MTR GAMING GROUP INC, DEF 14A, 2000-07-24

MTR GAMING GROUP INC
DEF 14A, 2000-07-24
MISCELLANEOUS AMUSEMENT & RECREATION

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

<TABLE>
<S> <C>
Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-12
</TABLE>

<TABLE>
<S> <C> <C>
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by
/ / Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.

(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
MTR GAMING GROUP, INC.
STATE ROUTE 2
CHESTER, WEST VIRGINIA 26034

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
MTR Gaming Group, Inc. to be held on August 23, 2000, at 9:00 a.m. local time,
at the Company's corporate headquarters at the Mountaineer Racetrack & Gaming
Resort, State Route 2, Chester, West Virginia 26034.

The accompanying Notice of Annual Meeting and Proxy Statement describe the
business to be conducted at the meeting. There will also be a brief report on
the current status of our business.

Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the Notice of Annual
Meeting and Proxy Statement, please complete, sign and date your proxy ballot,
and return it in the envelope provided.

On behalf of the Officers and Directors of MTR Gaming Group, Inc., I thank
you for your interest in the Company and hope that you will be able to attend
our Annual Meeting.

For the Board of Directors,

EDSON R. ARNEAULT
Chairman of the Board of
Directors and President

July 24, 2000
<PAGE>
MTR GAMING GROUP, INC.
STATE ROUTE 2
CHESTER, WEST VIRGINIA 26034

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MTR Gaming
Group, Inc. will be held on August 23, 2000 at 9:00 a.m. local time, at the
Company's corporate headquarters at the Mountaineer Racetrack & Gaming Resort,
State Route 2, Chester, West Virginia 26034 for the following purposes:

1. To elect five persons to serve as directors of the Corporation until the
next annual meeting of stockholders;

2. To ratify the adoption of the Corporation's 2000 Stock Incentive Plan;

3. To ratify the selection of BDO Seidman, LLP as the Corporation's
accountants and independent auditors; and

4. To transact such other business as may properly come before the meeting.

Stockholders entitled to notice and to vote at the meeting will be
determined as of the close of business on July 20, 2000, the record date fixed
by the Board of Directors for such purposes.

By order of the Board of Directors,
Rose Mary Williams, SECRETARY

July 24, 2000

PLEASE SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IF MAILED IN THE UNITED STATES, NO POSTAGE IS REQUIRED.
<PAGE>
MTR GAMING GROUP, INC.
STATE ROUTE 2
CHESTER, WEST VIRGINIA 26034

------------------------

PROXY STATEMENT
------------------------

INTRODUCTION

THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF DIRECTORS OF MTR GAMING GROUP, INC. (THE "COMPANY") FOR
USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 23, 2000.

A copy of the Company's report with financial statements for the year ended
December 31, 1999 is enclosed. This proxy statement and form of proxy were first
sent to stockholders on or about the date stated on the accompanying Notice of
Annual Meeting of Stockholders.

Only stockholders of record as of the close of business on July 20, 2000
will be entitled to notice of and to vote at the meeting and any postponement or
adjournments thereof. As of that date, 21,953,501 shares of Common Stock of the
Company were issued and outstanding. Each share outstanding as of the record
date will be entitled to one vote, and stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it at any time before it is exercised by written notice to the
Secretary of the Company or by submission of another proxy bearing a later date.
In addition, stockholders attending the meeting may revoke their proxies at any
time before they are exercised.

If no contrary instructions are indicated, all properly executed proxies
returned in time to be cast at the meeting will be voted FOR: (i) the election
of the directors nominated herein, (ii) the ratification of the adoption of the
Company's 2000 Stock Incentive Plan, and (iii) the ratification of the selection
of the auditors. Members of the Company's management intend to vote their shares
in favor of each of the proposals. A quorum for the meeting requires the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes entitled to be cast at the meeting, but in no event less than 33 and
1/3 percent of the outstanding shares of the Company's voting stock. The
election of directors requires a plurality of the votes cast at the meeting. The
ratification of the adoption of the Company's 2000 Stock Incentive Plan and the
confirmation of the auditors require the affirmative vote of a majority of the
shares present at the meeting.

Stockholders will vote at the meeting by ballot and votes cast at the
meeting in person or by proxy will be tallied by the Company's transfer agent.
Shares held by stockholders present in person at the meeting who do not vote and
Ballots marked "abstain" or "withheld" will be counted as present at the meeting
for quorum purposes, but will not be counted as part of the vote necessary to
approve the proposals for the election of directors or the confirmation of the
auditors.

The solicitation of proxies will be made primarily by mail. Proxies may also
be solicited personally and by telephone or telegraph by regular employees of
the Company, without any additional remuneration. The cost of soliciting proxies
will be borne by the Company. In addition, the Company may also retain a proxy
solicitation firm to solicit proxies, in which case, the Company will pay the
solicitation firm's fees. The Company will also make arrangements with brokerage
houses and other custodians, nominees and fiduciaries to forward solicitation
material to beneficial owners of stock held of record by such persons, and the
Company will reimburse such persons for their reasonable out-of-pocket expenses
in forwarding solicitation material.

The Company knows of no other matter to be presented at the meeting. If any
other matter should be presented at the meeting upon which a vote properly may
be taken, then the persons named as proxies will use their own judgment in
voting shares represented by proxies.
<PAGE>
ELECTION OF DIRECTORS

The directors of the Company are elected annually and hold office until the
next annual meeting and until their successors have been elected and have
qualified. The Company's Board of Directors (the "Board") has fixed the number
of Directors at seven. However, the Board has nominated five candidates for
service, each of whom serves for a term of one year, or until their successors
are elected and qualify. PROXIES CANNOT BE VOTED FOR A GREATER NUMBER OF PERSONS
THAN THE NUMBER OF NOMINEES NAMED.

Any stockholder submitting a proxy has the right to withhold authority to
vote for an individual nominee to the Board by writing that nominee's name in
the space provided on the proxy. Shares represented by all proxies received by
the Company and not marked to withhold authority to vote for any individual
director or for all directors will be voted FOR the election of all of the
nominees named below. The Company knows of no reason why any nominee would be
unable to serve, but if such should be the case, proxies will be voted for the
election of some other person.

NOMINEES FOR DIRECTORS

The Board has nominated the following persons to serve as the Company's
directors, and all proxies not marked otherwise will be voted for the nominees
for a term expiring at the Annual Meeting in 2001:

EDSON R. ARNEAULT has been a director of the Company since January 1992 and
has served as the Company's President and Chief Executive Officer since
April 26, 1995. He also serves as Chairman of the Company's Audit Committee. He
is also an officer and director of the Company's subsidiaries, Mountaineer
Park, Inc., Golden Palace Casinos, Inc., ExCal Energy Corp., Speakeasy Gaming of
Reno Inc. ("Speakeasy Reno") and Speakeasy Gaming of Las Vegas, Inc. ("Speakeasy
Las Vegas"). Mr. Arneault is also a principal in numerous ventures directly or
indirectly engaged in the development, production and transportation of oil and
gas. Since becoming the President of the Company and Mountaineer Park, however,
Mr. Arneault has devoted virtually all his time and attention to the business of
the Company. Mr. Arneault is a certified public accountant, and has served as a
tax partner with Seidman and Seidman (now "BDO Seidman LLP"), a public
accounting firm, in Grand Rapids, Michigan, from 1977 to 1980. Mr. Arneault was
employed as a certified public account by Arthur Andersen in the tax department
of its Cleveland office from 1972 to 1976. Mr. Arneault is a member of the
Independent Producers Association of America, the Ohio Oil and Gas Association,
the Michigan Oil and Gas Association and the Michigan Association of Certified
Public Accountants. Mr. Arneault received his Bachelor of Science in Business
Administration from Bowling Green University in 1969, his Master of Arts from
Wayne State University in 1971, and his Masters in Business Administration from
Cleveland State University in 1978. Mr. Arneault also serves as a member of the
Hospitality and Tourism Management Board of Visitors of Robert Morris College in
Pittsburgh, Pennsylvania.

ROBERT L. RUBEN has been a director of the Company since September 1995 and
a Vice President since February 1999. He also serves as Assistant Secretary of
the Company, is Chairman of the Company's Compensation Committee, and serves as
a Director and Assistant Secretary of Mountaineer Park. He is a partner in
Ruben & Aronson, LLP, a Washington, D.C. law firm. Previously, Mr. Ruben was a
principal in Freer, McGarry, Bodansky & Rubin, P.C., a Washington, D.C. law
firm, where he practiced from 1991 until 1997. From 1986 to 1988, Mr. Ruben was
associated with the firm of Bishop, Cook, Purcell & Reynolds, which later merged
with Winston & Strawn, and from 1989 to 1991, Mr. Ruben was associated with the
firm of Wickens, Koches & Brooks. Mr. Ruben practices principally in the areas
of commercial litigation and securities regulation. Mr. Ruben received his
Bachelor of Arts from the University of Virginia in 1983 and his Juris Doctor
from the Dickinson School of Law of Penn State University in 1986. He is a
member of the bars of the District of Columbia and the Commonwealth of
Pennsylvania (inactive). Ruben & Aronson, LLP currently serves as counsel to the
Company, and Mr. Ruben has represented Mr. Arneault and various of his
affiliates since 1987.

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ROBERT A. BLATT has been a director of the Company since September 1995 and
a Vice President since February 1999. Mr. Blatt is also a Director and Assistant
Secretary of Mountaineer Park, Chairman of the Company's Finance Committee and a
member of the Company's Compensation Committee. Mr. Blatt is the Chief Executive
Officer and managing member of New England National, L.L.C. and a member of the
board of directors and chairman of the audit committee of AFP Imaging
Corporation. Since 1979 he has been chairman and majority owner of CRC
Group, Inc., and related entities, a developer, owner, and operator of shopping
centers and other commercial properties, and since 1985, a member (seat owner)
of the New York Stock Exchange, Inc. From 1959 through 1991, Mr. Blatt served as
director, officer or principal of numerous public and private enterprises.
Mr. Blatt received his Bachelor of Science in Finance from the University of
Southern California in 1962 and his Juris Doctor from the University of
California at Los Angeles in 1965. He is a member of the State Bar of
California.

JAMES V. STANTON has been a director of the Company since February, 1998 and
serves on the Company's Audit Committee and as Chairman of the Company's
Compliance Committee. Mr. Stanton has his own law and lobbying firm, Stanton &
Associates, in Washington, D.C. From 1971-1978, Mr. Stanton represented the 20th
Congressional District of Ohio in the United States House of Representatives.
While in Congress Mr. Stanton served on the Select Committee on Intelligence,
the Government Operations Committee, and the Public Works and Transportation
Committee. Mr. Stanton has held a wide variety of public service positions,
including service as the youngest City Council President in the history of
Cleveland, Ohio and membership on the Board of Regents of the Catholic
University of America in Washington, D.C. Mr. Stanton is also former Executive
Vice President of Delaware North, a privately held international company which,
during Mr. Stanton's tenure, had annual sales of over $1 billion and became the
leading parimutuel wagering company in the United States, with worldwide
operations including horse racing, harness racing, dog racing, and Jai-Lai.
Delaware North also owned the Boston Garden and the Boston Bruins hockey team.
From 1985-1994, Mr. Stanton was a principal and co-founder of Western
Entertainment Corporation, which pioneered one of the first Native American
Gaming operations in the United States, a 90,000 square foot bingo and casino
gaming operation located on the San Manuel Indian Reservation in California,
which generated annual revenues in excess of $50 million. Mr. Stanton also
serves on the boards of CCA Companies Incorporated, and Saf T Lok Incorporated.

WILLIAM D. FUGAZY, JR. has been a director of the Company since February,
1998 and serves on the Company's Audit Committee. He is presently Chairman of
Camelot Ventures, Inc., which is a financial advisory firm based in New York
City, and is Chief Executive Officer of Summit Aviation Corporation, which is an
executive aviation services firm based at Republic Airport in East Farmingdale,
New York. Mr. Fugazy is a former Regional President of Koll Real Estate Service,
a company which provided real estate services throughout the United States and
internationally. Koll was one of the largest real estate services companies in
the world and in August, 1997, merged with CB Commercial Real Estate
Group, Inc. Prior to joining Koll, Mr. Fugazy was President of Tishman
Management and Leasing Services Corporation, also a national real estate service
company, which was sold to Koll in 1992. Prior to joining Tishman, Mr. Fugazy
was Senior Vice President of Muller and Company, a national investment banking
and securities brokerage operation. Mr. Fugazy is also a partner and officer of
the Beacon Hotel and Resort Corporation, a hotel management company with offices
in New York, Los Angeles, California and Miami Beach, Florida. Mr. Fugazy holds
a B.S. Degree from Fordham University in New York.

The Board held four regular meetings and three special meetings during the
fiscal year ended December 31, 1999. All directors attended at least 75% of the
total number of meetings of the Board. The Board does not have a standing
nominating committee. Mr. Ruben and Mr. Blatt make up the Board's Compensation
Committee. Mr. Blatt is the sole member of the Board's Finance Committee.
Messrs. Arneault, Stanton, and Fugazy make up the Board's Audit Committee. In
June of 2000, the Board of Directors established a formal Charter for the Audit
Committee. A copy of the Charter is attached hereto as Exhibit A. The
Compensation Committee makes recommendations with respect to salaries, bonuses,
restricted stock, and deferred compensation for the Company's executive officers
as well as the

3
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policies underlying the methods by which the Company compensates its executives.
During the fiscal year ended December 31, 1999, the Compensation Committee held
two meetings. As a matter of policy, and to assure compliance with
Rule 16b-3(d)(1) of the Securities Exchange Act of 1934, the decisions of the
Compensation Committee are subject to ratification by a majority of the Board.
The Finance Committee monitors the Company's relationships with its lenders and
investment bankers and negotiates on behalf of the Company with respect to
proposed financing arrangements. The Audit Committee reviews the financial
statements of the Company, selects the Company's accountants and independent
auditors, monitors accounting and related procedures of the Company and performs
other functions generally conducted by Audit Committees of reporting companies
of similar size. During the fiscal year ended December 31, 1999, the Audit
Committee held three meetings.

EXECUTIVE OFFICERS; OFFICERS

The following persons serve as the officers indicated:

<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION
NAME AND ADDRESS POSITION LAST 5 YEARS
---------------- -------- ------------
<S> <C> <C>
EDSON R. ARNEAULT*............................... Director, President of the Company
MTR Gaming Group, Inc. President, Chief and its subsidiaries
State Route 2 South Executive Officer,
P.O. Box 356 and Treasurer
Chester, WV 26034

ROBERT L. RUBEN**................................ Director, Vice Law
3299 K Street, N.W. President,
Suite 403 Assistant Secretary
Washington, D.C. 20007

ROBERT A. BLATT**................................ Director, Vice Commercial Development
1890 Palmer Avenue President
Suite 303 Assistant Secretary
Larchmont, NY 10538

MARY JO NEEDHAM***............................... Chief Financial accounting
MTR Gaming Group, Inc. Officer
State Route 2 South
Chester WV 26034

ROSE MARY WILLIAMS****........................... Secretary Horse Racing Management
MTR Gaming Group, Inc.
State Route 2 South
Chester, WV 26034
</TABLE>

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* Also an officer and director of Mountaineer Park, Inc., Speakeasy Gaming of
Las Vegas, Inc., Speakeasy Gaming of Reno, Inc., ExCal Energy Corporation,
and Golden Palace Casinos, Inc., the Company's subsidiaries.

** Also a director and assistant secretary of Mountaineer Park, Inc.

*** Also the Chief Financial Officer of Mountaineer Park, Inc.

**** Also a director and secretary of Mountaineer Park, Inc.

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<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The following table sets forth, as of July 20, 2000, the ownership of the
presently issued and outstanding shares of the Company's Common Stock by persons
owning more than 5% of such stock, and the ownership of such stock by the
Company's officers, directors and key employees, individually and as a group. As
of July 20, 2000, there were 21,953,501 shares of common stock outstanding. All
such shares were owned both beneficially and of record, except as otherwise
noted.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP PERCENTAGE OF CLASS
---------------- -------------------- -------------------
<S> <C> <C>
Edson R. Arneault(1)..................................... 4,064,317 16.29%
MTR Gaming Group, Inc.
State Route 2 South
P.O. Box 356
Chester, WV 26034
Robert L. Ruben(2)....................................... 691,228 2.77%
Ruben & Aronson, LLP
3299 K Street, N.W.
Suite 403
Washington, DC 20007
Robert A. Blatt(3)....................................... 1,064,084 4.27%
The CRC Group
Larchmont Plaza
1890 Palmer Avenue,
Suite 303
Larchmont, NY 10538
James V. Stanton(4)...................................... 61,900 Less than 1%
Stanton & Associates
1747 Pennsylvania Avenue, N.W.,
Suite 1050
Washington, D.C. 20006
William D. Fugazy, Jr.(4)................................ 72,500 Less than 1%
140 East 45th Street, Suite 4000
New York, New York 10017
Mary Jo Needham(5)....................................... 40,340 Less than 1%
MTR Gaming Group, Inc.
State Route 2 South
P.O. Box 356
Chester, WV 26034
Rose Mary Williams(6).................................... 55,000 Less than 1%
MTR Gaming Group, Inc.
State Route 2
Chester, West Virginia 26034
Madeleine LLC(7)......................................... 2,170,241 9.89%
450 Park Avenue
New York, NY 10022
Total Officers and Directors as a Group (7 persons)(8)... 6,049,369 24.25%
</TABLE>

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(1) Includes 2,414,317 shares and options to acquire beneficial ownership of
1,650,000 shares within 60 days held by Mr. Arneault or his affiliates. Also
includes 10,000 shares held in the name of Mr. Arneault's minor son, but
does not include 10,000 shares held in the name of Mr. Arneault's adult
daughter. Does not include options to purchase 300,000 shares granted to
Mr. Arneault in March of 2000 under the Company's 2000 Stock Incentive Plan
(the "2000 Plan") which was approved by the

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Company's Board of Directors in March of 2000. The 2000 Plan and all options
granted under that plan are subject to shareholder approval of the 2000
Plan.

(2) Includes 116,228 shares and options to acquire beneficial ownership of
575,000 shares within 60 days held by Mr. Ruben. Does not include options to
purchase 150,000 shares granted to Mr. Ruben in March of 2000 under the 2000
Plan.

(3) Includes 489,084 shares and options to acquire beneficial ownership of
575,000 shares exercisable within 60 days held by Mr. Blatt. Does not
include options to purchase 150,000 shares granted to Mr. Blatt in March of
2000 under the 2000 Plan.

(4) Includes 11,900 shares and options to acquire beneficial ownership of 50,000
shares exercisable within 60 days held by Mr. Stanton. Includes 14,000
shares and options to acquire beneficial ownership of 50,000 shares
exercisable within 60 days held by Mr. Fugazy. For each year of service on
the Company's Board of Directors, Mr. Stanton and Mr. Fugazy will each
receive options to purchase 25,000 shares of common stock of the Company.
Such options will be exercisable for a term of five years from the date of
grant. Any options that have not vested at the end of each calendar year
will be deemed cancelled.

(5) Includes 340 shares and options to acquire beneficial ownership of 40,000
shares within 60 days held by Ms. Needham. Does not include options to
purchase 20,000 shares granted to Ms. Needham in March of 2000 under the
2000 Plan.

(6) Includes no shares and options to acquire beneficial ownership of 55,000
shares within 60 days held by Ms. Williams. Does not include options to
purchase 30,000 shares granted to Ms. Williams in March of 2000 under the
2000 Plan.

(7) Includes 486,821 shares and options to acquire beneficial ownership of
1,683,420 shares within 60 days held by Madeleine LLC; provided, however,
that pursuant to an agreement with the Company, Madeleine LLC may not
exercise its warrant to the extent such exercise would result in its
ownership of 5% or more of the then issued and outstanding shares of common
stock of the Company without the prior approval of the West Virginia State
Lottery Commission.

(8) Includes Messrs. Arneault, Blatt, Ruben, Stanton and Fugazy and
Ms. Williams.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the provisions of Section 16(a) of the Securities Exchange Act of
1934, the Company's officers, directors and 10% beneficial stockholders are
required to file with the SEC reports of their transactions in the Company's
securities. Based solely on a review of the Forms 3 and 4 and amendments thereto
furnished to the Company during its most recent fiscal year and Forms 5 and
amendments thereto furnished to the Company with respect to its most recent
fiscal year, the Company believes that all forms were filed timely by the
Company's officers, directors and 10% beneficial stockholders.

6
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------------
AWARDS PAYOUTS
ANNUAL ------------------------ --------
COMPENSATION OTHER
------------------- ANNUAL RESTRICTED OPTIONS LTIP ALL OTHER
SALARY BONUS COMP. STOCK AWARDS SARS PAYOUTS COMP.
NAME YEAR ($) ($)(1) ($)(2) ($) (#)(3) ($) ($)(5)
---- -------- -------- -------- -------- ------------ --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edson R. Arneault(4)................ 1999 447,461 100,000 35,164 -- 500,000 -- 21,142
Chairman, President and 1998 384,525 92,750 38,028 -- 1,000,000 -- --
Chief Executive Officer of 1997 300,643 67,500 5,523 -- 150,000 -- --
MTR Gaming Group, Inc.

Bruce E. Dewing(4).................. 1999 178,461 -- 6,120 -- 50,000 -- --
Vice President and Chief 1998 128,846 -- 3,060 -- -- -- --
Operating Officer of
Speakeasy Las Vegas and
Speakeasy Reno

Robert A. Blatt, Vice
President(4)...................... 1999 132,328 -- 150,000 -- 3,115
</TABLE>

------------------------------

(1) Mr. Arneault's bonus paid in 1998 includes $52,000 earned by Mr. Arneault in
1997.

(2) As to Mr. Arneault for 1999 includes $33,864 toward performance bonus and an
estimated pension plan contribution of $1,300; for 1998 includes $36,922
vacation pay and $1,106 pension plan contribution. As to Mr. Dewing,
consists of car allowance.

(3) All grants in 1999 consisted of non-qualified stock options for a term of
five years. The options are fully vested and have an exercise price of $2.00
per share.

(4) See "Employment Agreements" below. Mr. Dewing commenced employment with the
Company in 1998; Mr. Blatt commenced employment with the Company in 1999,
having previously acted as a consultant.

(5) Consists of premiums for life insurance pursuant to a qualified plan in
accordance with Section 419 of the Internal Revenue Code.

OPTION GRANTS IN 1999

The following table contains information concerning the grant of stock
options during fiscal year 1999 to the Company's executive officers named in the
Summary Compensation Table.

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
NUMBER OF SECURITIES % OF TOTAL FOR OPTION TERM(1)
UNDERLYING OPTIONS OPTIONS GRANTED EXPIRATION -------------------
NAME GRANTED(#)(1) IN FISCAL YEAR EXERCISE PRICE DATE 5% 10%
---- -------------------- --------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Edson R. Arneault.... 500,000 42.0% $2.00 Feb. 2004 276,282 610,510
Bruce Dewing......... 50,000 4.2% 2.00 Feb. 2004 27,628 61,051
Robert A. Blatt...... 150,000 13.2% 2.00 Feb. 2004 82,884 183,153
</TABLE>

------------------------

(1) In accordance with the rules of the Securities and Exchange Commission,
"Potential Realizable Value" has been calculated assuming an aggregate five
year appreciation of the fair market value of the Company's common stock on
the date of the grant at annual compounded rates of 5% and 10%,
respectively. These amounts represent hypothetical gains that could be
achieved. Actual gains, if any, on the exercise of stock options will depend
on the future performance of the Company's stock and the date on which the
options are exercised. Moreover, the gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise of the option or the sale of the underlying
shares.

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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

The following table sets forth information regarding the number and value of
options held by each of the Company's executive officers named in the Summary
Compensation Table as of December 31, 1999.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END YEAR END($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edson R. Arneault.... 141,334 269,771 1,950,000 -- $2,268,250 --
Robert A. Blatt...... -- -- 475,000 -- 714,812 --
Bruce E. Dewing...... -- -- 50,000 -- 53,125 --
</TABLE>

------------------------

(1) Based on the market price of the Company's Common Stock of $3.0625 on
December 31, 1999, as reported by Nasdaq.

EMPLOYMENT AGREEMENTS

In February of 1999, the Company entered into an employment agreement with
its President and CEO, Edson R. Arneault. The agreement is for a term of five
(5) years, calls for an annual base salary of $450,000 (subject to automatic
annual cost of living increases of 5%), semi-annual cash bonuses of $50,000, and
a performance bonus for each year equal to 1% of the gross operating revenue
increase over 1998 operating revenue (provided, however, that EBITDA, as
defined, for such year exceeds 1998 EBITDA). The employment agreement also
entitles Mr. Arneault to participate in the Company's various benefit plans for
health insurance, life insurance and the like. The employment agreement likewise
permits Mr. Arneault to lease at the Company's expense, or have the Company
lease, reasonable living quarters for use by Mr. Arneault and other executives
of the Company in the State of Nevada and in any other state or jurisdiction in
which the Company is pursuing substantial business opportunities such that
Mr. Arneault is required, as a practical matter, to spend a substantial portion
of his time in such jurisdiction.

In the event Mr. Arneault's employment is terminated by him for good reason,
as defined, or by the Company other than for cause or a permanent and total
disability, he will be entitled to the compensation otherwise payable to him
under the employment agreement. In the event Mr. Arneault's employment is
terminated in connection with a change in control of the Company, Mr. Arneault
would be entitled to a cash severance payment equal to three times his annual
base salary and payment by the Company of the next five annual premium payments
for the insurance policy called for by the deferred compensation plan described
below.

In January of 1999, the Company entered into a deferred compensation
agreement with Mr. Arneault. Pursuant to the agreement, the Company has
purchased a life insurance policy on Mr. Arneault's life (face amount of
$2,250,000 and annual premium of $100,000). The owner of the policy is the
Company. The agreement entitles Mr. Arneault or his beneficiary to an annual
benefit, as defined, upon retirement, death or termination out of the cash value
of the insurance policy, after the Company has recouped the aggregate amount of
premiums paid. The benefits provided by the agreement were granted as additional
benefits and not as part of any salary reduction plan or arrangement deferring a
bonus or a salary increase.

In February of 1999, the Company entered into an employment agreement with
Robert A. Blatt. The agreement is for a term of five (5) years, calls for an
annual base salary of $46,000 (subject to automatic annual cost of living
increases of 5%) and additional compensation of $2,500 per day in the event
Mr. Blatt performs additional services. The employment agreement also entitles
Mr. Blatt to participate in the Company's various benefit plans for health
insurance, life insurance and the like.

8
<PAGE>
In the event Mr. Blatt's employment is terminated by him for good reason, as
defined, or by the Company other than for cause or a permanent and total
disability, he will be entitled to the compensation otherwise payable to him
under the employment agreement. In the event Mr. Blatt's employment is
terminated in connection with a change in control of the Company, Mr. Blatt
would be entitled to a cash severance payment equal to three times his annual
base salary and payment by the Company of the next five annual premium payments
for the insurance policy called for by the deferred compensation plan described
below.

In June of 1999, the Company entered into a deferred compensation agreement
with Mr. Blatt. Pursuant to the agreement, the Company has purchased a life
insurance policy on Mr. Blatt's life (face amount of $390,000 and annual premium
of $25,000). The owner of the policy is the Company. The agreement entitles
Mr. Blatt or his beneficiary to an annual benefit, as defined, upon retirement,
death or termination out of the cash value of the insurance policy, after the
Company has recouped the aggregate amount of premiums paid. The benefits
provided by the agreement were granted as additional benefits and not as part of
any salary reduction plan or arrangement deferring a bonus or a salary increase.

On February 1, 1999, the Company also entered into an employment agreement
with Robert L. Ruben. Pursuant to the agreement, Mr. Ruben agreed to serve the
Company as Assistant Secretary, Vice President, and Chairman of the Compensation
Committee as well as Assistant Secretary and Vice President of Mountaineer
Park, Inc. and in such other offices and directorships of the Company and of its
affiliates, for a five-year period ending on January 31, 2004. The agreement
provides for an annual base salary of $46,000 per year (subject to automatic
annual cost of living increases of 5%) and such cash bonuses and other benefits
as the Compensation Committee of the Board of Directors may periodically award
in its discretion based on Mr. Ruben's performance. Pursuant to the Agreement,
in June of 1999, the Company also entered into a deferred compensation agreement
with Mr. Ruben whereby the Company will purchase a life insurance policy on
Mr. Ruben's life (annual premium of $25,000). The owner of the policy will be
the Company. Mr. Ruben will also be entitled to an annual benefit, as defined,
upon retirement, death or termination out of the cash value of the insurance
policy (after the Company recoups the aggregate amount paid in premiums). The
benefits provided by the deferred compensation agreement were granted to
Mr. Ruben as additional benefits and not as part of any salary reduction plan or
arrangement deferring a bonus or a salary increase.

STOCK PERFORMANCE GRAPH

The following graph demonstrates a comparison of cumulative total returns of
the Company, the NASDAQ Market Index (which is considered to be a broad index)
and an industry peer group index based upon companies which are publicly traded
with the same four digit standard industrial classification code ("SIC") as the
Company (SIC 7999--Amusement and Recreational Services) for the past five years.
The beginning date for the graph is January 1, 1995. The following graph assumes
$100 invested in each of the above groups and the reinvestment of dividends.

9
<PAGE>
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MTR GAMING GROUP, INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
MTR GAMING GROUP, INC. SIC CODE INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 63.16 144.22 129.71
1996 84.21 151.06 161.18
1997 168.42 157.67 197.16
1998 205.26 117.00 278.08
1999 257.89 147.91 490.46
</TABLE>

DOLLARS

<TABLE>
<CAPTION>
COMPANY 1994 1995 1996 1997 1998 1999
------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
MTR Gaming Group, Inc....................... 100.00 63.16 84.21 168.42 205.26 257.89
Industry Index.............................. 100.00 144.22 151.06 157.67 117.00 147.91
NASDAQ Market Index......................... 100.00 129.71 161.18 197.16 278.08 490.46
</TABLE>

------------------------

(1) The peer group consists of the following companies: American Wagering, Inc.;
Argosy Gaming Co.; Boyd Gaming Corp.; Dover Downs Entertainment; Gametech
International, Inc,; Imax Corp.; Isle of Capris Casinos; JJC Holding
Company; Lady Luck Gaming Corp.; Lakes Gaming, Inc.; Leisure Time Casinos &
Resorts; Littlefield Corporation; MGM Grand, Inc.; Multimedia Games Inc.;
Quintel Communications, Inc.; Sands Regent; TBA Entertainment Corp.;
Ticketmaster Online; Tickets.com, Inc.; Vail Resorts Inc.; and Youbet.com,
Inc.

COMPENSATION OF DIRECTORS

Directors who are employees of the Company do not receive compensation for
attendance at Board meetings, but are entitled to reimbursement for expenses
that they incur in attending such meetings.

On February 18, 1998, the Company entered into separate agreements with
Mr. Stanton and Mr. Fugazy to provide certain compensation for their services on
the Company's Board of Directors. Specifically, each agreement provided for:
(i) the grant of options to purchase 25,000 shares of common stock of the
Company for each year of service; (ii) the registration by the Company, at its
sole cost, of the shares underlying such options by including such shares in any
registration statement the Company determines to file with the Securities and
Exchange Commission with respect to employee compensation; (iii) the adjustment
of the terms of such options in certain events as set forth in the agreement;
and (iv) a fee of $2,500 for each regular meeting of the Board, audit committee
or shareholders attended and reimbursement of expenses for travel, food and
lodging incurred in attending such meetings.

10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

On November 8, 1995, the Board voted to form an executive compensation
committee consisting of Mr. Ruben and Mr. Blatt, (the "Committee"). The
Committee is authorized to review all compensation matters involving directors
and executive officers and Committee approval is required for any compensation
to be paid to executive officers or directors who are employees of the Company.
As a matter of policy and to assure compliance with Rule 16b-3(d)(1) of the
Securities Exchange Act of 1934, the decisions of the Compensation Committee are
subject to ratification by a majority of the Board. Both Messrs. Blatt and Ruben
serve as officers and directors of the Company and of Mountaineer Park.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

POLICY

The Committee's decisions with respect to executive compensation will be
guided by the general principle that compensation be designed: (i) to assure
that the Company's executives receive fair compensation relative to their peers
at similar companies; (ii) to assure that the Company's shareholders are
receiving fair value for the compensation paid to the Company's executives; and
(iii) to allow the Company to secure and retain the services of high quality
executives.

The Company's compensation program will consist of three elements: a base
salary; annual incentives in the form of cash or restricted stock bonuses; and
long-term incentives in the form of stock options. The Committee believes that
annual incentives, or bonuses, should be used to reward an executive for
exceptional performance. The determination of what constitutes exceptional
performance is generally a subjective judgment by the Committee based on the
executive's contribution to the Company's revenues, legislative and regulatory
efforts, recruitment of high quality personnel, elevating public awareness and
perception of the Company's gaming and resort businesses, and development of the
Company's prospects. With respect to compensation for the Company's current CEO,
performance bonuses are calculated pursuant to a formula tied to increases in
the Company's gross operating revenues, subject to certain conditions and
limitations.

Stock options allow the Company to motivate executives to increase
stockholder value. This type of incentive also allows the Company to recruit
members of the management team whose contributions and skills are important to
its long-term success. The Committee intends to employ a combination of cash
incentives, stock and option awards.

CHIEF EXECUTIVE OFFICER COMPENSATION; EMPLOYMENT AGREEMENT.

During the fiscal year ended December 31, 1999, Mr. Arneault's base salary
and bonuses were based upon a February 1999 employment agreement. The
performance bonus is based upon an objective formula tied to increases in the
Company's gross operating revenue, subject to certain conditions and
limitations. In addition, in 1999, the Committee recommended, and the Board
approved, grants to Mr. Arneault of non-qualified options to purchase 500,000
shares of the Company's common stock at the fair market value on the date of
grant of $2.00 per share. The Committee believed that the total compensation was
warranted by Mr. Arneault's overall performance and in particular his pivotal
role in the continued growth of the Company's West Virginia business.

Respectfully submitted,

Robert A. Blatt
Robert L. Ruben

11
<PAGE>
CERTAIN TRANSACTIONS

In August of 1998, in connection with the exercise of options to purchase
378,415 shares of the Company's common stock, the Company's President and CEO,
Edson Arneault, delivered to the Company a promissory note for approximately
$461,000. The note is a full recourse obligation and was originally due on or
before August 1999 and bears interest at an annual rate of 8.5%. In 1999,
Mr. Arneault paid the interest then due on the note, and the Company agreed to
extend the note to August 2000. Also in August of 1999, in connection with the
exercise of options to purchase 141,334 shares of common stock, Mr. Arneault
delivered a promissory note for approximately $150,000. This note is a full
recourse obligation due on or before August 2000 and bears interest at an annual
rate of 8.0%. Mr. Arneault has pledged the 519,749 shares purchased in
connection with such exercises to secure repayment of the notes.

Mr. Robert Ruben, an officer and member of the Company's board, is a member
of the law firm Ruben & Aronson, LLP, which has performed legal services for the
Company. The Company and Ruben & Aronson anticipate that the law firm will
perform legal services for the Company in the future. During the fiscal year
ended December 31, 1999, the Company paid Ruben & Aronson the sum of $592,000
for legal services.

The Company anticipates that during the fiscal year ending December 31, 2000
it will pay Century Well Services, Inc. ("Century") more than $60,000 for
drilling and other earth moving services in connection with improvements and
maintenance at the Woodview Golf Course. Century is an affiliate of Edson
Arneault, the Company's president and chief executive officer. To date, Century
has been the low bidder in a competitive bidding process with respect to
services it has provided. Accordingly, the Company believes that its dealings
with Century have been on terms no less favorable than the Company could
reasonably have obtained from a non-affiliate.

RATIFICATION OF ADOPTION OF 2000
STOCK INCENTIVE PLAN

The Company's Board of Directors has adopted, subject to the approval of the
Company's stockholders, the Company's 2000 Stock Incentive Plan (the "Plan").
The Board has reserved 825,000 shares of the Company's Common Stock for issuance
pursuant to the exercise of options issued under the Plan. A copy of the
proposed Plan is attached as Exhibit B.

SUMMARY OF THE PLAN

Under the terms of the Plan, the Board or a Committee designated by the
Board may issue options or shares of stock to those persons whom the Board deems
to be "key employees" of the Company or any of its subsidiaries and who may
include officers and directors of the Company and to consultants and directors
who are not employees of the Company. However, no director may vote upon the
grant to himself. The awards to be granted under the Plan may be incentive stock
options eligible for favored treatment under Section 422 of the Internal Revenue
Code of 1986 (the "Code"), non-qualified options that are not eligible for such
treatment or stock of the Company which may be subject to contingencies or
restrictions. Approximately twenty employees, officers and directors of the
Company are currently eligible to participate in the Plan.

The exercise price for any incentive stock option ("ISO") may not be less
than 100% of the fair market value of the stock on the date the option is
granted, except that with respect to a participant who owns more than 10% of the
Company's common stock the exercise price must be not less than 110% of fair
market value. The exercise price of any non-qualified option shall be in the
sole discretion of the Committee. The aggregate fair market value of the shares
that may be subject to any ISO granted to any participant may not exceed
$100,000. There is no comparable limitation with respect to non-qualified stock
options.

12
<PAGE>
The term of all options granted under the Plan will be determined by the
Committee in its sole discretion; PROVIDED, HOWEVER, that the term of each ISO
shall not exceed 10 years from the date of grant thereof; and FURTHER, PROVIDED,
that if, at the time an ISO is granted, the optionee owns (or is deemed to own
under Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, of any of its
Subsidiaries or of a Parent, the term of the ISO shall not exceed five years
from the date of grant.

The right of exercise will be cumulative, so that shares that are not
purchased in one year may be purchased in a subsequent year. The options may not
be assigned. Upon exercise of any option, in whole or in part, payment in full
is required (unless the applicable award contract permits installment payments)
for the number of shares purchased. Payment may be made in cash, by delivery of
shares of the Company's common stock of equivalent fair market value (in which
case reload options will be issued) or by any other form of legal consideration
that is acceptable to the Board.

In addition to ISOs and non-qualified options, the Plan permits the
Committee, consistent with the purposes of the Plan, to grant shares of Common
Stock to such key employees (including officers and directors who are key
employees) of, or consultants to, the Company or any of its Subsidiaries, as the
Committee may determine, in its sole discretion. The grant may require the
holder to pay such price per share therefor, if any, as the Committee may
determine. Such shares may be subject to such contingencies and restrictions as
the Committee may determine.

If an employee's employment is terminated by reason of death or disability,
either the employee or his or her beneficiary will have the right for one year
to exercise the option to the extent the option was exercisable on the date of
death or disability. If a Plan participant's relationship with the Company is
terminated by reason other than death or disability and other than for cause or
without the Company's consent (in which case the option shall terminate
immediately), he or she may, for a period of three months, exercise the option
to the extent that it was exercisable on the date of termination, but in no
event after the date the award would otherwise have expired; PROVIDED, HOWEVER,
that in the event an employee's employment is terminated in connection with a
change in control of the Company, then the employee will have the right to
exercise the option until the date the award otherwise have expired.

The Plan will be administered by the Board, which is authorized to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan and to determine the employees to whom, and the time, terms and conditions
under which, options may be granted. The Board is also authorized to adjust the
number of shares available under the Plan, the number of shares subject to
outstanding options and the option prices to take into account the Company's
capitalization by reason of a stock dividend, recapitalization, merger,
consolidation, stock split, combination or exchange of shares or otherwise.

The Board may amend, suspend or terminate the Plan in any respect at any
time. However, no amendment may (i) increase the number of shares reserved for
options under the Plan, (ii) modify the requirements for participation in the
Plan, or (iii) modify the Plan in any way that would require stockholder
approval under the rules and regulations under the Securities Exchange Act of
1934.

FEDERAL INCOME TAX CONSEQUENCES

Under current Federal law, no taxable income will be recognized by the
recipient of an incentive stock option within the meaning of Section 422 of the
Code upon either the grant or exercise of the incentive stock option (provided
the exercise occurs while the participant is an employee of the Company or
within three months after termination of employment), nor will a deduction be
allowed the Company by reason of the grant or exercise, provided the employee
does not dispose of the shares issued upon exercise within two years from the
date the option was granted and within one year from the date the shares were
issued. If the recipient fails to satisfy these holding period requirements, the
difference between the amount realized upon disposition of the shares and the
adjusted basis of the shares is includible as compensation in the recipient's
gross income and the Company will be entitled to a deduction in that amount.

13
<PAGE>
Under current law, the holder of a non-qualified stock option is taxable at
the time of exercise on the difference between the exercise price and the fair
market value of the shares on the date of exercise. Upon disposition of the
stock, the stockholder is taxable upon the difference between the basis of the
stock (which is equal to the fair market value at the time the option was
exercised) and the amount realized upon the disposition.

A grant of shares of common stock that is subject to no vesting restrictions
will result in taxable income for federal income tax purposes to the recipient
at the time of grant in an amount equal to the fair market value of the shares
awarded. The Company would be entitled to a corresponding deduction at that time
for the amount included in the recipient's income.

Generally, a grant of shares of common stock under the Plan subject to
vesting and transfer restrictions will not result in taxable income to the
recipient for federal income tax purposes or a tax deduction to the Company in
the year of the grant. The value of the shares will generally be taxable to the
recipient as compensation income in the years in which the restrictions on the
shares lapse. Such value will be the fair market value of the shares on the
dates the restrictions terminate. Any recipient, however, may elect pursuant to
section 83(b) of the Code to treat the fair market value of the shares on the
date of such grant as compensation income in the year of the grant of restricted
shares, provided the recipient makes the election within 30 days after the date
of the grant. In any case, the Company will receive a deduction for federal
income tax purposes corresponding in amount to the amount of compensation
included in the recipient's income in the year in which that amount is so
included.

The Board believes the Plan will further the growth and development of the
Company by issuing options to certain key employees as an incentive for stock
ownership. It is contemplated that the Plan will provide such persons with
increased interest in the Company's success as they increase their proprietary
stake in the Company.

AWARDS GRANTED UNDER THE PLAN

Subject to stockholder approval of the Plan, the Board granted options under
the Plan in March of 2000 to the Company's Chief Executive Officer, two current
directors who are executive officers, the Company's secretary, and a group of
eleven employees and two consultants who are not executive officers. If the Plan
is not approved by the Company's stockholders on or before March 13, 2001, the
Plan and any grants thereunder shall terminate. The following table shows the
options granted under the new Plan in March of 2000.

OPTIONS GRANTED UNDER THE 2000 STOCK INCENTIVE PLAN(1)

<TABLE>
<CAPTION>
SECURITIES UNDERLYING
OPTIONS (2)
---------------------
<S> <C>
Edson R. Arneault........................................... 300,000
Robert A. Blatt............................................. 150,000
Robert L. Ruben............................................. 150,000
Mary Jo Needham............................................. 20,000
Rose Mary Williams.......................................... 30,000
All Current Executive Officers as a group (4 persons)....... 650,000
All employees and consultants who are not Executive Officers
as a group (13 persons)................................... 145,000
</TABLE>

------------------------

(1) As of July 20, 2000, the market value of the securities underlying the
options is $5.4063 per share of common stock. The Company will receive no
consideration for the granting of the options.

14
<PAGE>
(2) The options to purchase common stock of the Company are exercisable, subject
to stockholder approval, as of the grant date, March 13, 2000, and for a
period of ten years thereafter at a price per share of $2.50, the fair
market value on the date of grant.

The favorable vote, either in person or by proxy, of the holders of a
majority of the common shares is necessary for the adoption of the Plan. The
Board recommends a vote FOR the adoption of the Plan.

RATIFICATION OF SELECTION OF AUDITORS

The Board has selected the firm of BDO Seidman, LLP ("BDO"), independent
public accountants, to serve as auditors for the fiscal year ending
December 31, 2000, subject to ratification by the stockholders. BDO commenced
its service as the Company's auditor in the first quarter of 1999.

The Board recommends a vote FOR ratification of this selection.

A member of BDO is expected to be present at the Annual Meeting.

Effective February 1, 1999, in connection with the Company's engagement of
BDO, Corbin & Wertz ("Corbin") was dismissed from its engagement as independent
accountants for the Company. Corbin's report for the past two years did not
contain any adverse opinion or disclaimer of opinion nor was it qualified or
modified as to uncertainty, audit scope or accounting principles. The Company's
decision to dismiss Corbin and engage BDO was approved by the Audit Committee of
the Company's Board of Directors.

During the Company's two most recent fiscal years and any subsequent interim
period preceding Corbin's dismissal, there were no disagreements with Corbin on
any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which disagreements if not resolved to the
satisfaction of Corbin would have caused it to make reference to the subject
matters of the disagreements in connection with its report.

During the Company's two most recent fiscal years and any subsequent interim
period preceding this report, Corbin did not advise the Company with respect to
any of the matters described in paragraphs (a)(1)(v)(A) through (D) of Item 304
of Regulation S-K.

The Company engaged BDO as the independent accountants of the Company as
approved by the Audit Committee of the Company's Board of Directors effective
February 1, 1999. Prior to the engagement of BDO there were no consultations by
the Company with BDO relating to disclosable disagreements with Corbin, how
accounting principles would be applied by BDO to a specific transaction, or the
type of opinion BDO might render. The Company has afforded BDO an opportunity to
furnish a letter to the Commission with its comments.

The Company has provided Corbin with a copy of the foregoing disclosures and
has requested in writing that Corbin furnish it with a letter addressed to the
SEC stating whether or not it agrees with such disclosures. A copy of Corbin's
letter stating that it does not disagree with such disclosures is attached
hereto as Exhibit C.

FINANCIAL INFORMATION

The Financial Statements of the Company included in the Company's Annual
Report to Stockholders that accompanies this Proxy Statement are incorporated
herein by reference.

OTHER MATTERS

STOCKHOLDER PROPOSALS FOR NEXT MEETING

Proposals of stockholders intended for inclusion in the proxy statement for
the Annual Meeting of Stockholders to be held in 2000 must be received by the
Company's executive offices not later than

15
<PAGE>
March 20, 2001. Proponents should submit their proposals by Certified
Mail--Return Receipt Requested. Proposals received after that dated will be
deemed untimely.

NOTICE REGARDING ABANDONED PROPERTY LAW OF NEW YORK STATE

The Company has been informed by its Transfer Agent, Continental Stock
Transfer & Trust Company, that New York State now requires the Company's
Transfer Agent to report and escheat all shares held by the Company's record
shareholders if there has been no written communication received from the
shareholder for a period of five years. This regulation pertains specifically to
corporate issuers who do not pay dividends and their shareholders with New York,
foreign or unknown addresses. The law mandates escheatment of shares even though
the certificates are not in the Transfer Agent's possession, and even though the
shareholder's address of record is apparently correct.

The Transfer Agent has advised the Company that the law requires the
Transfer Agent to search its records as of June 30 each year in order to
determine those New York resident shareholders from whom it has had no written
communication within the past five years. Written communication would include
transfer activity, voted proxies, address changes or other miscellaneous written
inquiries. For those shareholders who have not contacted the Transfer Agent in
over five years, a first-class letter must be sent notifying them that their
shares will be escheated in November if they do not contact the Transfer Agent
in writing prior thereto. All written responses will be entered in the Transfer
Agent's files, but those who do not respond will have their shares escheated.
Shareholders will be able to apply to New York State for the return of their
shares.

Accordingly, shareholders that may be subject to New York's Abandoned
Property Law should make their inquiries and otherwise communicate, with respect
to the Company, in writing. Shareholders should contact their attorneys with any
questions they may have regarding this matter.

NO OTHER BUSINESS

Management is not aware at this date that any other business matters will
come before the meeting. If, however, any other matters should properly come
before the meeting, it is the intention of the persons named in the proxy to
vote thereon in accordance with their judgment.

July 24, 2000 MTR GAMING GROUP, INC.
Rose Mary Williams, Secretary

16
<PAGE>
EXHIBIT A
CHARTER OF THE
MTR GAMING GROUP, INC.
AUDIT COMMITTEE
JUNE, 2000

The Audit Committee of the Board of Directors of MTR Gaming Group, Inc. (the
"Audit Committee," the "Board" and "MTR" or the "Company," respectively), will
have the oversight responsibility, authority and specific duties as described
below.

COMPOSITION

The Audit Committee will be comprised of three or more directors as
determined by the Board. The members of the Audit Committee will meet the
independence and experience requirements of The Nasdaq Stock Market, Inc.
("Nasdaq"). The members of the Audit Committee will be elected annually at the
organizational meeting of the full Board held in August, and will be listed in
the annual report to shareholders. Any interim vacancies will also be filled by
the Board. One of the members of the Audit Committee will be elected Audit
Committee Chair by the Board.

RESPONSIBILITY

The Audit Committee is a committee of the Board, as defined by Delaware
corporate law. The Audit Committee's primary function is to assist the Board in
fulfilling its oversight responsibilities with respect to (i) the annual
financial information to be provided to shareholders and the Securities and
Exchange Commission ("SEC" or "Commission"); (ii) the system of internal
controls that management has established; and (iii) the internal and external
audit processes of MTR. In addition, the Audit Committee provides an avenue for
communication between internal audit personnel, MTR's independent auditors,
financial management and the Board. The Audit Committee should have a clear
understanding with the independent auditors that they must maintain an open and
transparent relationship with the Audit Committee, and that the ultimate
accountability of the independent auditors is to the Board and the Audit
Committee. The Audit Committee will make regular reports to the Board concerning
its activities.

While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditors. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditors or to
assure compliance with laws and regulations and the Company's business conduct
guidelines.

AUTHORITY

Subject to the prior approval of the Board, the Audit Committee is granted
the authority to investigate any matter or activity involving financial
accounting and financial reporting, as well as the internal controls of the
Company. In that regard, the Audit Committee will have the authority to approve
the retention of external professionals to render advice and counsel in such
matters. All employees will be directed to cooperate with respect thereto as
requested by members of the Audit Committee.

MEETINGS

The Audit Committee is to meet at least four times annually and as many
additional times as the Audit Committee deems necessary. Content of the agenda
for each meeting should be cleared by the Audit Committee Chair. The Audit
Committee is to meet in separate executive sessions with the chief financial
officer, independent auditors and internal audit personnel at least once each
year and at other times when considered appropriate.
<PAGE>
ATTENDANCE

Audit Committee members will strive to be present at all meetings, although
action may be taken by a majority of the Audit Committee members at a meeting.
As necessary or desirable, the Audit Committee Chair may request that members of
management and representatives of the independent auditors and internal audit
personnel be present at Audit Committee meetings. Waiver, notice and adjournment
of Audit Committee meetings shall be conducted in same manner as meetings of the
Board.

SPECIFIC DUTIES

- Review and reassess the adequacy of this charter annually and recommend
any proposed changes to the Board for approval. This should be done in
compliance with applicable Nasdaq Audit Committee Requirements.

- Review with the Company's management, internal audit personnel and
independent auditors the Company's accounting and financial reporting
controls. Obtain annually in writing from the independent auditors their
letter as to the adequacy of such controls.

- Review with the Company's management, internal audit personnel and
independent auditors significant accounting and reporting principles,
practices and procedures applied by the Company in preparing its financial
statements. Discuss with the independent auditors their judgments about
the quality, not just the acceptability, of the Company's accounting
principles used in financial reporting.

- Review the scope and general extent of the independent auditors' annual
audit. The Audit Committee's review should include an explanation from the
independent auditors of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent auditors should confirm to the Audit Committee that no
limitations have been placed on the scope or nature of their audit
procedures. The Audit Committee will review annually with management the
fee arrangement with the independent auditors.

- Inquire as to the independence of the independent auditors and obtain from
the independent auditors, at least annually, a formal written statement
delineating all relationships between the independent auditors and the
Company as contemplated by Independence Standards Board No. 1,
Independence Discussions with Audit Committees.

- Have a predetermined arrangement with the independent auditors that they
will advise the Audit Committee through its Chair and management of the
Company of any matters identified through procedures followed for interim
quarterly financial statements, and that such notification as required
under standards for communication with Audit Committees is to be made
prior to the related press release or, if not practicable, prior to filing
Forms 10-Q or 10-K. Also receive written confirmation provided by the
independent auditors at the end of each of the first three quarters of the
year that they have nothing to report to the Audit Committee, if that is
the case, or the written enumeration of required reporting issues.

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<PAGE>
- At the completion of the annual audit, the Audit Committee shall review
with management, internal audit personnel and the independent auditors the
following:

- The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to
shareholders and on Form 10-K.

- Results of the audit of the financial statements and the related report
thereon and, if applicable, a report on changes during the year in
accounting principles and their application.

- Significant changes to the audit plan, if any, and any serious disputes
or difficulties with management encountered during the audit, and
specifically ask the independent auditors about:

- the cooperation received during their audit, including access to
all requested records, data and information.

- whether there have been any disagreements with management which, if
not satisfactorily resolved, would have caused them to issue a
nonstandard report on the Company's financial statements.

- Other communications as required to be communicated by the independent
auditors by Statement of Auditing Standards ("SAS") 61 as amended by
SAS 90 relating to the conduct of the audit.

- Any written communication provided by the independent auditors
concerning their judgment about the quality of the Company's accounting
principles, as outlined in SAS 61 as amended by SAS 90, and that they
concur with management's representation concerning audit adjustments.

- After preparation by management and review by internal audit personnel and
independent auditors, approve the report required under SEC rules to be
included in the Company's annual proxy statement. This Charter is to be
published as an appendix to the proxy statement or annual report at least
once every three years.

- Discuss with the independent auditors the quality of the Company's
financial and accounting personnel. Also, elicit the comments of
management regarding the responsiveness of the independent auditors to the
Company's needs.

- Meet with management, internal audit personnel and the independent
auditors to discuss any relevant significant recommendations that the
independent auditors may have, particularly those characterized as
"material' or "serious'. Typically, such recommendations will be presented
by the independent auditors in the form of a Letter of Comments and
Recommendations to the Audit Committee. The Audit Committee should review
responses of management to the Letter of Comments and Recommendations from
the independent auditors and receive follow-up reports on action taken
concerning the aforementioned recommendations.

- Recommend to the Board the selection, retention or termination of the
Company's independent auditors.

- Review the appointment and replacement of the senior internal audit
executive.

- Review with management, internal audit personnel and the independent
auditors the methods used to establish and monitor the Company's policies
with respect to unethical or illegal activities by Company employees that
may have a material impact on the financial statements.

- Generally, as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company's general
counsel concerning legal and regulatory matters that may have a material
impact on the financial statements.

- As the Audit Committee may deem appropriate, obtain, weigh and consider
expert advice as to the Audit Committee and relevant rules of the Nasdaq
Stock Market, (which are attached as Schedule A) and other accounting,
legal and regulatory provisions.

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SCHEDULE A
NASDAQ RULES
GOVERNING AUDIT COMMITTEES
OF LISTED COMPANIES

Rule 4460 Non-Quantitative Designation Criteria for Issuers Excepting
Limited Partnerships

* * *

(d) Audit Committee:

(2)(A) Each issue must have, and certify that it has and will continue
to have, an audit committee of at least three members, comprised solely of
independent directors, each of whom is able to read and understand
fundamental financial statements, including a company's balance sheet,
income statement, and cash flow statement or will become able to do so
within a reasonable period of time after his or her appointment to the audit
committee. Additionally, each issuer must certify that it has, and will
continue to have, at least one member of the audit committee that has past
employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or
background which results in the individual's financial sophistication,
including being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight responsibility.

(2)(B) Notwithstanding paragraph (i), one director whose is not
independent as defined in Rule 4200, and is not a current employee or an
immediate family member of such employee, may be appointed to the audit
committee, if the membership on the committee by the individual is required
by the best interests of the corporation and its shareholders, and the board
discloses, in the next annual proxy statement subsequent to such
determination, the nature of the relationship and the reason for that
determination.

Rule 4200. Definitions

(a) For the purposes of the Rule 4000 Series, unless the context requires
otherwise--

* * *

14) "Independent director" means a person other than an officer or
employee of the company or its subsidiaries or any other individual having a
relationship which, in the opinion of the company's board of directors,
would interfere with the exercise of independent judgement in carrying out
the responsibilities of a director. The following persons shall not be
considered independent:

(A) a director who is employed by the corporation or any of its
affiliates for the current year or any of the past three years;

(B) a director who accepts any compensation from the corporation or
any of its affiliates in excess of $60,000 during the previous fiscal
year, other than compensation for board service, benefits under a
tax-qualified retirement plan, or non-discretionary compensation;

(C) a director who is a member of the immediate family of an
individual who is, or has been in any of the past three years, employed
by the corporation or any of its affiliates as an executive officer.
Immediate family includes a person's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's home;

(D) a director who is a partner in, or a controlling shareholder or
an executive officer of, any for-profit business organization to which
the corporation made, or from which the corporation received, payments
(other than those arising solely from investments in the corporation's
securities) that exceed 5% of the corporation's or business
organization's consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years; or

(E) a director who is employed as an executive of another entity
where any of the company's executives serve on that entity's compensation
committee.

* * *

A-1
<PAGE>
EXHIBIT B
2000 STOCK INCENTIVE PLAN
OF
MTR GAMING GROUP, INC.

1. PURPOSES OF THE PLAN. This stock incentive plan (the "Plan") is designed
to provide an incentive to key employees (including directors and officers who
are key employees) and to consultants and directors who are not employees of MTR
GAMING GROUP, INC., a Delaware corporation (the "Company"), or any of its
Subsidiaries (as defined in Paragraph 17), and to offer an additional inducement
in obtaining the services of such persons. The Plan provides for the grant of
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options which do not qualify as ISOs ("NQSOs"), and stock of the Company which
may be subject to contingencies or restrictions (collectively, "Awards"). The
Company makes no representation or warranty, express or implied, as to the
qualification of any option as an "incentive stock option" under the Code.

2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Paragraph 10,
the aggregate number of shares of Common Stock, $.0001 par value per share, of
the Company ("Common Stock") for which Awards may be granted under the Plan
shall not exceed 825,000. Such shares of Common Stock may, in the discretion of
the Board of Directors of the Company (the "Board of Directors"), consist either
in whole or in part of authorized but unissued shares of Common Stock or shares
of Common Stock held in the treasury of the Company. Subject to the provisions
of Paragraph 11, any shares of Common Stock subject to an option which for any
reason expires, is canceled or is terminated unexercised or which ceases for any
reason to be exercisable or a restricted stock Award which for any reason is
forfeited, shall again become available for the granting of Awards under the
Plan. The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of Common Stock as will be sufficient to
satisfy the requirements of the Plan.

3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Board
of Directors or a committee of the Board of Directors consisting of not less
than two directors, each of whom shall be a "non-employee director" within the
meaning of Rule 16b-3 (as defined in Paragraph 17) (collectively, the
"Committee"). Unless otherwise provided in the By-laws of the Company or by
resolution of the Board of Directors, a majority of the members of the Committee
shall constitute a quorum, and the acts of a majority of the members present at
any meeting at which a quorum is present, and any acts approved in writing by
all members without a meeting, shall be the acts of the Committee. Subject to
the express provisions of the Plan, the Committee shall have the authority, in
its sole discretion, to determine: the key employees, consultants and directors
who shall be granted Awards; the type of Award to be granted; the times when an
Award shall be granted; the number of shares of Common Stock to be subject to
each Award; the term of each option; the date each option shall become
exercisable; whether an option shall be exercisable in whole or in installments
and, if in installments, the number of shares of Common Stock to be subject to
each installment, whether the installments shall be cumulative, the date each
installment shall become exercisable and the term of each installment; whether
to accelerate the date of exercise of any option or installment thereof; whether
shares of Common Stock may be issued upon the exercise of an option as partly
paid and, if so, the dates when future installments of the exercise price shall
become due and the amounts of such installments; the exercise price of each
option; the price, if any, to be paid for a share Award; the form of payment of
the exercise price of an option; whether to restrict the sale or other
disposition of a stock Award or the shares of Common Stock acquired upon the
exercise of an option and, if so, to determine whether such contingencies and
restrictions have been met and whether and under what conditions to waive any
such contingency or restriction; whether and under what conditions to subject
all or a portion of the grant or exercise of an option, the vesting of a stock
Award or the shares acquired pursuant to the exercise of an option to the
fulfillment of certain contingencies or restrictions as specified in the
contract referred to in Paragraph 9 hereof (the "Contract"), including without
limitation, contingencies or restrictions relating to entering into a covenant
not to compete with the Company, any of its Subsidiaries or a Parent (as defined
in Paragraph 17), to financial objectives for the Company, any of its
Subsidiaries or a Parent, a division of any of the foregoing, a product line or
other category, and/or to the
<PAGE>
period of continued employment of the Award holder with the Company, any of its
Subsidiaries or a Parent, and to determine whether such contingencies or
restrictions have been met; whether an Award holder is Disabled (as defined in
Paragraph 17); the amount, if any, necessary to satisfy the obligation of the
Company, a Subsidiary or Parent to withhold taxes or other amounts; the Fair
Market Value (as defined in Paragraph 17) of a share of Common Stock; to
construe the respective Contracts and the Plan; with the consent of the Award
holder, to cancel or modify an Award, PROVIDED, that the modified provision is
permitted to be included in an Award granted under the Plan on the date of the
modification, and FURTHER, PROVIDED, that in the case of a modification (within
the meaning of Section 424(h) of the Code) of an ISO, such Award as modified
would be permitted to be granted on the date of such modification under the
terms of the Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to approve any provision which under Rule 16b-3 requires
the approval of the Board of Directors, a committee of non-employee directors or
the stockholders to be exempt (unless otherwise specifically provided herein);
and to make all other determinations necessary or advisable for administering
the Plan. Any controversy or claim arising out of or relating to the Plan, any
Award granted under the Plan or any Contract shall be determined unilaterally by
the Committee in its sole discretion. The determinations of the Committee on the
matters referred to in this Paragraph 3 shall be conclusive and binding on the
parties. No member or former member of the Committee shall be liable for any
action, failure to act or determination made in good faith with respect to the
Plan or any Award or Contract hereunder. Prior to the creation and designation
of the Committee by the Board of Directors, all powers and authority allocated
hereby to the Committee shall be allocated to the Board of Directors and all
references to the Committee shall be deemed to be references to the Board of
Directors.

4. OPTIONS

(a) GRANT. The Committee may from time to time, consistent with the
purposes of the Plan, grant options to such key employees (including officers
and directors who are key employees) of, and consultants to, the Company or any
of its Subsidiaries, and such Outside Directors, as the Committee may determine,
in its sole discretion. Such options granted shall cover such number of shares
of Common Stock as the Committee may determine, in its sole discretion, as set
forth in the applicable Contract; PROVIDED, HOWEVER, THAT THE MAXIMUM NUMBER OF
SHARES SUBJECT TO OPTIONS THAT MAY BE GRANTED TO ANY EMPLOYEE DURING ANY
CALENDAR YEAR UNDER THE PLAN (THE "162(M) MAXIMUM") SHALL BE 350,000 SHARES; AND
FURTHER, PROVIDED, that the aggregate Fair Market Value (determined at the time
the option is granted) of the shares of Common Stock for which any eligible
employee may be granted ISOs under the Plan or any other plan of the Company, of
any of its Subsidiaries or of a Parent, which are exercisable for the first time
by such optionee during any calendar year shall not exceed $100,000. Such ISO
limitation shall be applied by taking ISOs into account in the order in which
they were granted. Any option granted in excess of such ISO limitation amount
shall be treated as a NQSO to the extent of such excess.

(b) EXERCISE PRICE. The exercise price of the shares of Common Stock under
each option shall be determined by the Committee, in its sole discretion, as set
forth in the applicable Contract; PROVIDED, HOWEVER, that the exercise price per
share of an ISO shall not be less than the Fair Market Value of a share of
Common Stock on the date of grant; and FURTHER, PROVIDED, that if, at the time
an ISO is granted, the optionee owns (or is deemed to own under Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the exercise price per share of such ISO shall not be less than 110% of
the Fair Market Value of a share of Common Stock on the date of grant.

(c) TERM. The term of each option granted pursuant to the Plan shall be
determined by the Committee, in its sole discretion, and set forth in the
applicable Contract; PROVIDED, HOWEVER, that the term of each ISO shall not
exceed 10 years from the date of grant thereof; and FURTHER, PROVIDED, that if,
at the time an ISO is granted, the optionee owns (or is deemed to own under
Section 424(d) of the Code) stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, of

2
<PAGE>
any of its Subsidiaries or of a Parent, the term of the ISO shall not exceed
five years from the date of grant. Options shall be subject to earlier
termination as hereinafter provided.

(d) EXERCISE. An option (or any part or installment thereof), to the extent
then exercisable, shall be exercised by giving written notice to the Company at
its then principal office stating which option is being exercised, specifying
the number of shares of Common Stock as to which such option is being exercised
and accompanied by payment in full of the aggregate exercise price therefor (or
the amount due upon exercise if the Contract permits installment payments)
(a) in cash or by certified check or (b) if the applicable Contract permits,
with previously acquired shares of Common Stock having an aggregate Fair Market
Value on the date of exercise equal to the aggregate exercise price of all
options being exercised, or with any combination of cash, certified check or
shares of Common Stock having such value. The Company shall not be required to
issue any shares of Common Stock pursuant to any such option until all required
payments, including any required withholding, have been made.

The Committee may, in its sole discretion, permit payment of all or a
portion of the exercise price of an option by delivery by the optionee of a
properly executed notice, together with a copy of his irrevocable instructions
to a broker acceptable to the Committee to deliver promptly to the Company the
amount of sale or loan proceeds sufficient to pay such exercise price. In
connection therewith, the Company may enter into agreements for coordinated
procedures with one or more brokerage firms.

An optionee entitled to receive Common Stock upon the exercise of an option
shall not have the rights of a stockholder with respect to such shares of Common
Stock until the date of issuance of a stock certificate for such shares or, in
the case of uncertificated shares, until an entry is made on the books of the
Company's transfer agent representing such shares; PROVIDED, HOWEVER, that until
such stock certificate is issued or book entry is made, any optionee using
previously acquired shares of Common Stock in payment of an option exercise
price shall continue to have the rights of a stockholder with respect to such
previously acquired shares.

In no case may an option be exercised with respect to a fraction of a share
of Common Stock. In no case may a fraction of a share of Common Stock be
purchased or issued under the Plan.

(e) RELOAD OPTIONS. An optionee who, at a time when he is eligible to be
granted options under the Plan, uses previously acquired shares of Common Stock
to exercise an option granted under the Plan (the "prior option"), shall, upon
such exercise, be automatically granted an option (the "reload option") to
purchase the same number of shares of Common Stock so used (or if there is not a
sufficient number of shares available for grant under the Plan remaining, such
number of shares as are then available). Such reload options shall be of the
same type and have the same terms as the prior option (except to the extent
inconsistent with the terms of the Plan); PROVIDED, HOWEVER, that the exercise
price per share of the reload option shall be equal to the Fair Market Value of
a share of Common Stock on the date of grant of the reload option, and FURTHER,
PROVIDED, that if the prior option was an ISO and at the time the reload option
is granted, the optionee owns (or is deemed to own under Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a Parent, the
exercise price per share shall be equal to 110% of the Fair Market Value of a
share of Common Stock on the date of grant and the term of such option shall not
exceed five years.

5. RESTRICTED STOCK. The Committee may from time to time, consistent with
the purposes of the Plan, grant shares of Common Stock to such key employees
(including officers and directors who are key employees) of, or consultants to,
the Company or any of its Subsidiaries, as the Committee may determine, in its
sole discretion. The grant may cover such number of shares as the Committee may
determine, in its sole discretion, and require the Award holder to pay such
price per share therefor, if any, as the Committee may determine, in its sole
discretion. Such shares may be subject to such contingencies and restrictions as
the Committee may determine, as set forth in the Contract. Upon the issuance of
the stock certificate for a share Award, or in the case of uncertificated
shares, the entry on the books of the

3
<PAGE>
Company's transfer agent representing such shares, notwithstanding any
contingencies or restrictions to which the shares are subject, the Award holder
shall be considered to be the record owner of the shares, and subject to the
contingencies and restrictions set forth in the Award, shall have all rights of
a stockholder of record with respect to such shares, including the right to vote
and to receive distributions. Upon the occurrence of any such contingency or
restriction, the Award holder may be required to forfeit all or a portion of
such shares back to the Company. The shares shall vest in the Award holder when
all of the restrictions and contingencies lapse. Accordingly, the Committee may
require that such shares be held by the Company, together with a stock power
duly endorsed in blank by the Award holder, until the shares vest in the Award
holder.

6. TERMINATION OF RELATIONSHIP. Except as may otherwise be expressly
provided in the applicable Contract, if an Award holder's relationship with the
Company, its Subsidiaries and Parent as an employee or a consultant has
terminated for any reason (other than as a result of his death or Disability),
the Award holder may exercise the options granted to him as an employee of, or
consultant to, the Company or any of its Subsidiaries, to the extent exercisable
on the date of such termination, at any time within three months after the date
of termination, but not thereafter and in no event after the date the Award
would otherwise have expired; PROVIDED, HOWEVER, that if such relationship is
terminated either (a) for Cause (as defined in Paragraph 17), or (b) without the
consent of the Company, such option shall terminate immediately; and PROVIDED
FURTHER that in the event an employee's employment is terminated in connection
with a change in control of the Company, then the employee will have the right
to exercise the option until the date the award otherwise have expired.

For the purposes of the Plan, an employment relationship shall be deemed to
exist between an individual and the Company, any of its Subsidiaries or a Parent
if, at the time of the determination, the individual was an employee of such
corporation for purposes of Section 422(a) of the Code. As a result, an
individual on military, sick leave or other bona fide leave of absence shall
continue to be considered an employee for purposes of the Plan during such leave
if the period of the leave does not exceed 90 days, or, if longer, so long as
the individual's right to reemployment with the Company, any of its Subsidiaries
or a Parent is guaranteed either by statute or by contract. If the period of
leave exceeds 90 days and the individual's right to reemployment is not
guaranteed by statute or by contract, the employment relationship shall be
deemed to have terminated on the 91st day of such leave.

Except as may otherwise be expressly provided in the applicable Contract,
options granted under the Plan shall not be affected by any change in the status
of the Award holder so long as he continues to be an employee of, or a
consultant to, the Company, or any of its Subsidiaries or a Parent (regardless
of having changed from one to the other or having been transferred from one
corporation to another).

Except as may otherwise be expressly provided in the applicable Contract, if
an Award holder's relationship with the Company as an Outside Director ceases
for any reason (other than as a result of his death or Disability) then options
granted to such holder as an Outside Director may be exercised, to the extent
exercisable on the date of such termination, at any time within three months
after the date of termination, but not thereafter and in no event after the date
the Award would otherwise have expired; PROVIDED, HOWEVER, that if such
relationship is terminated for Cause, such Award shall terminate immediately. An
Award granted to an Outside Director, however, shall not be affected by the
Award holder becoming an employee of, or consultant to, the Company, any of its
Subsidiaries or a Parent.

Except as may otherwise be expressly provided in the Contract, upon the
termination of the relationship of an Award holder as an employee of, or
consultant to, the Company, and its Subsidiaries and Parent, or as an Outside
Director, for any reason (including his death or Disability), the share Award
shall cease any further vesting and the unvested portion of such Award as of the
date of such termination shall be forfeited to the Company for no consideration.

Nothing in the Plan or in any Award granted under the Plan shall confer on
any Award holder any right to continue in the employ of, or as a consultant to,
the Company, any of its Subsidiaries or a Parent,

4
<PAGE>
or as a director of the Company, or interfere in any way with any right of the
Company, any of its Subsidiaries or a Parent to terminate the Award holder's
relationship at any time for any reason whatsoever without liability to the
Company, any of its Subsidiaries or a Parent.

7. DEATH OR DISABILITY. Except as may otherwise be expressly provided in
the applicable Contract, if an Award holder dies (a) while he is an employee of,
or consultant to, the Company, any of its Subsidiaries or a Parent, (b) within
three months after the termination of such relationship (unless such termination
was for Cause or without the consent of the Company), or (c) within one year
following the termination of such relationship by reason of his Disability, the
options that were granted to him as an employee of, or consultant to, the
Company or any of its Subsidiaries, may be exercised, to the extent exercisable
on the date of his death, by his Legal Representative (as defined in
Paragraph 17) at any time within one year after death, but not thereafter and in
no event after the date the option would otherwise have expired.

Except as may otherwise be expressly provided in the applicable Contract, if
an Award holder's relationship as an employee of, or consultant to, the Company,
any of its Subsidiaries or a Parent has terminated by reason of his Disability,
the options that were granted to him as an employee of, or consultant to the
Company or any of its Subsidiaries may be exercised, to the extent exercisable
upon the effective date of such termination, at any time within one year after
such date, but not thereafter and in no event after the date the option would
otherwise have expired.

Except as may otherwise be expressly provided in the applicable Contract, if
an Award holder's relationship as an Outside Director terminates as a result of
his death or Disability, the options granted to him as an Outside Director may
be exercised, to the extent exercisable on the date of such termination, at any
time within one year after the date of termination, but not thereafter and in no
event after the date the Award would otherwise have expired. In the case of the
death of the Award holder, the Award may be exercised by his Legal
Representative.

8. COMPLIANCE WITH SECURITIES LAWS. It is a condition to the issuance of
any share Award and exercise of any option that either (a) a Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Common Stock to be issued upon such grant or
exercise shall be effective and current at the time of exercise, or (b) there is
an exemption from registration under the Securities Act for the issuance of the
shares of Common Stock upon such exercise. Nothing herein shall be construed as
requiring the Company to register shares subject to any Award under the
Securities Act or to keep any Registration Statement effective or current.

The Committee may require, in its sole discretion, as a condition to the
receipt of an Award or the exercise of any option that the Award holder execute
and deliver to the Company his representations and warranties, in form,
substance and scope satisfactory to the Committee, which the Committee
determines are necessary or convenient to facilitate the perfection of an
exemption from the registration requirements of the Securities Act, applicable
state securities laws or other legal requirement, including, without limitation,
that (a) the shares of Common Stock to be received under the Award or issued
upon the exercise of the option are being acquired by the Award holder for his
own account, for investment only and not with a view to the resale or
distribution thereof, and (b) any subsequent resale or distribution of shares of
Common Stock by such Award holder will be made only pursuant to (i) a
Registration Statement under the Securities Act which is effective and current
with respect to the shares of Common Stock being sold, or (ii) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the Award holder shall prior to any offer of sale or
sale of such shares of Common Stock provide the Company with a favorable written
opinion of counsel satisfactory to the Company, in form, substance and scope
satisfactory to the Company, as to the applicability of such exemption to the
proposed sale or distribution.

In addition, if at any time the Committee shall determine, in its sole
discretion, that the listing or qualification of the shares of Common Stock
subject to any Award or option on any securities exchange,

5
<PAGE>
Nasdaq or under any applicable law, or the consent or approval of any
governmental agency or regulatory body, is necessary or desirable as a condition
to, or in connection with, the granting of an Award or the issuing of shares of
Common Stock thereunder, such Award may not be granted and such option may not
be exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.

9. AWARD CONTRACTS. Each Award shall be evidenced by an appropriate
Contract which shall be duly executed by the Company and the Award holder, and
shall contain such terms, provisions and conditions not inconsistent herewith as
may be determined by the Committee. The terms of each Award and Contract need
not be identical.

10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK. Notwithstanding any other
provision of the Plan, in the event of a stock dividend, recapitalization,
merger in which the Company is the surviving corporation, spin-off, split-up,
combination or exchange of shares or the like which results in a change in the
number or kind of shares of Common Stock which is outstanding immediately prior
to such event, the aggregate number and kind of shares subject to the Plan, the
aggregate number and kind of shares subject to each outstanding Award, the
exercise price of each option, any contingencies and restrictions based on the
number or kind of shares, and the 162(m) Maximum shall be appropriately adjusted
by the Board of Directors, whose determination shall be conclusive and binding
on all parties. Such adjustment may provide for the elimination of fractional
shares which might otherwise be subject to Awards without payment therefor.

In the event of (a) the liquidation or dissolution of the Company, (b) a
merger in which the Company is not the surviving corporation or a consolidation,
or (c) any transaction (or series of related transactions) in which (i) more
than 50% of the outstanding Common Stock is transferred or exchanged for other
consideration, or (ii) shares of Common Stock in excess of the number of shares
of Common Stock outstanding immediately preceding the transaction are issued
(other than to stockholders of the Company with respect to their shares of stock
in the Company), any outstanding options, unvested stock shall terminate upon
the earliest of any such event, unless other provision is made therefor in the
transaction.

11. AMENDMENTS AND TERMINATION OF THE PLAN. The Plan was adopted by the
Board of Directors on March 13, 2000. No ISO may be granted under the Plan after
March 12, 2010. The Board of Directors, without further approval of the
Company's stockholders, may at any time suspend or terminate the Plan, in whole
or in part, or amend it from time to time in such respects as it may deem
advisable, including, without limitation, in order that ISOs granted hereunder
meet the requirements for "incentive stock options" under the Code, to comply
with the provisions of Rule 16b-3, Section 162(m) of the Code, or any change in
applicable law, regulations, rulings or interpretations of any governmental
agency or regulatory body; PROVIDED, HOWEVER, that no amendment shall be
effective without the requisite prior or subsequent stockholder approval which
would (a) except as contemplated in Paragraph 10, increase the maximum number of
shares of Common Stock for which Awards may be granted under the Plan or the
162(m) Maximum, (b) change the eligibility requirements to receive Awards
hereunder, or (c) make any change for which applicable law, regulation, ruling
or interpretation by the applicable governmental agency or regulatory authority
requires stockholder approval. No termination, suspension or amendment of the
Plan shall adversely affect the rights of any Award holder under an Award
without his prior consent. The power of the Committee to construe and administer
any Awards granted under the Plan prior to the termination or suspension of the
Plan nevertheless shall continue after such termination or during such
suspension.

12. NON-TRANSFERABILITY. No option granted under the Plan shall be
transferable otherwise than by will or the laws of descent and distribution, and
options may be exercised, during the lifetime of the Award holder, only by him
or his Legal Representatives. Except as may otherwise be expressly provided in
the Contract, a stock Award, to the extent not vested, shall not be transferable
otherwise than by will or the laws of descent and distribution. Except to the
extent provided above, Awards may not be assigned,

6
<PAGE>
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar process, and any such attempted assignment, transfer, pledge,
hypothecation or disposition shall be null and void AB INITIO and of no force or
effect; PROVIDED, HOWEVER, that a contract may provide that non-qualified Awards
may be donated to charity or assigned to a family trust or similar estate
planning vehicle.

13. WITHHOLDING TAXES. The Company, a Subsidiary or Parent may withhold
(a) cash, or (b) with the consent of the Committee, shares of Common Stock to be
issued under a stock Award or upon exercise of an option having an aggregate
Fair Market Value on the relevant date, or a combination of cash and shares
having such value, in an amount equal to the amount which the Committee
determines is necessary to satisfy the obligation of the Company, any of its
Subsidiaries or a Parent to withhold federal, state and local taxes or other
amounts incurred by reason of the grant, vesting, exercise or disposition of an
Award, or the disposition of the underlying shares of Common Stock.
Alternatively, the Company may require the holder to pay to the Company such
amount, in cash, promptly upon demand.

14. LEGENDS; PAYMENT OF EXPENSES. The Company may endorse such legend or
legends upon the certificates for shares of Common Stock issued under a stock
Award or upon exercise of an option under the Plan and may issue such "stop
transfer" instructions to its transfer agent in respect of such shares as it
determines, in its discretion, to be necessary or appropriate to (a) prevent a
violation of, or to perfect an exemption from, the registration requirements of
the Securities Act and any applicable state securities laws, (b) implement the
provisions of the Plan or any agreement between the Company and the Award holder
with respect to such shares of Common Stock, or (c) permit the Company to
determine the occurrence of a "disqualifying disposition," as described in
Section 421(b) of the Code, of the shares of Common Stock issued or transferred
upon the exercise of an ISO granted under the Plan.

The Company shall pay all issuance taxes with respect to the issuance of
shares of Common Stock under a stock Award or upon the exercise of an option
granted under the Plan, as well as all fees and expenses incurred by the Company
in connection with such issuance.

15. USE OF PROCEEDS. The cash proceeds received upon the exercise of an
option, or grant of a stock Award under the Plan shall be added to the general
funds of the Company and used for such corporate purposes as the Board of
Directors may determine.

16. SUBSTITUTIONS AND ASSUMPTIONS OF AWARDS OF CERTAIN CONSTITUENT
CORPORATIONS. Anything in this Plan to the contrary notwithstanding, the Board
of Directors may, without further approval by the stockholders, substitute new
Awards for prior options, or restricted stock of a Constituent Corporation (as
defined in Paragraph 17) or assume the prior options or restricted stock of such
Constituent Corporation.

17. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below:

(a) "Cause" shall mean: (i) in the case of an employee or consultant,
if there is a written employment or consulting agreement between the Award
holder and the Company, any of its Subsidiaries or a Parent which defines
termination of such relationship for cause, cause as defined in such
agreement, and (ii) in all other cases, cause as defined by applicable state
law.

(b) "Constituent Corporation" shall mean any corporation which engages
with the Company, any of its Subsidiaries or a Parent in a transaction to
which Section 424(a) of the Code applies (or would apply if the option
assumed or substituted were an ISO), or any Subsidiary or Parent of such
corporation.

(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

7
<PAGE>
(e) "Fair Market Value" of a share of Common Stock on any day shall
mean: (i) if the principal market for the Common Stock is a national
securities exchange, the average of the highest and lowest sales prices per
share of Common Stock on such day as reported by such exchange or on a
composite tape reflecting transactions on such exchange, (ii) if the
principal market for the Common Stock is not a national securities exchange
and the Common Stock is quoted on Nasdaq, and (A) if actual sales price
information is available with respect to the Common Stock, the average of
the highest and lowest sales prices per share of Common Stock on such day on
Nasdaq, or (B) if such information is not available, the average of the
highest bid and lowest asked prices per share of Common Stock on such day on
Nasdaq, or (iii) if the principal market for the Common Stock is not a
national securities exchange and the Common Stock is not quoted on Nasdaq,
the average of the highest bid and lowest asked prices per share of Common
Stock on such day as reported on the OTC Bulletin Board Service or by
National Quotation Bureau, Incorporated or a comparable service; PROVIDED,
HOWEVER, that if clauses (i), (ii) and (iii) of this subparagraph are all
inapplicable, or if no trades have been made or no quotes are available for
such day, the Fair Market Value of a share of Common Stock shall be
determined by the Board of Directors by any method consistent with
applicable regulations adopted by the Treasury Department relating to stock
options.

(f) "Legal Representative" shall mean the executor, administrator or
other person who at the time is entitled by law to exercise the rights of a
deceased or incapacitated optionee with respect to an option granted under
the Plan.

(g) "Nasdaq" shall mean the Nasdaq Stock Market.

(h) "Outside Director" shall mean a person who is a director of the
Company, but on the date of grant is not an employee of, or consultant to,
the Company, any of its Subsidiaries or a Parent.

(i) "Parent" shall have the same definition as "parent corporation" in
Section 424(e) of the Code.

(j) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act, as the same may be in effect and interpreted from time to time.

(k) "Subsidiary" shall have the same definition as "subsidiary
corporation" in Section 424(f) of the Code.

18. GOVERNING LAW; CONSTRUCTION. The Plan, the Awards and Contracts
hereunder and all related matters shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without regard to conflict
of law provisions that would defer to the substantive laws of another
jurisdiction.

Neither the Plan nor any Contract shall be construed or interpreted with any
presumption against the Company by reason of the Company causing the Plan or
Contract to be drafted. Whenever from the context it appears appropriate, any
term stated in either the singular or plural shall include the singular and
plural, and any term stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter.

19. PARTIAL INVALIDITY. The invalidity, illegality or unenforceability of
any provision in the Plan, any Award or Contract shall not affect the validity,
legality or enforceability of any other provision, all of which shall be valid,
legal and enforceable to the fullest extent permitted by applicable law.

20. STOCKHOLDER APPROVAL. The Plan shall be subject to approval by a
majority of the votes present in person or by proxy and entitled to vote hereon
at the next duly held meeting of the Company's stockholders at which a quorum is
present. No Award granted hereunder may vest or be exercised prior to such
approval; PROVIDED, HOWEVER, that the date of grant of any Award shall be
determined as if the Plan had not been subject to such approval. Notwithstanding
the foregoing, if the Plan is not approved by a vote of the stockholders of the
Company on or before March 13, 2001, the Plan and any Awards granted hereunder
shall terminate.

8
<PAGE>
EXHIBIT C

CORBIN & WERTZ
CERTIFIED PUBLIC ACCOUNTANTS BUSINESS CONSULTANTS
AN ACCOUNTANCY CORPORATION

February 4, 1999

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Gentlemen:

We have been furnished with a copy of the response to Item 4 of Form 8-K for
the event that occurred on February 1, 1999, to be filed by our former client,
MTR Gaming Group, Inc. We agree with the statements contained in paragraphs
(a)(1)(i), (ii), (iii), (iv) and (v) made in response to that Item insofar as
they relate to our firm.

/s/ CORBIN & WERTZ

--------------------------------------
CORBIN & WERTZ
Irvine, California

Century Centre - 2603 Main Street, Suite 600 - Irvine, CA 92614 -
Tel: (949) 756-2120 - FAX: (949) 756-9110
<PAGE>
REVOCABLE PROXY
MTR GAMING GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 23, 2000

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

The undersigned hereby appoints Edson R. Arneault and Robert L. Ruben and each
of them, with full power of substitution as the proxies of the undersigned to
vote all the undersigned's shares of the Common Stock of MTR Gaming Group, Inc.
(the "Corporation") at the Annual Meeting of the Corporation's Stockholders to
be held at the Corporation's headquarters at the Mountaineer Racetrack & Gaming
Resort, State Route 2, Chester, West Virginia 26034. on August 23, 2000 at 9:00
a.m. and at any adjournments or postponements thereof, with the same force and
effect as the undersigned might or could do if personally present:

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.

<TABLE>
<C> <S> <C> <C>
1. ELECTION OF DIRECTORS
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
</TABLE>

Edson R. Arneault Robert L. Ruben Robert A. Blatt James V. Stanton William
D. Fugazy, Jr.

This proxy will be voted in the Election of Directors in the manner
described in the Proxy Statement for the Annual Meeting of Stockholders.
(INSTRUCTION: To withhold authority to vote for one or more individual nominees
write such name or names in the space provided below.)

2. PROPOSAL TO RATIFY THE ADOPTION OF THE CORPORATION'S 2000 STOCK INCENTIVE
PLAN.

/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
3. PROPOSAL TO CONFIRM THE SELECTION OF BDO SEIDMAN, LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE CORPORATION FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2000.

/ / FOR / / AGAINST / / ABSTAIN

4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.

<TABLE>
<S> <C>
DATED ------------- , 2000

--------------------------------------------------
Signature

--------------------------------------------------
Signature if held jointly

Please sign exactly as name appears below. When
shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized person. If a partnership, please sign
in full partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
</TABLE>