder shall cease.
          
          (b)  TERMINATION UPON DEATH.  This Agreement shall automatically
terminate upon the death of the Executive and, other than as may be provided in
SECTION 4 hereof or under any benefit plan maintained by the Company or as
otherwise may be provided by law, the Company shall have no obligation to make,
and the Executive's estate or successors shall have no right to receive, any
further compensation or payments of any kind.
          
          (c)  TERMINATION UPON DISABILITY.  The Company may terminate this
Agreement upon the Permanent Disability of the Executive at the end of the
period for which the Executive is entitled to receive Base Salary pursuant to
SECTION 4(d) hereof.  Thereafter, the Company shall be obligated to pay only the
amounts set forth in SECTION 4 of this Agreement or as to which the Executive
may be entitled under any benefit plan maintained by the Company or as may
otherwise be provided by law.
          
          (d)  TERMINATION WITHOUT JUST CAUSE.  The Company shall have the
option to terminate the Employment Period at any time by thirty (30) days prior
written notice to the Executive.  If none of the circumstances allowing
termination pursuant to SECTION 6(a), (b) AND (c) exist on the date such notice
is given, such 


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termination shall be deemed to have been a termination without Just Cause and 
the Executive shall be entitled to the unpaid portion of his Base Salary 
attributable to periods up to and including the effective date of such 
termination, to any other amounts to which the Executive may be entitled 
under any benefit plan maintained by the Company or as otherwise may be 
provided by law, and the Executive shall be entitled to receive the severance 
benefits described in SECTION 10 hereof.
          
     7.   TERMINATION BY EXECUTIVE.
     
          (a)  TERMINATION FOR GOOD REASON.  The Executive shall have the option
to terminate his employment with the Company, effective upon the effective date
set forth in written notice of such termination to the Company, for "Good
Reason".  For purposes of this Agreement, Good Reason shall mean the occurrence
of any one or more of the following events: (i) the assignment to the
Executive of any duties inconsistent in any material respect with the duties
described in SECTION 1 hereof, or any other action by the Company that results
in an intentional diminution of the Executive's position, authority, duties or
responsibilities, and (ii) any material breach of this Agreement by the Company
that either is not taken in good faith or is not remedied by the Company
promptly after receipt of notice thereof from the Executive.  A Termination of
employment by the Executive for Good Reason shall be effectuated by giving the
Company written notice of the termination, setting forth in reasonable detail
the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies, and shall
be given within sixty (60) days of the event giving rise to the Good Reason.  A
termination of employment by the Executive for Good Reason shall be effective on
the fifth business day following the date when such notice is given, unless the
notice sets forth an alternate date (which date shall in no event be later than
thirty (30) days after the notice is given).  Upon termination by the Executive
for Good Reason, the Executive shall be entitled to the unpaid portion of Base
Salary attributable to periods up to and including the effective date of such
termination, to any other amounts to which the Executive may be entitled under
any benefit plan maintained by the Company or as otherwise may be provided by
law, and the Executive shall be entitled to receive the severance benefits
described in SECTION 10 hereof.
          
          (b)  TERMINATION WITHOUT GOOD REASON.  The Executive shall have the
option to terminate his employment with the Company at any time after the first
anniversary of this Agreement, upon thirty (30) days prior written notice to the
Company.  If none of the circumstances constituting Good Reason exists on the
date such notice is given, the Executive shall be entitled to the unpaid portion
of his Base Salary attributable to periods up to and including the effective
date of such termination and any other amounts to which the Executive may be
entitled under any benefit plan maintained by the Company or as otherwise may be
provided by law, and the Executive shall not be entitled to any severance
benefits pursuant to SECTION 10 hereof.
     
     8.   SURRENDER OF PROPERTIES.  Upon termination of the Executive's
employment with the Company, regardless of the cause therefor, the Executive
shall promptly surrender to the Company all property provided him by the Company
for use in relation to his employment, and, in addition, the employee shall
surrender to the Company any and all sales materials, lists of customers and
prospective customers, price lists, files, records, models, or other materials
and information of or pertaining to the Company or its customers or prospective
customers or the products, business and operations of the Company.
     
     9.   CONTINUATION OF INSURANCE.  If, following notice of termination given
by the Company pursuant to SECTION 6(d) of this Agreement, the Executive is
unable to arrange alternate employment before the stated effective date of such
termination, the Company shall, at the Company's expense, continue the
Executive's medical, disability and life insurance coverage for a period
extending one hundred and twenty (120) days following the effective date of
termination or until the Executive secures alternate employment, whichever date
occurs first, and such period shall be credited against any period for which the
Company is otherwise obligated to make such benefits available to the Executive
under Section 480-B of the Internal Revenue Code of 1986, as amended, or any
similar provision of law.
     
     10.  SEVERANCE PAY.  Notwithstanding any other provision of this 
Agreement, if the Employment Period is terminated by the Company or any 
successor of the Company pursuant to SECTION 6(d) hereof, or by the Executive 
pursuant to SECTION 7(a) hereof, the Company shall pay the Executive a 
severance 


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benefit equal to the Executive's Base Salary for the remaining Employment 
Period at the annual rate in effect immediately prior to such termination.  
Any payment required pursuant to this SECTION 10 shall be made within thirty 
(30) days following the termination date.

     11.  INDEMNIFICATION.  The Executive shall indemnify the Company and hold
it harmless from and against any and all loss, damage and expense (including
reasonable attorneys' fees and disbursements) arising out of any claim or threat
of claim against the Executive or the Company resulting from or in any way
related to the Executive's relationship with any previous employer, including
any claim of breach of contract, interference with contract or breach or
impairment of a real or claimed legally protected right of such previous
employer.
     
     12.  CONFIDENTIALITY OF INFORMATION; DUTY OF NON-DISCLOSURE.  The
Executive acknowledges and agrees that his employment by the Company under this
Agreement necessarily involves his understanding of, and access to, certain
trade secrets and confidential information pertaining to the business of the
Company.  Accordingly, the Executive agrees that except as may be required in
the reasonable performance of his duties hereunder, he will not, directly or
indirectly, without the express prior written consent of the Company, disclose
to or use for the benefit of any person, corporation or other entity, or for
himself, any and all files, trade secrets or other confidential information
concerning the internal affairs of the Company, including, but not limited to,
information pertaining to its clients, services, products, earnings, finances,
operations, methods or other activities; provided, however, that the foregoing
shall not apply to information which is of public record or is generally known,
disclosed or available to the general public or the industry generally or was
known by the Executive prior to his employment under this Agreement.  Further,
the Executive agrees that he shall not, directly or indirectly, remove or
retain, without the express prior written consent of the Company, and upon
termination of this Agreement for any reason shall return to the Company, any
figures, calculations, letters, papers, records, computer disks, computer 
print-outs, lists, documents, instruments, drawings, designs, programs, 
brochures, sales literature, or any copies thereof, or any information or 
instruments derived therefrom, or any other similar information of any type 
or description, however such information might be obtained or recorded, 
arising out of or in any way relating to the business of the Company or 
obtained as a result of his employment by the Company.  The Executive 
acknowledges that all of the foregoing are proprietary information, and are 
the exclusive property of the Company.  The covenants contained in this 
SECTION 12 shall survive the termination of this Agreement.
     
     13.  ENFORCEMENT.
     
          (a)  Upon presentation of a claim or claims (collectively, "Claims")
arising out of or relating to this Agreement, or the breach hereof, by an
aggrieved party, the other party shall have thirty (30) days in which to make
such inquiries of the aggrieved party and conduct such investigations as it
believes reasonably necessary to determine the validity of the Claims.  At the
end of such period of investigation, the complained of party shall either pay
the amount of the Claims or the arbitration proceeding described immediately
below shall be invoked.
          
          (b)  In the event that the Claims are not settled by the procedure set
forth immediately above, the Claims shall be submitted to arbitration conducted
in accordance with the Commercial Arbitration Rules ("Rules") of the American
Arbitration Association ("AAA") except as amplified or otherwise varied hereby.
          
          (c)  The parties shall submit the dispute to the Denver regional
office of the AAA and the situs of the arbitration shall be Denver County,
Colorado.
          
          (d)  The arbitration shall be conducted by a single arbitrator.  The
parties shall appoint the single arbitrator to arbitrate the dispute within ten
(10) business days of the submission of the dispute.  In the absence of
agreement as to the identity of the single arbitrator to arbitrate the dispute
within such time, the AAA is authorized to appoint an arbitrator in accordance
with the Rules, except that the arbitrator shall have as his principal place of
business the Denver metropolitan area.
          
          (e)  The single arbitrator selected by the AAA shall be an attorney or
accountant licensed to practice by the State of Colorado.


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          (f)  Notwithstanding anything in the Rules to the contrary, the
arbitration award shall be made in accordance with the following procedure: 
Each party shall, at the commencement of the arbitration hearing, submit an
initial statement of the amount each party proposes be selected by the
arbitrator as the arbitration award ("Settlement Amount").  During the course of
the arbitration, each party may vary its proposed Settlement Amount.  At the end
of the arbitration hearing, each party shall submit to the arbitrator its final
Settlement Amount ("Final Settlement Amount"), and the arbitrator shall be
required to select either one or the other Final Settlement Amounts as the
arbitration award without discretion to select any other amount as the award. 
The arbitration award shall be paid within ten (10) business days after the
award has been made, together with interest from the date of award at the rate
of eight percent (8%).  Judgment upon the award may be entered in any federal or
state court having jurisdiction over the parties.
     
     14.  COSTS OF ENFORCEMENT.  In the event of any suit or proceeding seeking
to enforce the terms, covenants or conditions of this Agreement, the prevailing
party shall, in addition to all other remedies and relief that may be available
under this Agreement or applicable law, recover his or its reasonable attorneys'
fees and costs as shall be determined and awarded by the arbitrator or court, as
the case may be.
     
     15.  COMPETING INTEREST.  During the Employment Period, the Executive shall
not, without the prior written consent of the Company, engage in any other
business activity that competes with or is of a nature similar to that of the
Company for gain, profit or other pecuniary advantage or engage in or in any
manner be connected or concerned, directly or indirectly, whether as an officer,
director, stockholder, partner, owner, executive, consultant, creditor or
otherwise, with the operation, management or conduct of any business that
competes with or is of a nature similar to that of the Company; provided,
however, that this SECTION 15 shall not prohibit the Executive from owning up to
one percent (1%) of the publicly traded shares of any entity.
     
     16.  NONCOMPETE CLAUSE.  If the Employment Period is terminated by the
Company for Just Cause pursuant to SECTION 6(a) hereof, or voluntarily by the
Executive pursuant to SECTION 7(b) hereof, the Executive will be prohibited from
accepting employment with, and shall not in any manner be connected or
concerned, whether directly or indirectly, whether as an officer, director,
stockholder, partner, owner, executive, consultant, creditor or otherwise, with
the operation, management or conduct of any business having gaming operations in
any state or other jurisdiction in which the Company has gaming operations
immediately prior to the date of the Executive's termination of employment, for
a period beginning on the date of the Executive's termination of employment and
ending on the then current Termination Date.
     
     17.  GENERAL PROVISIONS.
          
          (a)  GOODWILL.  The Company has invested substantial time and money in
the development of its products, services, territories, advertising and
marketing thereof, soliciting clients and creating goodwill.  By accepting
employment with the Company, the Executive acknowledges that the customers are
the customers of the Company, and that any goodwill created by the Executive
belongs to and shall inure to the benefit of the Company.
          
          (b)  NOTICES.  Any notice required or permitted hereunder shall be
made in writing (i) either by actual delivery of the notice into the hands of
the party thereunder entitled, or (ii) by the mailing of the notice in the
United States mail, certified or registered mail, return receipt requested, all
postage prepaid and addressed to the party to whom the notice is to be given at
the party's respective address set forth below, or such other address as the
parties may from time to time designate by written notice as herein provided.
     
     As addressed to the Company:
     
          Colorado Gaming & Entertainment Co.
          12596 West Bayaud Avenue, Suite 450
          Lakewood, Colorado  80228


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     With a copy to:
     
          Leboeuf, Lamb, Greene & MacRae L.L.P.
          633 Seventeenth Street, Suite 2800
          Denver, Colorado  80202
          Attention: Thomas J. Moore
     
          As addressed to the Executive:
     
     Robert J. Stephens
     1312 So. Gaylord
     Denver, Colorado  80210

The notice shall be deemed to be received in case (i) on the date of its actual
receipt by the party entitled thereto, and in case (ii) on the third (3rd)
business day following the date of its mailing.
          
          (c)  AMENDMENT AND WAIVER.  No amendment or modification of this
Agreement shall be valid or binding upon the Company unless made in writing and
signed by an officer of the Company duly authorized by the Board of Directors or
upon the Executive unless made in writing and signed by him.  The waiver by the
Company of the breach of any provision of this Agreement by the Executive shall
not operate or be construed as a waiver of any subsequent breach by him.
          
          (d)  ENTIRE AGREEMENT.  This Agreement constitutes the entire
Agreement between the parties with respect to the Executive's duties and
compensation as an executive of the Company, and there are no representations,
warranties, agreements or commitments between the parties hereto with respect to
his employment except as set forth herein.
          
          (e)  GOVERNING LAW.  This Agreement shall be governed by and construed
in accordance with the internal laws (and not the law of conflicts) of the State
of Colorado.
          
          (f)  SEVERABILITY.  If any provision of this Agreement shall, for any
reason, be held unenforceable, such provision shall be severed from this
Agreement unless, as a result of such severance, the Agreement fails to reflect
the basic intent of the parties.  If the Agreement continues to reflect the
basic intent of the parties, then the invalidity of such specific provision
shall not affect the enforceability of any other provision herein, and the
remaining provisions shall remain in full force and effect.
          
          (g)  ASSIGNMENT.  The Executive may not under any circumstances
delegate any of his rights and obligations hereunder without first obtaining the
express prior written consent of the Company.  This Agreement and all of the
Company's rights and obligations hereunder may be assigned or transferred by it,
in whole or in part, to be binding upon and inure to the benefit of any
subsidiary or successor of the Company, but any such transfer or assignment
shall not relieve the Company of its obligations under this Agreement to the
extent that an assignee does not fulfill such obligations.


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<PAGE>

     IN WITNESS WHEREOF, this Agreement is entered into on the day and year
first above written.

                                       COMPANY:

                                       COLORADO GAMING & ENTERTAINMENT CO.


                                       By: /s/ Stephen J. Szapor, Jr.
                                          -----------------------------------
                                       Its: President
                                          -----------------------------------

                                       EXECUTIVE:

                                       /s/ ROBERT J. STEPHENS
                                       -----------------------------------
                                       ROBERT J. STEPHENS








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