EX-10.1: INDEMNIFICATION AGREEMENT

Exhibit 10.1

EXECUTION COPY

INDEMNIFICATION AGREEMENT

           THIS INDEMNIFICATION AGREEMENT (this “ Agreement ”), dated as of September 3, 2006, is entered into by and between American Real Estate Holdings Limited Partnership, a Delaware limited partnership (“ AREH ”), and Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (“ ACE Hi ”). All capitalized terms used and not otherwise defined herein are used herein as defined in the Acquisition Agreement (as hereinafter defined).

RECITALS

           WHEREAS , simultaneously with the execution of this Agreement, AREH, ACE Hi, Pinnacle Entertainment, Inc., a Delaware corporation (“ Buyer ”), ACE Gaming, LLC, a New Jersey limited liability company, AREP Boardwalk Properties LLC, a Delaware limited liability company (“ Boardwalk ”), PSW Properties LLC, a Delaware limited liability company (“ PSW ”), AREH MLK LLC, a Delaware limited liability company (“ MLK ”), and Mitre Associates LLC, a Delaware limited liability company (“ Mitre ” and collectively with Boardwalk, PSW and MLK, the “ AREH Subs ” and collectively the AREH Subs and AREH, the “ AREH Selling Parties ”), are entering into an Acquisition Agreement (the “ Acquisition Agreement ”);

           WHEREAS , the AREH Selling Parties acquired the assets of the AREH Subs for the benefit of ACE Hi because ACE Hi, neither at the respective dates of such acquisitions had, nor at this time has, capital or financing available to acquire such assets;

           WHEREAS , the AREH Selling Parties are entering the Acquisition Agreement and agreeing to undertake their obligations thereunder, including without limitation, their indemnification obligations thereunder, as an inducement for Buyer to enter into the Acquisition Agreement and in order to facilitate the sale of the ACE Lo Equity Interests by ACE Hi thereunder;

           WHEREAS , simultaneously with the execution of the Acquisition Agreement, as an inducement for Buyer to enter into the Acquisition Agreement and in order to facilitate the sale of the ACE Lo Equity Interests by ACE Hi thereunder, AREH and Buyer are entering into a Stockholders Agreement (the “ Stockholders Agreement ”), pursuant to which, among other things, AREH will agree to make certain payments to Buyer in the event of certain Alternative Dispositions (as defined in the Stockholders Agreement) and any such payments shall be deemed to be capital contributions from AREH to ACE Hi and payments from ACE Hi to Buyer;

           WHEREAS , AREH and ACE Lo previously executed a Call Agreement, pursuant to which AREH granted ACE Lo the non-exclusive right to purchase the Traymore Site;

           WHEREAS , pursuant to the Acquisition Agreement, AREH has agreed to sell the Traymore Site directly to the Buyer as an accommodation to ACE Hi in order to allow for an efficient transfer of the Traymore Site along with the Casino Property; and

           WHEREAS , as an inducement for AREH to enter into the Acquisition Agreement and in order to facilitate the sale of the ACE Lo Equity Interests by ACE Hi under the Acquisition Agreement, ACE Hi has agreed to indemnify AREH in respect of any Losses (as defined herein) resulting from or arising out of AREH’s obligations under the Acquisition Agreement, in each case in accordance with the terms of this Agreement.

           NOW, THEREFORE , in consideration of the mutual promises and covenants contained herein, for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and intending to be legally bound, the parties hereto hereby agree as follows:

     Section 1. Indemnification of AREH Parties . ACE Hi shall indemnify and hold harmless AREH and its Affiliates, each of their respective direct or indirect parent entities, officers, members, partners, directors, employees, agents and representatives, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “ AREH Parties ”), from and against any and all direct or indirect costs, losses, Liabilities, obligations, damages, claims, causes of action, fines, levies, charges, demands, fees and expenses, whenever arising or incurred, of any kind or character, however asserted, including without limitation interest, penalties, reasonable attorneys’ and experts’ fees and any and all amounts paid in reasonable investigation, defense or settlement of any of the foregoing (hereinafter “ Losses ”), resulting from or arising out of AREH’s indemnification obligations under the following provisions of the Acquisition Agreement (the “AREH Obligations”):

in each case whether such Losses arise out of or result from a claim by an Indemnified Party against any AREH Party or from a claim by a third Person against any AREH Party or otherwise (collectively, “ Indemnifiable Losses ”); provided, however, in no event shall ACE Hi be obligated to indemnify an AREH Party for any Loss to the extent such Loss arises under clause

(i) or (ii) of this Section 1 and is a result of an AREH Party’s (x) gross negligence or willful misconduct, or (y) intentional breach of a provision of the Acquisition Agreement.

     Section 2. Escrow Provisions .

     A. In order to secure ACE Hi’s obligations hereunder and to facilitate any payment in respect of Indemnifiable Losses hereunder, ACE Hi shall deposit with JP Morgan Chase (the “ Escrow Agent ”), in a segregated account (the “ Escrow Account ”), pursuant to an escrow agreement to be entered into as of the Closing Date, by and among ACE Hi, AREH and the Escrow Agent and to be in the form attached hereto as Annex A (the “ Escrow Agreement ”), any and all amounts or payments received by ACE Hi pursuant to the Acquisition Agreement, which amounts shall be so deposited with the Escrow Agent from time to time immediately following the receipt of any such amounts by ACE Hi, including without limitation, the following amounts:

          The foregoing amounts including any interest, dividends or other earnings accrued or earned thereon shall be collectively referred to herein as the “ Escrow Amount ”.

     B. Amounts from the Escrow Amount shall remain on deposit in the Escro