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                        CONVERTIBLE SUBORDINATED NOTE

$5,000,000.00                                                 Las Vegas, Nevada
                                                             September 24, 1996

     FOR VALUE RECEIVED, the adequacy of which is hereby acknowledged, 
Boardwalk Casino, Inc., a Nevada corporation with its principal office 
located at 3750 Las Vegas Blvd. South, Las Vegas, Nevada 89109 (the "Maker"), 
hereby promises to pay to the order of Diversified Opportunities Group Ltd. 
(the "Holder") with its principal office located at 1231 Main Avenue, 
Cleveland, Ohio 44113, the principal sum of Five Million Dollars 
($5,000,000.00), together with interest thereon from the date hereof until 
payment in full at the Charged Rate (as defined below).  This Convertible 
Subordinated Note (the "Note") is issued pursuant to that certain Purchase 
Agreement dated September 24, 1996 (the "Purchase Agreement") among the 
Maker, the Holder and Norbert W. Jansen, individually and as trustee under an 
agreement dated July 14, 1993 ("Jansen").

1.  PAYMENT OF PRINCIPAL

     All principal outstanding hereunder shall be due in one payment, in full,
on September 23, 1998.  Principal of and interest on this Note are payable in
lawful money of the United States of America at the Holder's address stated
above, or at such other place as the Holder shall designate to the Maker in
writing.

2.  INTEREST

    a.  For purposes of this Note, the following terms shall have the meanings
        given them in this subsection a.:

           i. "ADJUSTED EURODOLLAR RATE": For each calendar month until 
              this Note is paid in full, the rate (rounded upward, if necessary,
              to the next one

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              hundredth of one percent) determined by dividing the Eurodollar 
              Rate for such Interest Period by 1.00 minus the Eurodollar 
              Reserve Percentage;

         ii. "EURODOLLAR BUSINESS DAY": A day (other than a Saturday, Sunday or
              legal holiday) on which banks are open for business in New York 
              City and on which there is trading by and between banks in 
              United States dollar deposits in the interbank Eurodollar 
              market.

       iii.   "EURODOLLAR RATE": For each calendar month, the interest rate 
              per annum (rounded upward, if necessary, to the next 
              one-sixteenth of one percent) at which United States dollar 
              deposits are offered to First Bank National Association (the 
              "Bank") in the interbank Eurodollar market two Eurodollar 
              Business Days prior to the first day of such calendar month for 
              delivery in immediately available funds on the first day of 
              such month and in an amount approximately equal to the 
              outstanding principal amount of the Note and for a thirty (30) 
              day maturity; provided, that in lieu of determining the rate in 
              the foregoing manner, the Holder may substitute the per annum 
              Eurodollar rate (LIBOR) for United States dollars displayed on 
              the Telerate Systems, Inc. screen, page 3750 (or other 
              applicable page), on the first day, of such calendar month.

         iv. "EURODOLLAR RESERVE PERCENTAGE": As of any day, that percentage
              (expressed as a decimal) which is in effect on such day, as 
              prescribed by the Federal Reserve Board for determining the 
              maximum reserve


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              requirement (including any basic, supplemental or emergency 
              reserves) for a member bank of the Federal Reserve System, with 
              deposits comparable in amount to those held by the Bank, in 
              respect of "Eurocurrency Liabilities" as such term is defined 
              in Regulation D of the Federal Reserve Board.  The rate of 
              interest applicable to the outstanding principal balance of the 
              Note shall be adjusted automatically on and as of the effective 
              date of any change in the Eurodollar Reserve Percentage.

    b.  This Note shall bear interest on the unpaid principal amount at a 
        variable rate per annum equal to the sum of (1) the Adjusted 
        Eurodollar Rate, plus (2) two percent (2.00%) (the "Charged Rate").  
        The Charged Rate shall be adjusted monthly on the first day of each 
        calendar month and each change in the Charged Rate shall result 
        immediately, without notice or demand of any kind, in a corresponding 
        change in the interest rate under the Note. Interest shall be payable 
        on the last day of each calendar quarter, and, in the event of a 
        permitted prepayment on the date of such prepayment.  The Holder 
        shall provide the Maker with notice of the Charged Rate periodically 
        in order to permit the Maker to make timely payments hereunder.

    c.  Any amount not paid when due under this Note, whether at the date
        scheduled for payment or earlier upon acceleration, shall bear 
        interest until paid in full at a rate per annum equal to the Charged 
        Rate plus four percent (4.00%) (the "Default Rate").

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3.   FACILITY FEE

     Maker shall pay to Holder an annual facility fee (the "Facility Fee") 
in the amount of Twelve Thousand Five Hundred Dollars ($12,500).  The 
Facility Fee shall be due and payable to Holder on the date hereof and on the 
same day of each subsequent year until this Note is paid in full.

4.   USE OF PROCEEDS

     The principal sum of Five Million Dollars ($5,000,000) shall be used by 
the Maker solely for working capital purposes.

5.   SECURITY

     This Note is be secured by a Deed of Trust and Security Agreement of 
even date herewith on certain real and personal property owned by the Maker 
located in Clark County, Las Vegas, Nevada (the "Deed of Trust").

6.   PREPAYMENT  Except as may be required by Section 16(b) of the Purchase 
Agreement or as otherwise may be required by the Nevada Gaming Authorities 
(as defined in the Purchase Agreement), the Maker may not prepay 
this Note without the prior written consent of the Holder.

7.   COVENANTS.  So long as any indebtedness under this Note remains 
outstanding, Maker shall not without the prior written consent of the Holder:

     a.  directly or indirectly declare or pay any dividends or make any 
distributions upon any of its common stock or other equity securities; 
PROVIDED that the Maker may pay dividends or make distributions on its common 
stock or its other equity securities during any fiscal year so long as the 
same are permitted pursuant to that certain Indenture dated as of


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<PAGE>

April 7, 1995 between the Maker and Shawmut Bank, N.A., Trustee for 
$40,000,000 16.5% First Mortgage Notes Due March 31, 2005 (the "Indenture");

     b.  directly or indirectly redeem purchase or otherwise acquire any of
the Maker's common stock or other equity securities (including, without
limitation, options and other rights to acquire such common stock or other
equity securities), or directly or indirectly redeem, purchase or make any
payments with respect to any stock appreciation rights, phantom stock plans or
similar rights or plans; PROVIDED that the Maker may redeem, purchase or
otherwise acquire outstanding common stock or other equity securities so long as
the same are permitted pursuant to the Indenture;

     c.  merge or consolidate with any person or permit any subsidiary to merge
or consolidate with any person (other than a wholly-owned subsidiary); PROVIDED
that a subsidiary may merge with another person so long as after such merger the
Maker owns at least 80% of the (i) capital stock of the surviving corporation
possessing the right to vote for the election of directors and (ii) number of
shares of the common stock of the surviving corporation then outstanding;

     d.  sell, lease or otherwise dispose or, or permit any subsidiary to sell,
lease or otherwise dispose of, more than 50% of the consolidated assets of the
Maker and its subsidiaries (computed on the basis of book value, determined in
accordance with generally accepted accounting principles consistently applied,
or fair market value);

     e.  issue or sell any shares of the capital stock, or rights to acquire
shares of the capital stock, of any subsidiary to any person (other than the
Holder or a permitted assignee of the Holder) if immediately after such
issuance or sale the Maker owns less than 80% of


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the (i) capital stock possessing the right to vote for the election of 
directors and (ii) the number of shares of the common stock of any subsidiary 
then outstanding;

     f.  liquidate, dissolve or effect a recapitalization or reorganization 
in any form of transaction (including, without limitation, any reorganization 
into a limited liability company or into partnership or other non-corporate 
form); or

     g.  create, incur, assume or suffer to exist, or permit any subsidiary 
to create, incur, assume or suffer to exist, additional indebtedness, unless 
the same is permitted pursuant to the Indenture.

     Further, in the event the Maker proposes to authorize, issue or enter 
into any agreement providing for the issuance (contingent or otherwise) of 
equity securities, including without limitation, common stock, preferred 
stock, warrants or otherwise, or any notes or debt securities containing 
equity features, including, without limitation, any notes or debt securities 
convertible into or exchangeable for common stock, preferred stock, or other 
equity securities, the Maker shall provide thirty (30) days prior written 
notice to the Holder that it plans to effect such a transaction.  In such 
event, the Holder shall have the right to require the Maker to pay off the 
remaining indebtedness owed to the Holder under this Note as a condition to 
completing such a transaction; such pay off to occur contemporaneously with 
the closing of such a transaction.  The Holder shall exercise such right by 
delivering written notice to the Maker within twenty (20) days after the 
Holder's receipt of the notice described above.

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8.   CONVERSION

     a.  Prior to payment in full of the principal balance of this Note, the 
Holder of this Note has the right, at the Holder's option, at any time and 
from time to time following the receipt from the Nevada Gaming Authorities 
(as defined in the Purchase Agreement) of Licensing Approval (as defined in 
the Purchase Agreement), to convert all or any portion of the then unpaid 
principal balance of this Note in accordance with the provisions of 
subparagraph c. of this Section 8, into shares of Common Stock of Maker, 
$.001 par value per share (the "Common Stock").  The number of shares of 
Common Stock into which this Note may be converted ("Conversion Shares") 
shall be determined by dividing the then unpaid principal balance of this 
Note by $7.50 (the "Conversion Price").

      b.  Any Conversion Shares shall have the registration rights set forth 
in the Registration  Agreement between the Maker and the Holder dated of even 
date herewith.

      c.  Before the Holder shall be entitled to convert this Note into 
Conversion Shares, it shall give written notice by mail, postage prepaid, to 
the Maker at its principal corporate office, of the election to convert the 
same.  Such notice shall state therein the date on which such conversion will 
occur.  The Maker at its own expense shall, as soon as practicable 
thereafter, issue and deliver at such office to the Holder of this Note a 
certificate or certificates for the number of Conversion Shares to which the 
Holder of this Note shall be entitled.  At the time such certificates are 
issued, accrued interest on the amount of principal so converted shall be 
paid by the Maker to the Holder.  Such conversion shall be deemed to have 
been made immediately prior to the close of business on the date of 
conversion specified in such written notice, and the Holder of this Note 
shall be treated for all purposes as the record holder of such Conversion 
Shares.  To the extent

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that the entire unpaid principal balance of this Note is not being converted
into Common Stock, the Holder of this Note shall credit the Note on its books to
the extent of the principal being converted by the Holder into Common Stock.

     d.  No fractional share of Common Stock shall be issued upon conversion of
this Note.  In lieu of the Maker issuing any fractional share to the Holder upon
the conversion of this Note, the Maker shall pay, in cash, to the Holder the
amount of outstanding principal that is applicable to such fractional share.

9.  CONVERSION PRICE ADJUSTMENTS.

     a.  In the event the Maker should at any time or from time to time after
the date of issuance hereof fix a record date for the effectuation of a split or
subdivision of the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other distribution
payable in additional shares of Common Stock or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of this Note shall be appropriately decreased so that the number of
Conversion Shares issuable upon conversion of this Note shall be increased in
proportion to such increase of outstanding shares.

     b.  If the number of shares of Common Stock outstanding at any time 
after the date hereof is decreased by a combination of the outstanding shares 
of Common Stock,


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then, following the record date of such combination, the Conversion Price for
this Note shall be appropriately increased so that the number of Conversion
Shares issuable on conversion hereof shall be decreased in proportion to such
decrease in outstanding shares.

     c.  In the event of (i) any taking by the Maker of a record of the holders
of any class of securities of the Maker for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right or (ii) any capital reorganization of
the Maker, any reclassification or recapitalization of the capital stock of the
Maker or any transfer of all or substantially all of the assets of the Maker to
any other person or any consolidation or merger involving the Maker, or (iii)
any voluntary or involuntary dissolution, liquidation or winding up of the
Maker, the Maker will mail to the Holder of this Note a notice specifying (A)
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right and the amount and character of such dividend,
distribution or right, (B) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up is expected to become effective and the record date for determining
stockholders entitled to vote thereon and (C) the new Conversion Price after
giving effect to the adjustment event which new Conversion Price shall represent
an appropriate increase or decrease in the Conversion Price to preserve the
proportionate amount of Conversion Shares.  Such notice shall be mailed at least
twenty (20) days prior to the date described in clause (A) or (B) above.


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     d.  The Maker shall at all times reserve and keep available out of its 
authorized but unissued shares of Common Stock solely for the purpose of 
effecting the conversion of the Note into such number of Conversion Shares as 
shall from time to time be sufficient to effect the conversion of the Note; 
and; if at any time the number of authorized but unissued shares of Common 
Stock shall not be sufficient to effect the conversion of the entire 
outstanding principal amount of this Note, in addition to such other remedies 
as shall be available to the Holder of this Note, the Maker will use its best 
efforts to take such corporate action as may, in the opinion of its counsel, 
be necessary to increase its authorized but unissued shares of Common Stock to 
such number of shares as shall be sufficient for such purposes.

10.  EVENTS OF DEFAULT

     "Event of Default," whenever used herein, means any one or more of the
following defaults shall have occurred and be continuing (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law pursuant to any judgment decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

         i.   Default in the payment of any installment of interest the
    Facility Fee, the principal of this Note or any other amount payable 
    hereunder when such payment becomes due and payable, whether at maturity, 
    by acceleration or otherwise, and such default shall continue unremedied 
    for a period of fifteen (15) days;

         ii.  Default in the performance or breach of any other agreement,
    covenant or warranty of the Maker contained in this Note, and such default
    or breach shall continue unremedied for a period of thirty (30) days after
    the date on which written


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    notice of such default or breach, requiring the Maker to remedy the same, 
    shall have been given to the Maker by the Holder, or such longer period 
    provided that the default is of a nature that cannot be remedied within 
    30 days and the Maker has within the thirty (30) day period instituted 
    curative action and diligently and continuously pursues such action to 
    completion;

         iii.  The entry of a decree or order by a court having jurisdiction
    adjudging the Maker a bankrupt or insolvent, or approving as properly 
    filed a petition seeking reorganization, arrangement, adjustment or 
    composition of or in respect of the Maker under federal bankruptcy law or 
    any similar federal or state law for the relief of debtors ("Bankruptcy 
    Law"), or appointing a receiver, liquidator, assignee, trustee, 
    conservator, sequestrator or assignee in bankruptcy or insolvency of the 
    Maker or of any substantial part of its property, or ordering the winding 
    up or liquidation of its affairs, and such decree or order shall have 
    continued undischarged and unstayed for a period of thirty (30) days;

         iv.  The Maker shall commence a voluntary case or shall consent to the
    entry of an order for relief in any involuntary case under Bankruptcy 
    Law, or shall consent to the appointment of or taking possession by a 
    receiver, liquidator, custodian, sequestrator, trustee or assignee of any 
    substantial part of its property, or shall make an assignment for the 
    benefit of creditors, or shall fail generally to pay its debts as they 
    become due;

          v.  There shall have occurred any circumstance or event which, upon 
    the lapse of time, the giving of notice, or both, would constitute an 
    event of default


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<PAGE>

    under any other indebtedness of the Maker with a principal balance in 
    excess of $1,000,000, except if the same is cured or waived within any 
    applicable grace period;

         vi.  The Maker shall have failed to give written notice within five
    (5) days after the occurrence of the event or circumstances described in 
    clause (v), above; and 

        vii.  Breach or default by the Maker of any representation,
    warranty, agreement or covenant pursuant to the Purchase Agreement or any
    other agreement between the Holder and Maker or Jansen, including, without
    limitation, the Deed of Trust and such breach or default gives rise to an
    indemnification obligation of the Maker or Jansen pursuant to the Purchase
    Agreement and such parties fail to comply with such indemnification
    obligations.

11.  REMEDIES

     If an Event of Default occurs and is continuing (unless waived in writing
by the Holder), then, and in each and every case, unless the entire principal of
this Note already shall have become due and payable, the Holder may, by a notice
in writing to the Maker, declare the principal of and the accrued interest on
this Note to be immediately due and payable.  The principal of and accrued
interest on this Note shall become and shall be immediately due and payable upon
such declaration.

12.  MISCELLANEOUS

     a.  The Maker hereby waives presentment, notice of dishonor, protest and
diligence in bringing suit against the Maker.  Acceptance by the Holder of any
payment which is less than the full amount then due and owing hereunder shall
not constitute a waiver of the Holder is right to receive payment in full at
such time or at any prior or subsequent time.  The Maker consents that the time
of payment may be extended an


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unlimited number of times before or after maturity without notice to the Maker,
and that the Maker shall not be discharged by reason of any such extension or
extensions of time.  No delay or omission on the part of the Holder in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Note.  A waiver on any one occasion shall not be
construed as a bar to or waiver of any such right or remedy on any future
occasion.

     b.  Notwithstanding the foregoing, if at any time implementation of any
provision hereof shall cause the interest contracted for or charged herein and
collectible hereunder to exceed the applicable lawful maximum rate, then the
interest shall be limited to such lawful maximum.

     c.  The Maker shall be liable for any and all costs and expenses of
collection, including, without limitation, reasonable attorneys' fees, arising
by virtue of an Event of Default.

     d.  This Note shall be subject to and construed in accordance with the
laws of the State of Nevada.  If any provision herein shall be unenforceable,
such unenforceable provision shall not render the remaining provisions hereof
unenforceable or invalid.

     e.  This Note shall be binding upon the Maker and the Maker may not 
assign its obligations  hereunder without the prior written consent of 
the Holder.  The Holder may assign its rights hereunder, in whole or in 
part, to one or more corporations, limited liability companies, 
partnerships, trusts or other entities which are under common control 
with or controlled through equity ownership and/or voting control by, the 
Holder or Jeffrey P. Jacobs; it being acknowledged that any entity in 
which Jeffrey P. Jacobs beneficially owns 


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15% or more of the voting equity securities and is Chairman of the Board 
and/or Chief Executive Officer constitutes common control.

                                        BOARDWALK CASINO, INC.

                                        By:
                                           -------------------------------

                                        Title:  Secretary/Treasurer
                                              ----------------------------











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