<PAGE>

                                                                Exhibit 10.31

                         DEFERRED COMPENSATION AGREEMENT

     DEFERRED COMPENSATION AGREEMENT (this "Agreement"), dated as of February 2,
1999 (the "Effective Date"), by and between Harveys Casino Resorts, a Nevada
corporation (the "Company"), and Stephen L. Cavallaro (the "Executive"), an
employee of the Company or a Subsidiary of the Company.

     Prior to the date hereof, Executive has been a participant in the Company's
Supplemental Executive Retirement Plan (the "SERP"). The SERP is a non-funded
retirement arrangement, and Executive has no current right to receive the value
of his accrued benefits under the SERP. In connection with the pending merger of
the Company and Harveys Acquisition Corporation, a Nevada corporation (the
"Merger"), Executive's participation in the SERP will cease, whereupon one-half
of Executive's gross accrued benefits under the SERP will be paid to him
(subject to applicable withholding requirements), and the remaining one-half of
his gross accrued benefits will continue to be deferred pursuant to this
Agreement.

     In addition, Executive and the Company have entered into that certain Stock
Option and Restricted Stock Award Agreement (the "Award Agreement"), of even
date herewith, which provides, among other things, for the automatic deferral
pursuant to this Agreement of restricted shares of Class A Common Stock and
restricted shares of Class B Common Stock of the Company (the "Deferred
Shares"), at such time as the value of such restricted shares would otherwise be
includable in Executive's gross income (the "Deferral Date"). Executive and the
Company may also enter into additional agreements ("Additional Award
Agreements") regarding shares of restricted stock (also referred to as "Deferred
Shares") providing for an identical deferral mechanism to that set forth in the
Award Agreement.

     1. AMOUNT DEFERRED; DEFERRAL PERIOD. (a) The amount of Executive's accrued
benefits under the SERP to be deferred pursuant to this Agreement is $390,939
(the "Initial Amount").

          (b) The number of Deferred Shares to be deferred under this Agreement
shall be as determined under the Award Agreement or the relevant Additional
Award Agreement, as applicable.

          (c) The deferral period shall commence on the date hereof with respect
to the Initial Amount and on the Deferral Date with respect to Deferred 

<PAGE>

Shares, and shall continue in each case until the occurrence of a Distribution
Event as set forth in Section 5 hereof.

     2. DEEMED INVESTMENT IN SHARES OF COMPANY COMMON STOCK. (a) As of the date
hereof, the Initial Amount shall be deemed to be invested in 202.1969 shares of
the Class A Common Stock, par value $.01 per share, of the Company, including
fractional shares (the "Deemed Class A SERP Shares") and 20,219.6862 shares of
the Class B Common Stock, par value $.01 per share, of the Company, including
fractional shares (the "Deemed Class B SERP Shares") (the Deemed Class A SERP
Shares and the Deemed Class B SERP Shares being collectively referred to herein
as the "Deemed SERP Shares"), based on a price of $19.14314156 per share of
Class A Common Stock and $19.14314156 per share of Class B Common Stock (the
Class A Common Stock and the Class B Common Stock being collectively referred to
herein as the "Common Stock").

          (b) As of the Deferral Date, the Deferred Shares shall be deemed to be
invested in an identical number of shares of the same class of Company capital
stock as the Deferred Shares themselves (the "Deemed Deferred Shares" and,
together with the Deemed SERP Shares, the "Deemed Shares").

          (c) The Company shall establish an unfunded bookkeeping account (the
"Account") to track the number of Deemed Shares held on Executive's behalf. The
Account shall be divided into two sub-accounts, one to track the number of
Deemed SERP Shares (the "SERP Sub-Account"), and the other to track the number
of Deemed Deferred Shares (the "Restricted Stock Sub-Account"). The Account
shall at all times prior to the occurrence of a Distribution Event be unfunded
and Executive's rights under the Account shall be subject to claims of the
general creditors of the Company. The Executive shall have no voting rights and
no rights to receive a distribution of dividends with respect to the Deemed
Shares, except as provided in Section 2(f) below.

          (d) The value of the SERP Sub-Account as of any date shall be equal to
the sum of (x) the product of (i) the Fair Market Value (as defined in Section
4) of one share of Class A Common Stock on such date and (ii) the number of
Deemed Class A Shares under the SERP Sub-Account on such date and (y) the
product of (i) the Fair Market Value of one share of Class B Common Stock on
such date and (ii) the number of Deemed Class B Shares under the SERP Sub-
Account on such date (the "Fair Market Value Formula"); PROVIDED, that in the
event Executive's employment shall be terminated (A) at any time prior to the
fifth 

                                       2
<PAGE>

anniversary of the Effective Date by the Executive other than for Good
Reason or (B) at any time by the Company for Cause (each as defined in the
Employment Agreement, of even date herewith, between the Company and the
Executive (the "Employment Agreement") as in effect as of the date hereof or as
the same may be amended from time to time, regardless of the termination of the
Employment Agreement prior to the effective date of Executive's termination of
employment), the value of the SERP Sub-Account as of the date of such valuation
shall be determined as the LESSER of (x) the value of the Deemed SERP Shares as
determined under the Fair Market Value Formula as of such valuation date and (y)
the Initial Amount as increased at the rate of 8% per year, compounded annually,
from the Effective Date through such valuation date.

          (e) The value of the Restricted Stock Sub-Account on any date shall be
as determined by applying the Fair Market Value Formula to the Deemed Deferred
Shares; PROVIDED, that from and after the effective date of Executive's
termination of employment by the Company without Cause or by the Executive for
Good Reason, the value of the Restricted Stock Sub-Account shall be determined
as the LESSER of (x) the value of the Deemed Deferred Shares as determined under
the Fair Market Value Formula as of such valuation date and (y) the value of the
Deemed Deferred Shares as of the effective date of such termination as
determined under the Fair Market Formula, as increased at the rate of 12% per
year, compounded annually, from such effective date through such valuation date;
and PROVIDED, further, that from and after the effective date of Executive's
termination of employment for any reason other than by the Company without Cause
or by Executive for Good Reason, including without limitation by reason of
Executive's death or Disability (as defined in the Employment Agreement), the
value of the Restricted Stock Sub-Account shall be determined as the LESSER of
(x) the value of the Deemed Deferred Shares as determined under the Fair Market
Value Formula as of such valuation date and (y) the value of the Deemed Deferred
Shares as of the effective date of such termination as determined under the Fair
Market Value Formula, as increased at the rate of 8% per year, compounded
annually, from such effective date through such valuation date.

          (f) On any date prior to a Distribution Event that dividends are
distributed by the Company to its stockholders in respect of the Class A Common
Stock or Class B Common Stock, each Deemed Share credited to the Account shall,
as applicable, be credited with a dividend equivalent, which shall be a dollar
amount equal to the dividends, if any, payable by the Company on such date,
either in cash or property, in respect of a share of such class of Common Stock.
In 

                                       3
<PAGE>

the case of dividends payable in property, the amount of the dividend
equivalent shall be based on the fair market value of such property at the time
of distribution of the dividend, as determined in good faith by the Board of
Directors of the Company (the "Board"). The dividend equivalents so credited to
the Account shall be automatically converted as of the dividend distribution
date into Deemed Shares (or fractions thereof) based upon the Fair Market Value
of such Deemed Shares as of such date.

     3. ADJUSTMENTS. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or similar change affecting the
Class A or Class B Common Stock, or any other class of shares of Company capital
stock to which the Deemed Shares may from time to time relate, an equitable
substitution or proportionate adjustment shall be made in the kind and number of
Deemed Shares held under the Account as may be determined in good faith by the
Board.

     4. FAIR MARKET VALUE. For purposes of this Agreement, "Fair Market Value"
(when capitalized, unless the context clearly indicates otherwise) means, as of
any given date, (A) if the Common Stock is publicly traded, the closing sale
price of the Common Stock on such date (or the nearest preceding date on which
the Common Stock was traded) as reported in the Western Edition of THE WALL
STREET JOURNAL, or (B) if the Common Stock is not publicly traded, the fair
market value of the Common Stock as determined in accordance with the procedures
set forth below, in each case based on the per share value of the Company as a
whole as of the relevant date, without any discount for the sale of a minority
interest and without considering lack of liquidity, including transfer and other
restrictions on the Common Stock:

          (a) The Board shall determine the fair market value of the Common
Stock in good faith, using commercially reasonable methods and at the Company's
sole expense, PROVIDED, that if Executive is a member of or non-voting observer
on the Board, Executive shall recuse himself from all deliberations of the Board
regarding such determination, and except as otherwise provided herein shall not
be entitled to receive or be provided access to any minutes or other records of
the Board with respect to such determination. The Board shall communicate the
per share valuation as so determined in writing to Executive within 20 business
days following the date Executive provides written notice of, or the Board shall
otherwise acknowledge, the need to determine the Fair Market Value of the Common
Stock hereunder, and upon Executive's request, the Board shall provide Executive
appropriate supporting documentation regarding the methods, assumptions and
other bases 

                                       4
<PAGE>

used in arriving at such valuation. If acceptable to Executive, the fair market
value of the Common Stock shall be as so determined.

          (b) If the fair market value as determined under (a) is not acceptable
to Executive, Executive shall determine the fair market value of the Common
Stock in good faith, using commercially reasonable methods and at Executive's
sole expense, and shall communicate the per share valuation as so determined in
writing to the Board within 20 business days following the Board's communication
to Executive of the per share valuation pursuant to (a) above and, upon the
Board's request, Executive shall provide to the Board appropriate supporting
documentation regarding the methods, assumptions and other bases used in
arriving at such valuation. If acceptable to the Board, the fair market value of
the Common Stock shall be as so determined.

          (c) If the fair market value as determined under (b) is not acceptable
to the Board, the Board and Executive shall then negotiate in good faith to
agree upon the fair market value of the Common Stock, based on the valuations
under (a) and (b) above.

          (d) If the Board and Executive shall be unable by the foregoing means
to agree upon the fair market value of the Common Stock within ten business days
after the Board has been advised of Executive's valuation, the issue shall then
be submitted to binding arbitration in Las Vegas, Nevada according to the rules
and procedures of the American Arbitration Association. The Company and
Executive shall each submit to the arbitrator their valuations under (a) and (b)
above, together with all supporting documentation regarding the methods,
assumptions and other bases used in arriving at such valuation. The arbitrator
shall then be instructed to choose which of the two valuations more closely
reflects the fair market value of the Common Stock, and shall not have the right
to choose a third valuation as the appropriate fair market value of the Common
Stock. The party whose valuation is not so chosen by the arbitrator shall pay
any and all costs and expenses of the arbitration (but not the initial valuation
of the other party), including without limitation reasonable attorneys' fees and
other fees incurred by the prevailing party in such arbitration. Judgment may be
entered on the arbitrator's determination and award.

          5. DISTRIBUTION EVENTS. (a) Upon the occurrence of a Mandatory
Distribution Event (as defined in Section 5(b)), the value of the Account as of
the date of such Mandatory Distribution Event shall be paid in whole to
Executive at the 

                                       5
<PAGE>

election of the Company (i) in cash, (ii) in shares of Company capital stock, or
(iii) a combination of cash or shares of Company capital stock, in each case
having a Fair Market Value equal to the value of the Account as of the date of
such Mandatory Distribution Event. Upon the occurrence of a Special Distribution
Event, the Executive shall be distributed shares of Company capital stock having
a Fair Market Value equal to the lesser of the Applicable Value (as defined in
Section 5(c)) and the value of the Account as of the date of such Special
Distribution Event. In addition, at any time on or following the effective date
of Executive's termination of employment, the Company shall have the right, in
its sole and absolute discretion, to distribute the value of the Account, in
whole or in part (a "Permissive Distribution Event" and, together with a
Mandatory Distribution Event and a Special Distribution Event, a "Distribution
Event"), at the election of the Company (i) in cash, (ii) in shares of Company
capital stock, or (iii) a combination of cash or shares of Company capital
stock, in each case having a Fair Market Value equal to the value of the Account
(or portion thereof being distributed) as of the date of such Permissive
Distribution Event, PROVIDED, that after giving effect to the distribution and
the election, the Tax Liability Condition (as defined in Section 5(c)) for the
Permissive Distribution Event would be satisfied with respect thereto. Except as
necessary to satisfy the Tax Liability Condition, the shares distributed in
connection with a Mandatory Distribution Event or a Permissive Distribution
Event need not be Marketable Securities (as defined in Section 5(d)).

          (b) The first to occur of the following events shall constitute a
Mandatory Distribution Event:

               (i) The earliest date following the closing of an Initial Public
     Offering (as such term is defined in Section 6(e)) upon which all
     underwriter lock-up arrangements applicable to Executive, if any, shall
     have expired; PROVIDED, that after giving effect to the distribution and
     the election referred to in Section 5(a), the Tax Liability Condition (as
     defined below) for the Mandatory Distribution Event would be satisfied with
     respect thereto;

               (ii) The occurrence of a Change in Control (as defined under the
     Award Agreement); PROVIDED, that after giving effect to the distribution
     and the election referred to in Section 5(a) (assuming the Deemed Shares
     represented Common Stock for the purposes of this calculation), the Tax
     Liability Condition (as defined below) for the Mandatory Distribution Event
     would be satisfied with respect thereto; and


                                       6
<PAGE>

               (iii) The last day of the Company's fifteenth fiscal year
     commencing after the Effective Date (the "Maximum Deferral Distribution
     Event").

          A Special Distribution Event shall occur each time that Executive has
the opportunity to sell Restricted Securities (as defined in the Stockholders
Agreement, of even date herewith, among the Company and certain stockholders
(the "Stockholders Agreement"), pursuant to Section 2.5 or 3.1 (under an
effective registration statement) of the Stockholders Agreement.

          (c) For purposes of this Section 5, (i) the Tax Liability Condition
shall be satisfied if, in respect of any Distribution Event, the sum of any cash
and Marketable Securities represented by the Deemed Shares would equal or exceed
Executive's Tax Liability in respect of such Distribution Event; and (ii) the
Applicable Value shall be the dollar amount obtained by dividing the maximum
income tax rate (federal, state and local) for Executive in the state and
locality of his residence for income tax purposes as determined pursuant to
Section 5(e), including without limitation impositions in respect of Medicare,
into the dollar value of the total consideration which is comprised of cash and
Marketable Securities to which Executive would be entitled to receive pursuant
to the Stockholders Agreement as a result of the Special Distribution Event.

          (d) For purposes of this Section 5, Marketable Securities shall mean
shares of capital stock of or other equity interests in any entity that, upon
distribution to Executive, are freely tradeable by Executive under the
Securities Act of 1933, as amended (the "Securities Act"), and are not subject
to any contractual restrictions or limitations imposed by the Company on the
rights of Executive to sell such shares.

          (e) For purposes of this Section 5, Executive's Tax Liability in
respect of any Distribution Event shall mean the product of (i) the maximum
income tax rate (federal, state and local) for Executive in the state and
locality of his residence for income tax purposes, including without limitation
impositions in respect of Medicare and (ii) the amount of income to be
recognized by Executive upon such Distribution Event, in each case as determined
by the Company's independent auditors, a copy of which determination shall be
provided to Executive. For purposes of the immediately preceding sentence, if
Executive shall be subject to income taxation in more than one state, the
maximum rate of taxation for each such state shall be taken into account
proportionately based on the 

                                       7
<PAGE>

extent to which the income so recognized would be treated under applicable law
as having been earned in or otherwise having a relevant nexus with such state
for income tax purposes.

          (f) The value of the Account shall be distributed to Executive within
five business days following the occurrence of the Distribution Event or, if
later, within five business days after the final determination of the Fair
Market Value of the Account pursuant to Section 4.

          (g) Executive hereby agrees that commencing upon and for the 180-day
period following a Mandatory Distribution Event pursuant to clause (b)(i) above
(which Mandatory Distribution Event does not also constitute a Special
Distribution Event), Executive shall not, directly or indirectly, sell, make any
short sale of, loan, hypothecate, pledge, offer, grant or sell any option or
other contract for the purchase of, purchase any option or other contract for
the sale of, or otherwise dispose of or transfer, or agree to engage in any of
the foregoing transactions with respect to, any shares of Common Stock to be
distributed to Executive pursuant to such Distribution Event other than (a)
shares having a Fair Market Value no greater than Executive's Tax Liability in
respect of such Distribution Event and (b) such number of shares as may be sold
by Executive, subject to the volume limitations of Rule 144(e) under the
Securities Act as if Rule 144 applied to such sale and as if Executive were an
affiliate of the Company for such purposes.

          6. CALL RIGHTS. (a) In the event all or any portion of the value of
the Account is distributed to the Executive pursuant to Section 5 prior to the
Company's Initial Public Offering in shares of capital stock or other equity
interests of any entity that are not Marketable Securities (the "Illiquid
Distributed Shares"), the Company shall have the right (the "Call"), exercisable
at any time prior to the Company's Initial Public Offering (the "Call Exercise
Period") by giving written notice to the Executive pursuant hereto, to purchase
any or all of the Illiquid Distributed Shares in exchange for an amount in cash
equal to the Fair Market Value of such Illiquid Distributed Shares as of the
date on which such notice is provided (the "Call Price"); PROVIDED, that if
Executive is exercising "tag-along" rights pursuant to Section 2.5 of the
Stockholders Agreement, then until completion of such tag-along offer, the Call
Price shall not be less than the price per share attainable by Executive under
such tag-along offer.

          (b) The closing with respect to the exercise of the Call shall take
place at the Company's executive offices within 30 days following the date the

                                       8
<PAGE>

Company provides Executive written notice of its intention to exercise the Call
or, if later, within five business days after the final determination of the
Fair Market Value of the Illiquid Distributed Shares pursuant to Section 4.

          (c) Notwithstanding any other provision hereof, the Company may
assign, without the consent of the Executive, its rights under this Section 6;
PROVIDED, that no such assignment shall release the Company from its obligations
hereunder.

          (d) Notwithstanding anything herein or in the Stockholders Agreement
to the contrary, during the Call Exercise Period the Call shall continue to
apply to the Illiquid Distributed Shares following any transfer thereof by the
Executive under any circumstances, including pursuant to any arrangement,
proceeding, decree, judgment, order or application of law relating to the
division of property for domestic relations purposes.

          (e) The Call shall terminate upon the closing of the Company's Initial
Public Offering. For purposes of this Agreement, "Initial Public Offering" shall
mean the closing of a public offering pursuant to an effective registration
statement under the Securities Act covering shares of the Company's Common
Stock, which shares are approved for listing or quotation on the New York Stock
Exchange, American Stock Exchange or Nasdaq National Market.

     7. STOCKHOLDERS AGREEMENT. Executive is a party to the Stockholders
Agreement and Executive and the Company agree that any shares of Company capital
stock issuable to Executive under this Agreement shall be subject in all
respects to the Stockholders Agreement, the provisions of which shall be deemed
to be incorporated herein by reference.

     8. NOTICES. All notices and other communications under this Agreement shall
be in writing and shall be given by first class mail, certified or registered
with return receipt requested, or by a nationally recognized overnight delivery
service to the respective parties named below:

      If to Company:             Harveys Casino Resorts
                                 Highway 50 and Stateline Avenue
                                 P.O. Box 128
                                 Lake Tahoe, Nevada 89449
                                 Attention:

                                       9
<PAGE>

                                 Facsimile: 702-586-6811


      with a copy to:            Colony Capital, Inc.
                                 1999 Avenue of the Stars
                                 Los Angeles, California 90067
                                 Attention: Kelvin L. Davis
                                 Facsimile: 310-282-8808

      and a copy to:             Skadden, Arps, Slate, Meagher & Flom LLP
                                 300 South Grand Avenue
                                 Los Angeles, California 90071
                                 Attention: Jonathan H. Grunzweig
                                 Facsimile: 213-687-5600

      If to the Executive:       Stephen L. Cavallaro
                                 8824 Montagna Drive
                                 Las Vegas, Nevada 89134
                                 Facsimile: 702-363-4461

      with a copy to:            Michael Forman
                                 Klehr, Harrison, Harvey, Branzburg & Ellers LLP
                                 1401 Walnut Street
                                 Philadelphia, Pennsylvania 19102
                                 Facsimile: 215-568-3206

Either party hereto may change such party's address for notices by notice duly
given pursuant hereto.

     9. WITHHOLDING REQUIREMENTS. Executive shall, no later than the date
amounts become payable hereunder pursuant to a Distribution Event, pay to the
Company, or make arrangements satisfactory to the Company, including, as
applicable, by means of any cash distributable pursuant to Section 5, regarding
payment of any federal, state, or local taxes or other amounts of any kind
required by law to be withheld with respect to such Distribution Event. The
obligations of the Company hereunder shall be conditional on the making of such
payments or arrangements, and the Company shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to Executive.

                                       10
<PAGE>

     10. FAILURE TO ENFORCE NOT A WAIVER. The failure to enforce at any time any
provision of this Agreement shall in no way be construed to be a waiver of such
provision or of any other provision hereof.

     11. GOVERNING LAW. This Agreement shall be governed by and construed
according to the laws of the State of Nevada without regard to its principles of
conflict of laws.

     12. AMENDMENTS. This Agreement may be amended or modified at any time only
by an instrument in writing signed by each of the parties hereto.

     13. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not
constitute or be evidence of any agreement or understanding, express or implied,
that the Executive has a right to continue as an employee of the Company or any
Subsidiary or affiliate of the Company for any period of time or at any specific
rate of compensation.

     14. DISPUTE RESOLUTION. Any dispute arising under this Agreement shall be
resolved in accordance with the arbitration provisions of the Employment
Agreement as in effect as of the date hereof, or as the same may be amended from
time to time, regardless of the expiration of the Employment Agreement prior to
the resolution of such dispute, and such arbitration provisions shall be deemed
to be incorporated herein by this reference.

     15. MARKET STAND-OFF. In connection with any underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Securities Act for such period as the Company or its
underwriters may request (such period not to exceed 180 days following the date
of the applicable offering), the Executive shall not, directly or indirectly,
sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell
any option or other contract for the purchase of, purchase any option or other
contract for the sale of, or otherwise dispose of or transfer, or agree to
engage in any of the foregoing transactions with respect to, any shares of
Company capital stock acquired under this Agreement without the prior written
consent of the Company or its underwriters, PROVIDED, that the Executive shall
not be required to be subject to "lock-up" restrictions that are more
restrictive than such restrictions to which any other Employee Stockholder (as
defined in the Stockholders Agreement) having commensurate job duties and
responsibilities in the Company is subject, or that would prevent the Executive
from effectuating a sale pursuant to

                                       11
<PAGE>

Section 2.5 of the Stockholders Agreement or Section 3.1 of the Stockholders
Agreement.




                                       12

<PAGE>


     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.

                                         HARVEYS CASINO RESORTS


                                         By:  /s/ Charles W. Scharer    
                                            -----------------------------------
                                              Name:   Charles W. Scharer
                                              Title:  President and
                                                      Chief Executive Officer



                                         /s/ Stephen L. Cavallaro
                                         --------------------------------------
                                                    STEPHEN L. CAVALLARO

                                         Address:   8824 Montagna Drive
                                                    Las Vegas, Nevada 89134



                                       13