BRIDGE LOAN TERM SHEET

Borrower:

Magna Entertainment Corp.

Guarantors:

See Schedule A.

Lender:

MID Islandi sf., acting through its Zug Branch.

Documentation:

Loan agreement ("Bridge Loan Agreement") to contain standard representations, warranties, covenants, indemnities, events of default and remedies for a transaction of this nature.

All dollar amounts used herein are stated in U.S. dollars. All uses herein of the word "including" shall be deemed to mean "including without limitation".

Bridge Loan Commitment:

Not to exceed $100 million non-revolving general credit facility (the
"Bridge Loan") available in 3 tranches:

1    $50 million on closing

2    $25 million on the first banking day on or after Oct. 15, 2005

3    $25 million on the first banking day on or after Jan. 15, 2006

Tranches 2 and 3 will not be available unless (a) no event of default (or
unmatured event of default) will have occurred and be continuing or will
result from the making available of the tranche and (b) the Borrower has
established to the satisfaction of the Lender, in its sole discretion, that the
Borrower is in compliance with, can reasonably be expected to be able to
implement, and is using commercially reasonable efforts to implement, its recapitalization plan (the "MEC Recapitalization Plan") taking into account, among other things, the associated milestones set forth on Schedule B.

Purpose:

For general corporate purposes, in accordance with the MEC
Recapitalization Plan

Drawdown Availability:

Draws as required, subject to satisfaction of conditions precedent to tranche availability and drawdown.

Term:

Last day of the month that is 13 months from the month in which the closing of the Bridge Loan occurs (i.e., August 31, 2006 if closing occurs in July 2005), with no extension or renewal rights.

Arrangement Fee:

$1 million, payable on closing; $500,000, payable on the date (if any) on
which all or any part of Tranche 2 is made available to the Borrower; and
$500,000, payable on the date (if any) on which all or any part of Tranche
3 is made available to the Borrower.

Pricing:

At the Borrower's option:

1.

Floating rate, with interest per annum equal to the greater of: (a) the U.S. Base Rate, as announced by Bank of Montreal ("BMO") from time to time, plus 550 bps and (b) 9% (with interest in each case payable monthly in arrears); and/or

2.

Fixed rate, with interest per annum equal to the greater of: (a) LIBOR plus 650 bps and (b) 9%, subject to: (i) minimum contract amounts of US$10 million; (ii) not more than five contracts at any one time; and, (iii) contract terms not to exceed three months, and in any event not to extend beyond the expiry of the Term (with interest in each case payable at contract maturity).

Commitment Fee:

100 bps per annum on the undrawn amount of the $100 million maximum Bridge Loan Commitment, payable quarterly in arrears.

Mandatory Repayment:

The Bridge Loan will be repaid and the Bridge Loan Commitment will be reduced in amounts equal to:

•

100% of the net proceeds generated from any equity raise by the Borrower or its subsidiaries, less any amounts required to be paid to BMO pursuant to the MEC-BMO Credit Facility (the "BMO Facility") as set forth on Schedule C

•

100% of the net proceeds generated from any debt raise (except for the Gulfstream Loan (in the maximum amount of $115 million plus capitalized interest and Lender's costs) and the Remington Loan (in the maximum amount of $34.2 million plus capitalized interest and Lender's Costs)) or asset sale by the Borrower or its subsidiaries related to Santa Anita Park and/or Golden Gate Fields, subject to any requirement to repay Wells Fargo and/or BMO with such net proceeds as set forth on Schedule C

•

100% of the net proceeds generated from any other debt raise (except for the Gulfstream Loan and the Remington Loan (each in the maximum amount specified above)) or asset sale by the Borrower or its subsidiaries, less any amounts required to be paid to BMO as set forth on Schedule C

•

Unless used for repairs or reconstruction of damaged property as approved by the Lender, acting reasonably, 100% of the net proceeds of property insurance proceeds in excess of $1 million for the Borrower, less any amounts required to be paid to Wells Fargo, if applicable, and/or BMO, if applicable, as set forth on Schedule C

Net proceeds will be applied first to repay amounts advanced under Tranches 1, 2 and 3 (in that sequence), and then, to the extent there is no amount advanced under a given tranche, the remaining commitment under such tranche will be reduced by an amount equal to the excess amount of net proceeds (in the same sequence).

Voluntary Cancellation/ Repayment:

The Bridge Loan Commitment may be permanently cancelled by the Borrower, in whole or in part, without penalty subject to 10 business days notice. Amounts borrowed under the Bridge Loan can be repaid at any time without penalty (subject to LIBOR contract maturity dates). Amounts repaid cannot be reborrowed.

Security:

See Schedule A.

Authorization:

The Lender is authorized to file UCC financing statements against the Borrower and each of the Guarantors upon execution of this term sheet.

Conditions Precedent To Funding:

Standard conditions precedent to funding given the nature of the transaction, including:

•

Receipt of the MEC Recapitalization Plan (as approved by the MEC Board), in form and substance satisfactory to the Lender

•

Lender satisfaction with the CB Richard Ellis appraisal for Santa Anita prepared for Wells Fargo on September 10, 2004 in connection with the extension of the Wells Fargo – Santa Anita loan

•

Receipt of appraisal for Golden Gate Fields

•

Receipt of appraisal for Gulfstream (previously delivered)

•

Receipt of appraisal for Palm Meadows residential lands

•

Receipt of appraisal for San Luis Rey Downs

•

Receipt of appraisal for Dixon land

•

Receipt of appraisal for Ocala land

•

Lender satisfaction with environmental reports with respect to the Borrower and the Guarantors

•

Receipt of Amended BMO Facility, in form and substance satisfactory to the Lender, in its sole discretion, and including an extension of the term such that the Amended BMO Facility expires no earlier than the last day of the month that is 12 months from the month in which the closing of the Bridge Loan occurs

•

Execution of Intercreditor Agreements in form and substance satisfactory to the Lender, in its sole discretion, between (a) the Lender and BMO and (b) the Lender and Wells Fargo

•

Execution of all Documentation

•

Confirmation that all Representations and Warranties are true and correct

•

Receipt of favourable letters of opinion from counsel in form and substance satisfactory to the Lender

•

Registration of all registrable Security (subject to the provisions below under "SHRCP Approval")

•

Receipt of all approvals with respect to the Bridge Loan set forth below under the heading "Board Approvals"

Financial Covenants: