This Mortgage was prepared by and after recording should be returned to:

Mitchell S. Berkey, Esq.

Wolff& Samson PC

One Boland Drive

West Orange, New Jersey 07052

MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT

This MORTGAGE, FIXTURE FILING AND SECURITY AGREEMENT (this "Mortgage"), made this 22nd day of July, 2004 by ACE GAMING, LLC, a limited liability company duly formed and existing under the laws of the State of New Jersey and having its principal place of business at the Sands Hotel and Casino, Indiana Avenue and Brighton Park, Atlantic City, New Jersey 08401 (the "Mortgagor"), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association having its corporate trust office at Sixth and Marquette, Minneapolis, Minnesota 55479, as Trustee (the "Mortgagee") under the Indenture described below on its own behalf and on behalf of the holders from time to time of the Securities referred to below (the "Holders").

WITNESSETH

WHEREAS, the Mortgagor is the owner of a fee simple interest in certain land and air spaces situated in the City of Atlantic City, County of Atlantic, State of New Jersey ("Atlantic City"), being more particularly described on Schedule A-1 attached hereto and by this reference made a part hereof (the "Casino Land") and the improvements now or hereafter constructed on the Casino Land, a portion of which constitute the Sands Hotel and Casino and Parking Garage (the "Sands");

WHEREAS, the Mortgagor is the owner of a fee simple interest in certain land and air spaces situated in Atlantic City, being more particularly described on Schedule A-2 attached hereto and by this reference made a part hereof (the "Office Land") and the improvements now or hereafter constructed on the Office Land;

WHEREAS, the Mortgagor is the owner of certain land situated in the City of Atlantic City, County of Atlantic, State of New Jersey, being more particularly described on Schedule A-3 attached hereto and by this reference made a part hereof (the "Expansion Land" and the improvements now or hereafter constructed on the Expansion Land (the Casino Land, the Office Land, and the Expansion Land being collectively referred to herein as the "Land");

WHEREAS, the Mortgagor is the owner of an easement interest in the parcels of real property situated in Atlantic City more particularly described on Schedule A-4 attached hereto and by this reference made a part hereof (the "Easement") and the improvements now or hereafter constructed on the Easement;

WHEREAS, the Easement was granted to the Mortgagor and the Cl a ridge Casino Hotel pursuant to that certain Ordinance No. 103 of Atlantic City dated October 7, 1987 and was recorded January 29, 1993 in the Atlantic County, New Jersey Clerk's Office in Deed Book 5463, Page 228 (the "Easement Ordinance");

WHEREAS, the Mortgagor is the sole owner and holder of the lessee's interest (the "Leasehold Estate") under the Lease dated December 18, 2000 originally between Madison House Group, L. P., as lessor, and Greate Bay Hotel and Casino, Inc., as lessee (the "Madison House Lease"), with respect to certain property located in the City of Atlantic City, County of Atlantic and State of New Jersey commonly known as 125 Dr. Martin Luther King Boulevard and more particularly described on Schedule A-5 attached hereto and by this reference made a part hereof.

WHEREAS, pursuant to an Indenture, dated as of the date hereof (as the same may hereafter be amended, supplemented or otherwise modified, the "Indenture"; capitalized terms not otherwise defined herein are used herein as defined therein), among the Mortgagor, the Mortgagee and Atlantic Coast Entertainment Holdings, Inc., a Delaware corporation (the "Company"), the Company is issuing, on the date hereof, up to $110 million of 3% First Mortgage Notes Due 2008 (the "First Mortgage Notes" or the "Securities");

WHEREAS, this Mortgage is being executed and delivered pursuant to the terms and conditions set forth in the Indenture and is entitled to the benefits thereof;

WHEREAS, the Mortgagor has guaranteed the punctual payment (including applicable notice and/or grace periods) of the principal of and any interest on the Securities, whether at maturity, by acceleration or otherwise, and payment and performance by the Company, and the Mortgagor of their other respective obligations (including the payment of fees and expenses) under the Indenture and with respect to the Securities pursuant to the guarantee contained in Article 12 of the Indenture (as the same may hereafter be amended, supplemented or otherwise modified from time to time, the "Guarantee"); and

WHEREAS, it is a condition precedent to the issuance of the Securities that the obligations of Mortgagor under the Guarantee be secured by, among other things, this Mortgage.

NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, receipt of which is hereby acknowledged, the Mortgagor agrees as follows:

TO SECURE:

The payment and performance by the Mortgagor of all of its obligations, covenants and duties, including, but not limited to, obligations to make payment of all principal, interest (including any interest that accrues after the filing of a petition of the type referred to in Sections 501 (vi) and 501 (vii) of the Indenture) fees, expenses and other amounts payable under the Guarantee, this Mortgage, the Indenture and any other Security Document, including all amounts that constitute part of such obligations and would be owed by the Company or the Mortgagor to the Mortgagee but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Company or the Mortgagor, (all of such obligations, covenants and duties referred to in this paragraph being called, collectively, the "Liabilities").

The Mortgagor hereby grants to the Mortgagee on behalf of the Mortgagee and of the Holders, a security interest in, and the Mortgagor hereby mortgages to the Mortgagee on its own behalf and on behalf of the Holders, all of its estate, right, title and interest in, to and under, or derived from, the following property:

The Land, together with all right, title and interest of the Mortgagor now owned or......

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