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                                                               Exhibit 10.29



                              EMPLOYMENT AGREEMENT
         THIS AGREEMENT, made and entered into this 2nd day of February, 1999,
by and between HARVEYS CASINO RESORTS, a Nevada corporation, hereinafter
referred to as "HARVEYS" and/or "EMPLOYER," and JOHN J. MCLAUGHLIN, hereinafter
referred to as "EMPLOYEE," as follows:
                    
                              W I T N E S S E T H:
         WHEREAS, EMPLOYEE has previously served as an employee of HARVEYS
pursuant to that certain employment agreement, dated August 14, 1995, as amended
(the "Prior Agreement"); and

         WHEREAS, HARVEYS and Harveys Acquisition Corporation, a Nevada
corporation ("ACQ CORP"), have entered into an Agreement and Plan of Merger
dated as of February 1, 1998 (the "Merger Agreement"), whereby ACQ CORP will be
merged with and into HARVEYS (the "Merger"); and

         WHEREAS, in connection with the Merger Agreement, HARVEYS and EMPLOYEE,
together with other members of HARVEYS management, have entered into a
Memorandum of Understanding, dated February 1, 1998 (the "MOU"), which sets
forth, among other things, certain terms regarding EMPLOYEE'S employment with
HARVEYS following consummation of the Merger, including the execution of a new
employment agreement to replace the Prior Agreement; and

         WHEREAS, following consummation of the Merger, HARVEYS desires to
continue to secure the benefits of EMPLOYEE'S background, knowledge, experience,
ability, expertise and industry to promote and maintain HARVEYS' stability,
growth, viability and profitability; and

         WHEREAS, subject to consummation of the Merger, HARVEYS desires to
continue to engage the services of EMPLOYEE, who is desirous of continued
employment by HARVEYS, upon the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, together with other good and valuable consideration
the receipt of which is hereby acknowledged, the parties hereto do hereby agree
as follows:



<PAGE>


                                       I.

                                   DEFINITIONS

         1.01 EMPLOYEE shall at all times mean John J. McLaughlin.

         1.02 EMPLOYER shall at all times mean HARVEYS CASINO RESORTS, a Nevada
corporation, and its Successors in Interest together with its subsidiaries.

         1.03 HARVEYS shall at all times mean HARVEYS CASINO RESORTS, a Nevada
corporation, and its Successor in Interest together with its subsidiaries.

         1.04 Successor in Interest shall mean any entity which is the successor
or assign of HARVEYS, at law or at equity, and shall include without limitation,
any entity into which HARVEYS is merged or consolidated, and any entity to which
all or substantially all of the assets or businesses of HARVEYS is transferred.

                                       II.

                   NATURE OF EMPLOYMENT AND DUTIES OF EMPLOYEE

         2.01 Subject to and effective upon the consummation of the Merger,
EMPLOYEE shall continue to serve HARVEYS as Senior Vice President, Chief
Financial Officer and Treasurer of HARVEYS. EMPLOYEE shall at all times be
subject to, observe and carry out such rules, regulations, policies, directions,
and restrictions as HARVEYS Board of Directors (the "Board") may from time to
time establish for senior executive officers of the EMPLOYER.

         2.02 Subject to the supervision and control of the Board and EMPLOYER'S
Chief Executive Officer, EMPLOYEE shall do and perform all services and acts
necessary or advisable to fulfill the duties and responsibilities of his
position and shall render such services on the terms set forth herein. Without
limiting the generality of the foregoing, EMPLOYEE shall be responsible for the
EMPLOYER'S financial plans, policies and relationships with financial
institutions as well as managing the EMPLOYER'S controller, directing the
EMPLOYER'S treasury, national purchasing, budgeting, tax and accounting
functions and overseeing the EMPLOYER'S data processing functions. In addition,
EMPLOYEE shall have such other executive and managerial powers and duties with
respect to HARVEYS and its subsidiaries that are consistent with the offices of
Senior Vice President, Chief Financial Officer and Treasurer

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and as may reasonably be assigned to him by the Board, including without
limitation serving on the Board of Directors of any subsidiary of HARVEYS.

         2.03 EMPLOYEE has reviewed and concurs with his responsibilities and
duties as set forth in Section 2.02 above.

         2.04 During the Term (as defined below), EMPLOYEE shall devote
substantially all of his productive time, ability and attention to the business
of EMPLOYER. In addition, EMPLOYEE shall not directly or indirectly render any
service of a business, commercial or professional nature, to any other person or
organization, whether for compensation or otherwise, without the prior written
consent of the Board, PROVIDED, that, subject to the provisions of Article X
hereof, EMPLOYEE shall not be precluded from involvement in charitable or civic
activities or his personal financial investments provided the same do not
materially interfere with his time or attention to the business of EMPLOYER, and
PROVIDED, further, that EMPLOYEE shall not serve as a director of any other
for-profit business that is not an affiliate of EMPLOYER.

         2.05 EMPLOYEE agrees that he shall at all times (i) to the best of his
ability and experience conscientiously perform all of the duties and obligations
of his position with the EMPLOYER, (ii) use his best efforts to do and perform
all services, acts, or things necessary or advisable to assist in the management
and conduct of the business and otherwise advance the interests of EMPLOYER and
(iii) diligently and in the highest good faith carry out the lawful directives
of the Board, PROVIDED, that EMPLOYEE shall not be obligated to perform his
duties hereunder outside the Stateline, Nevada area, except for business trips
and directors meetings outside said area which arise and result from the normal
conduct of the business of HARVEYS.

                                      III.

                    TERM AND GENERAL CONDITIONS OF EMPLOYMENT

         3.01 Subject to and effective upon consummation of the Merger, EMPLOYER
hereby employs the EMPLOYEE, and EMPLOYEE hereby agrees to be employed by
HARVEYS for a period of five (5) years commencing on the date of consummation of
the Merger (the "Effective Date") and terminating on the fifth anniversary of
the Effective Date (as the same may be extended as set forth below, the "Term"),
unless extended by mutual written agreement of the

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parties; PROVIDED, that the period of employment shall automatically be extended
for successive one (1) year periods if neither party has provided six (6) months
prior written notice to the other of its intention to have this Agreement lapse
at the expiration of the Term; and PROVIDED FURTHER, that the Term shall be
subject to earlier termination in accordance with Articles IV, V and VI below.

         3.02 Notwithstanding anything to the contrary herein, in the event of
any termination of EMPLOYEE's employment for any or no reason, EMPLOYEE and
EMPLOYER shall nevertheless continue to be bound by the terms and conditions set
forth in Articles IX through XII, in Section 13.08 and, to the extent provided
therein, Section 13.09 below.

         3.03 Upon consummation of the Merger, the Prior Agreement shall be
cancelled and terminated without further obligation of EMPLOYER.

         3.04 If the Merger Agreement shall be terminated prior to consummation
of the Merger, EMPLOYEE shall continue his employment with HARVEYS pursuant to
the terms of the Prior Agreement, which in such case shall remain in full force
and effect. 3.05 EMPLOYEE hereby acknowledges and agrees that his rights as set
forth herein to receive severance and other compensation and benefits hereunder
shall supersede and replace in its entirety any severance or other benefits that
might otherwise be payable pursuant to HARVEYS Change of Control Plan as in
effect as of the date hereof or as the same may be amended from time to time or
under any other severance plan, policy, agreement or arrangement in effect
immediately prior to the Effective Date. EMPLOYEE further acknowledges that as
of the Effective Date, EMPLOYEE shall no longer be a participant in or have any
rights under the Change of Control Plan (or under any such other severance plan,
policy, agreement or arrangement in effect immediately prior to the Effective
Date), regardless of the reasons or circumstances of his termination of
employment. EMPLOYEE further acknowledges that as of the Effective Date EMPLOYEE
shall no longer be a participant in or have any rights under the Company's Long
Term Incentive Plan or Supplemental Executive Retirement Plan.


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                                       IV.

                     TERMINATION OF EMPLOYMENT WITHOUT CAUSE

         4.01 EMPLOYEE'S employment may be terminated at any time by HARVEYS,
with or without "Cause" (as defined in Section 6.01 below), at any time and for
any or no reason. Any such termination without Cause shall be effective only
upon thirty (30) days' prior written notice to EMPLOYEE (such effective date,
for purposes of this Article IV, the "Termination Date").

         4.02 If EMPLOYEE'S termination by EMPLOYER shall be without Cause,
EMPLOYEE shall be entitled to the following benefits:

                  (a) Except as provided below, EMPLOYEE shall be entitled to
receive on the Termination Date a lump sum payment in an amount equal to the
product of (x) the Applicable Multiplier (as defined below) and (y) the sum of
his then Base Salary and then Annual Target Bonus (each as defined below).

                                     (i)  "Applicable Multiplier" shall mean the
         lesser of (A) 1.5 and (B) a fraction, the denominator of which is 12,
         and the numerator of which shall be the number of full plus partial
         (calculated by the day) months remaining in the Term following the
         Termination Date, which numerator shall be increased by the number of
         full plus partial (calculated by the day) months during any Post-Term
         Restriction Period (as defined below and further described in Annex E)
         if an election to have such Post-Term Restriction Period apply to
         EMPLOYEE is made by EMPLOYER pursuant to Section 10.01.

                                    (ii)  For purposes of this Section 4.02(a),
         EMPLOYEE'S annual target bonus under the Annual Bonus Plan (as defined
         in Section 7.02 below) for each fiscal year during the Term shall be
         deemed to be 50 percent of EMPLOYEE'S Base Salary as in effect as of
         the date the relevant business plan targets for such fiscal year are
         established by the Board.

                                   (iii)  For purposes of this
         Agreement, the "Post-Term Restriction Period" shall mean that period, 
         if any, following expiration of the Term during which EMPLOYEE would be
         subject to the restrictions of


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         Section 10.01 as determined under the first paragraph of Section 10.01,
         without regard to any limitation of such period by reason of Section
         10.01(a). The Post-Term Restriction Period is further described in
         Annex E hereto.
                                    (iv)  Notwithstanding the foregoing, in the 
         event that EMPLOYEE'S Termination Date shall be less than one year
         prior to the expiration of the Term and the Applicable Multiplier
         (determined as above by including any applicable Post-Term Restriction
         Period) shall be less than 1.0, EMPLOYEE shall not be entitled to
         receive the lump sum payment determined under the first sentence of
         this Section 4.02(a), but shall instead be entitled to receive (A) on
         the Termination Date a lump sum payment in an amount equal to the
         product of (x) the Applicable Multiplier and (y) his then Base Salary
         and (B) as applicable, a bonus as determined under Annex E hereto.

                  (b) EMPLOYEE shall be entitled to continuation of his Benefits
(as defined below) for that number of months immediately following the
Termination Date equal to the product of (A) the Applicable Multiplier and (B)
12 (such number of months, the "Severance Period"), PROVIDED, that in the event
that during such period, pursuant to applicable law or the terms of the
applicable plan, any Benefits may not be provided pursuant to the terms of the
specific plan referenced herein, EMPLOYER shall provide substantially equivalent
benefits by alternate means.

                  (c) Subject to the provisions of the Award Agreement (as
defined in Section 7.03 below), EMPLOYEE shall vest as of the Termination Date
in that portion of the Stock Award and Stock Option grants (each as defined
below) that would otherwise have vested had EMPLOYEE remained in HARVEYS employ
for the duration of the Severance Period.

                  Except as set forth in this Section 4.02 and Section 13.08,
all other rights of EMPLOYEE (and, except as provided in Sections 4.02 and 3.02
above and Section 13.08, all obligations of the EMPLOYER) hereunder shall
terminate as of the Termination Date.

         4.03 If during the term hereof EMPLOYEE'S employment shall terminate by
reason of his death or Disability (as defined below), he or his estate, as
applicable, shall be entitled to (i) all


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amounts of Base Salary and Benefits accrued but unpaid through the date of such
termination (which shall be the date of death or the 45th day after the date
EMPLOYER provides EMPLOYEE notice of termination for Disability) and (ii) any
death and/or disability benefits that may be due EMPLOYEE under any benefit
plans in effect from time to time. "Disability" shall mean any physical or
mental disability that prevents EMPLOYEE from performing one or more of the
essential functions of his position for a period of not less than six (6) months
in any continuous 12-month period. Except as set forth in this Section 4.03 and
Section 13.08, all other rights of EMPLOYEE (and, except as provided in this
Section 4.03 and Section 3.02 above and Section 13.08, all obligations of the
EMPLOYER) hereunder shall terminate as of the date of such termination of
employment.
                                       V.

                 TERMINATION OF EMPLOYMENT AT EMPLOYEE'S REQUEST

         5.01 EMPLOYEE may, at EMPLOYEE'S sole option and right, terminate his
employment with EMPLOYER at any time, with or without Good Reason (as defined
below). Any such termination shall be effective only upon thirty (30) days'
prior written notice to HARVEYS.
         
                  (a) In the event of such termination of employment without
Good Reason, EMPLOYEE shall be entitled to receive all amounts of Base Salary
and Benefits accrued but unpaid through the date of such termination.

                  (b) In the event of such termination of employment with Good
Reason, EMPLOYEE shall be entitled to receive the benefits set forth in Sections
4.02(a)-(c) as if EMPLOYEE'S employment had been terminated by EMPLOYER without
Cause, with the "Termination Date" as used in such sections being the effective
date of termination pursuant to this Section 5.01.

                  For purposes of this Section 5.01, EMPLOYEE shall have "Good
Reason" to terminate his employment hereunder if (i) EMPLOYER shall, without
EMPLOYEE'S written consent, willfully and materially breach its obligations
under this Agreement, (ii) EMPLOYEE provides EMPLOYER written notice pursuant
hereto stating with specificity the respects in



                                      - 7 -
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which EMPLOYEE believes EMPLOYER to have willfully and materially breached its
obligations under this Agreement and (iii) within thirty (30) days following the
date of such notice EMPLOYER shall not have cured such breach. Except as set
forth in this Section 5.01 (and, as incorporated hereinabove by reference,
Section 4.02) and Section 13.08, all other rights of EMPLOYEE (and, except as
provided in Section 3.02 above and Section 13.08, all obligations of the
EMPLOYER) hereunder shall terminate as of the date of such termination of
employment.
                                       VI.
                       
                       TERMINATION OF EMPLOYMENT FOR CAUSE

         6.01 EMPLOYER may at any time, at its election, by written notice to
EMPLOYEE stating with specificity the reason for the termination, terminate
EMPLOYEE'S employment for "Cause," which shall be defined as EMPLOYEE'S:

                  (a)      Gross negligence or willful malfeasance in the 
                           performance of his duties
                           under this Agreement;

                  (b)      Failure to obtain or retain any permits, licenses, or
                           approvals which may be required by any state or local
                           authorities in order to permit the EMPLOYEE to
                           continue his employment as contemplated by this
                           Agreement;

                  (c)      Conviction of any felony or conviction of a crime 
                           involving moral turpitude;

                  (d)      Dishonesty with respect to EMPLOYER (including, 
                           without limitation, fraud) resulting in a breach of
                           duty to EMPLOYER involving EMPLOYEE'S personal gain
                           or profit;

                  (e)      Engaging in any activity that is in violation of the
                           provisions of Article X of this Agreement, which
                           shall not be cured following ten days' written notice
                           and a demand to cure such violation; or

                  (f)      Use or imparting of any confidential or proprietary
                           information of EMPLOYER or any subsidiary or
                           affiliate in violation of any confidentiality or
                           proprietary agreement to which EMPLOYEE is a party,
                           including without limitation the provisions of
                           Article IX of this Agreement; PROVIDED, that in the
                           event such notice is provided pursuant to


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Section 6.01(b), EMPLOYEE shall have a period of thirty (30) days following the
date of such notice in which to cure such failure, and if EMPLOYEE shall cure
such failure within such period, EMPLOYEE's employment hereunder shall be
reinstated without prejudice.

        6.02 Upon the provision of such notice (or, in the case of such notice
pursuant to Section 6.01(b), upon expiration of the applicable cure period
without cure), EMPLOYEE'S employment shall immediately cease and terminate for
Cause. In the event of such termination of employment, EMPLOYEE shall be
entitled to receive all amounts of Base Salary and benefits accrued but unpaid
through the date of such termination. Except as set forth in this Section 6.02
and Section 13.08, all other rights of EMPLOYEE (and, except as provided in
Section 3.02 above and Section 13.08, all obligations of the EMPLOYER) hereunder
shall terminate as of the date of such termination of employment.
        
                                      VII.
         
                            COMPENSATION OF EMPLOYEE

         7.01   Base Salary - EMPLOYEE shall receive an annual base salary 
("Base Salary") of Three Hundred Thousand Dollars ($300,000), payable in at
least monthly installments, less all applicable Federal, state and local taxes,
Social Security and any other government mandated deductions. EMPLOYEE'S Base
Salary shall be reviewed by the Board no less frequently than annually relative
to specified performance-based criteria to be determined by the Board.

         7.02   Annual Bonus - Following the Effective Time, EMPLOYEE shall be
eligible to participate in EMPLOYER'S Management Incentive Plan ("MIP") or, at
the election of EMPLOYER, in a new or equivalent annual bonus plan established
by EMPLOYER having a similar structure to the MIP providing for payment of an
annual bonus (the "Annual Bonus Plan"), but in either case with thresholds and
triggering events for payment based on the achievement of HARVEYS annual budget
and other business plan targets to be determined by the Board following the
Effective Date. EMPLOYEE's maximum annual bonus under the Annual Bonus Plan
shall not be less than $165,000. Notwithstanding the foregoing, the following
provisions shall apply with respect to EMPLOYEE'S participation in the Annual
Bonus Plan with respect to fiscal 1999:


                                      - 9 -
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                  (a) On the date hereof, EMPLOYER shall pay to EMPLOYEE a lump
sum amount in cash equal to 25% of EMPLOYEE'S maximum bonus under the Annual
Bonus Plan for fiscal 1999, which lump sum amount EMPLOYER and EMPLOYEE
acknowledge and agree to be $55,625 (the "Advance"). EMPLOYEE hereby
acknowledges receipt of the Advance.

                  (b) Following the end of fiscal 1999, the Board shall
determine EMPLOYEE'S bonus under the Annual Bonus Plan in the ordinary course
using the financial targets established by the Board prior to the date hereof,
without regard to the Advance (the "Overall 1999 Bonus Entitlement"). On the
date bonuses under the Annual Bonus Plan are paid generally to employees with
respect to fiscal 1999, EMPLOYEE shall be entitled to receive an annual bonus
payment equal to the excess, if any, of (i) EMPLOYEE'S Overall 1999 Bonus
Entitlement over (ii) the amount of the Advance. In the event the Advance shall
be greater than the Overall 1999 Bonus Entitlement, EMPLOYEE shall have no
obligation to repay any portion of the Advance to EMPLOYER, and no portion of
the Advance shall be offset against amounts otherwise payable to EMPLOYEE under
the Annual Bonus Plan with respect to subsequent fiscal years. However, in the
event EMPLOYEE'S employment is terminated by EMPLOYER without Cause or by
EMPLOYEE for Good Reason prior to December 31, 1999, the amount of the Advance
shall be offset dollar-for-dollar against amounts otherwise payable to EMPLOYEE
under Section 4.02(a).

         7.03   Stock Grants and Stock Option - On the Effective Date, EMPLOYEE
shall receive (i) a restricted Stock Award consisting of 180 shares of the Class
A common stock, par value $.01 per share, of HARVEYS ("Class A Common Stock")
and 18,000 shares of the Class B common stock, par value $.01 per share, of
HARVEYS ("Class B Common Stock") and (ii) a Stock Option to purchase 240
additional shares of Class A Common Stock and 24,000 additional shares of Class
B Common Stock, each at a price of $20.06 per share; PROVIDED, that the Stock
Award and Stock Option shall each be subject in all respects to the terms of
HARVEYS 1999 Omnibus Incentive Plan, a copy of which is attached hereto as Annex
A (the "Omnibus Plan"), the individual stock option and restricted stock award
agreement to be entered into thereunder evidencing the Stock Award and Stock
Option, a copy of which is attached hereto as Annex B



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(the "Award Agreement"), and that certain Stockholders Agreement among HARVEYS,
Colony HCR Voteco, LLC, a Nevada limited liability company, Colony Investors
III, L.P., a Delaware limited partnership, and the security holders of the
Company (including EMPLOYEE) as identified from time to time on Schedule A
thereto, a copy of which is attached hereto as Annex C.

                                      VIII.

                            BENEFITS AND PERQUISITES

         During the Term, EMPLOYEE shall be entitled to the benefits and
perquisites as set forth in this Article VIII (collectively, "Benefits")

         8.01   HARVEYS 401(k) Plan - During the employment term the EMPLOYEE
shall be allowed to participate in HARVEYS 401(k) Plan, or shall be provided
with benefits that are substantially identical to the benefits provided under
such plan as of the date hereof.

         8.02   Vacation - EMPLOYEE shall be entitled to four weeks of paid
vacation per year in the first three years of the Term and five weeks of paid
vacation per year in the fourth and fifth years of the Term. EMPLOYEE shall be
afforded the usual holidays as EMPLOYER may from time to time recognize.

         8.03   Complimentary Privileges - EMPLOYEE shall be entitled such 
Level I complimentary privileges as are afforded generally to senior executives
of the EMPLOYER from time to time pursuant to policies adopted by the Board of
Directors..

         8.04   EMPLOYER shall provide EMPLOYEE with an automobile in accordance
with the Class II category of EMPLOYER'S Standard Automobile Policy and
Procedures, as from time to time amended.

         8.05   Disability - EMPLOYEE shall also be entitled to short term
disability coverage and long term disability coverage under plans as in effect
from time to time as implemented by EMPLOYER.

         8.06   Medical, Vision and Dental Insurance - EMPLOYER shall provide
medical, vision and dental benefits to EMPLOYEE, his spouse and dependents in
accordance with



                                     - 11 -
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EMPLOYER'S Class One coverage under the Executive Medical Plan, as amended from
time to time.

         8.07   Deferred Compensation Program - EMPLOYEE shall be allowed to
participate in the Deferred Compensation Program as is in effect from time to
time.

         8.08   Life Insurance - During the Term. EMPLOYER shall furnish 
EMPLOYEE with Group Term Life Insurance and Accidental Death/Dismemberment
Insurance, in each case subject to the terms of such plans as in effect from
time to time.

         8.09   Additional Employee Benefit Plans - EMPLOYEE shall be entitled 
to participate in all additional employee benefits plans which may, in the
future, be made generally available to EMPLOYER'S most senior management
employees, PROVIDED, that separate employee benefits plans may be adopted for
lower-ranking management employees as to which EMPLOYER may determine EMPLOYEE
ineligible for participation, and PROVIDED, FURTHER, that EMPLOYEE shall not be
entitled to participate in (i) EMPLOYER'S Supplemental Executive Retirement Plan
or any other supplemental retirement plan or arrangement, (ii) EMPLOYER's Long
Term Incentive Plan or (iii) any severance plan, policy or arrangement of
EMPLOYER. This Section 8.09 shall not be construed to affect EMPLOYEE'S
entitlement to severance or bonus amounts as provided in this Agreement or
hereafter.

         8.10   Reimbursement of Expenses - EMPLOYER shall reimburse EMPLOYEE 
for any expenses reasonably and necessarily incurred by him in furtherance of
his duties hereunder, including, travel, meals, and accommodations, upon
submission by him of vouchers or receipts and in compliance with such rules and
policies relating thereto as EMPLOYER may from time to time adopt.

                                       IX.

                     PROTECTION OF CONFIDENTIAL INFORMATION

         EMPLOYEE acknowledges that during the course of his employment with the
EMPLOYER, its subsidiaries and affiliates, he has been and will be exposed to
documents and other information regarding the confidential affairs of the
EMPLOYER, its subsidiaries and affiliates, including without limitation
information about their past, present and future financial



                                     - 12 -
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condition, the markets for their products, key personnel, past, present or
future actual or threatened litigation, trade secrets, current and prospective
customer lists, operational methods, acquisition plans (including without
limitation potential acquisition targets), financing sources, prospects, plans
for future development and other business affairs and information about the
EMPLOYER and its subsidiaries and affiliates not readily available to the public
(the "Confidential Information"). EMPLOYEE further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character. In recognition of the foregoing, the
EMPLOYEE covenants and agrees as follows:

         9.01   At no time shall EMPLOYEE ever divulge, disclose, or otherwise 
use any Confidential Information, unless and until such information is readily
available in the public domain by reason other than EMPLOYEE's unauthorized
disclosure or use thereof, unless such disclosure or use is made in good faith
and solely in furtherance of EMPLOYEE's duties hereunder or expressly authorized
by the Board in writing in advance of such disclosure or use.

         9.02   Upon the termination of EMPLOYEE'S employment at any time and 
for any or no reason, or at any other time the Board may so direct, EMPLOYEE
shall promptly deliver to the EMPLOYER's offices in Stateline, Nevada all of the
property and equipment of the EMPLOYER and its subsidiaries (including any
automobiles, cell phones, pagers, credit cards, personal computers, etc.) and
any and all documents, records, and files, including any notes, memoranda,
customer lists, reports or any and all other documents, including any copies
thereof, whether in hard copy form or on a computer disk or hard drive, which
relate to the EMPLOYER, its subsidiaries, affiliates, successors or assigns,
and/or their respective past and present officers, directors, employees or
consultants (collectively, the "Employer Property, Records and Files"); it being
expressly understood that, upon termination of EMPLOYEE'S employment, EMPLOYEE
shall not be authorized to retain any of the Employer Property, Records and
Files, except to the extent expressly so authorized in writing by the Board.


                                     - 13 -
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                                       X.

                        NONCOMPETITION AND OTHER MATTERS

         10.01  During the Term and for the one year period following the date 
of termination of EMPLOYEE'S employment at any time and for any or no reason
(PROVIDED, that such period shall be six months in the event Executive's
employment terminates upon expiration of the Term), EMPLOYEE shall not at any
time in any city, town, county, parish, other municipality in any state of the
United States or Native American territory (the names of each such city, town,
county, parish, other municipality or Native American territory, including,
without limitation, the name of each county in the State of Nevada being
expressly incorporated by reference herein), or any other place in the world,
where the EMPLOYER, or its subsidiaries, affiliates, successors, or assigns,
engages in owning, operating, managing and/or developing land-based or riverboat
casinos or hotels associated or materially competitive with casinos, or any
other business engaged in from time to time by the EMPLOYER or its subsidiaries,
affiliates, successors or assigns in which EMPLOYEE has had significant
authority and responsibility (the "Business"), directly or indirectly, (i)
engage in a competing business for EMPLOYEE'S own account; (ii) enter the employ
of, or render any consulting services to, any entity that competes with the
EMPLOYER, or its subsidiaries, affiliates, successors, or assigns, in the
Business; or (iii) become interested in any such entity in any capacity,
including, without limitation, as an individual, partner, shareholder, officer,
director, principal, agent, trustee or consultant; PROVIDED, HOWEVER, EMPLOYEE
may (A) own, directly or indirectly, solely as a passive investment, securities
of any entity traded on any national securities exchange or market if EMPLOYEE
is not a controlling person of, or a member of a group which controls, such
entity and does not, directly or indirectly, own 5% or more of any class of
securities of such entity and (B) subject to the first sentence of Section 2.04
above, make passive investments in hospitality enterprises not materially
competitive with gaming and/or enterprises which are principally bar/restaurant
enterprises containing no more than 50 gaming positions, PROVIDED, that such
investments shall not materially interfere with the performance of EMPLOYEE'S
duties hereunder.



                                     - 14 -
<PAGE>


                  (a)   Notwithstanding the foregoing, if (i) EMPLOYEE'S
employment is terminated by EMPLOYER other than for Cause or by EMPLOYEE for
Good Reason and (ii) the effective date of such termination as determined
hereunder occurs within the one year period prior to the expiration date of the
Term, the restrictions set forth in this Section 10.01 shall expire upon
expiration of the Term unless EMPLOYER provides written notice to EMPLOYEE not
later than two days after such effective date that it wishes the restrictions of
this Section 10.01 to apply during the Post-Term Restriction Period (as defined
in Section 4.02 above) and pays EMPLOYEE the severance compensation provided for
under Section 4.02(a) and provides the benefits provided for under Section
4.02(b).
                  (b)   If EMPLOYEE'S employment is terminated for any other
reason or under any other circumstances, the provisions of this Section 10.01
shall be effective without regard to Section 10.01(a).

         10.02  During the Term and for the two year period immediately 
following the date of termination of EMPLOYEE'S employment at any time and for
any or no reason, EMPLOYEE shall not at any time, directly or indirectly,
solicit or induce any officer, director, employee, agent or consultant of the
EMPLOYER or any of its successors, assigns, subsidiaries or, to the best of
EMPLOYEE'S knowledge, affiliates, to terminate his, her or its employment or
other relationship with the EMPLOYER or its successors, assigns, subsidiaries
or, to the best of EMPLOYEE'S knowledge, affiliates, for the purpose of
associating with any competitor of the EMPLOYER or its successors, assigns,
subsidiaries or, to the best of EMPLOYEE'S knowledge, affiliates, or otherwise
encourage any such person or entity to leave or sever his, her or its employment
or other relationship with the EMPLOYER or its successors, assigns, subsidiaries
or, to the best of EMPLOYEE'S knowledge, affiliates, for any other reason.

         10.03  During the Term and for the two year period immediately 
following the date of termination of EMPLOYEE'S employment at any time and for
any or no reason, EMPLOYEE shall not at any time, directly or indirectly,
solicit or induce (i) any customers or clients of EMPLOYER or its successors,
assigns, subsidiaries or, to the best of EMPLOYEE'S knowledge, affiliates, or
(ii) any vendors, suppliers or consultants then under contract to the EMPLOYER
or


                                     - 15 -
<PAGE>


its successors, assigns, subsidiaries or, to the best of EMPLOYEE'S knowledge,
affiliates, to terminate his, her or its relationship with the EMPLOYER or its
successors, assigns, subsidiaries or, to the best of EMPLOYEE'S knowledge,
affiliates, for the purpose of associating with any competitor of the EMPLOYER
or its successors, assigns, subsidiaries or, to the best of EMPLOYEE'S
knowledge, affiliates, or otherwise encourage such customers or clients, or
vendors, suppliers or consultants then under contract, to terminate his, her or
its relationship with the EMPLOYER or its successors, assigns, subsidiaries or,
to the best of EMPLOYEE'S knowledge, affiliates, for any other reason.

                                       XI.

                         RIGHTS AND REMEDIES UPON BREACH

         If EMPLOYEE breaches any of the provisions of Articles IX or X above
(the "Restrictive Covenants"), the EMPLOYER and its subsidiaries, affiliates,
successors or assigns shall have the rights and remedies set forth below in this
Article XI, each of which shall be independent of the others and severally
enforceable, and each of which shall be in addition to, and not in lieu of, any
other rights or remedies available to the EMPLOYER or its subsidiaries,
affiliates, successors or assigns at law or in equity.

         11.01  The right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction by injunctive
decree or otherwise, it being agreed that any breach of the Restrictive
Covenants would cause irreparable injury to the EMPLOYER or its subsidiaries,
affiliates, successors or assigns and that money damages would not provide an
adequate remedy to the EMPLOYER or its subsidiaries, affiliates, successors or
assigns.

         11.02  EMPLOYEE acknowledges and agrees that the Restrictive Covenants
are reasonable and valid in geographic and temporal scope and in all other
respects. If any court determines that any of the Restrictive Covenants, or any
part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full force and effect
without regard to the invalid portions.

         11.03  If any court determines that any of the Restrictive Covenants, 
or any part thereof, is unenforceable because of the duration or scope of such
provision, such court shall have the



                                     - 16 -
<PAGE>


power to reduce the duration or scope of such provision, as the case may be (it
being the intent of the parties that any such reduction be limited to the
minimum extent necessary to render such provision enforceable), and, in its
reduced form, such provision shall then be enforceable.

         11.04  EMPLOYEE intends to and hereby confers jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction within the
geographic scope of such covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of EMPLOYEE that such
determination not bar or in any way affect the right of the EMPLOYER or its
subsidiaries, affiliates, successors or assigns to the relief provided herein in
the courts of any other jurisdiction within the geographic scope of such
covenants, as to breaches of such covenants in such other respective
jurisdictions, such covenants as they relate to each jurisdiction being, for
this purpose, severable into diverse and independent covenants.

                                      XII.

                                   ARBITRATION

     Except as necessary for the EMPLOYER and its subsidiaries, affiliates,
successors or assigns or EMPLOYEE to specifically enforce or enjoin a breach of
this Agreement (to the extent such remedies are otherwise available), the
parties agree that any and all disputes that may arise in connection with,
arising out of or relating to this Agreement, or any dispute that relates in any
way, in whole or in part, to EMPLOYEE'S employment with the EMPLOYER or any
subsidiary, the termination of that employment or any other dispute by and
between the parties or their subsidiaries, affiliates, successors or assigns,
shall be submitted to binding arbitration in Las Vegas, Nevada according to the
National Employment Dispute Resolution Rules and procedures of the American
Arbitration Association. The parties agree that the prevailing party in any such
dispute shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which he or it may be entitled.
This arbitration obligation extends to any and all claims that may arise by and
between the parties or their subsidiaries, affiliates, successors or assigns,
and expressly extends to, without limitation, claims or causes of action for
wrongful termination, impairment of ability to compete in the open labor market,
breach of an




                                     - 17 -
<PAGE>



express or implied contract, breach of the covenant of good faith and fair
dealing, breach of fiduciary duty, fraud, misrepresentation, defamation,
slander, infliction of emotional distress, disability, loss of future earnings,
and claims under the Nevada constitution, the United States Constitution, and
applicable state and federal fair employment laws, federal and state equal
employment opportunity laws, and federal and state labor statutes and
regulations, including, but not limited to, the Civil Rights Act of 1964, as
amended, the Fair Labor Standards Act, as amended, the Americans With
Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as
amended, the Employee Retirement Income Security Act of 1974, as amended, the
Age Discrimination in Employment Act of 1967, as amended, and any other state or
federal law.
                                      XIII.

                                  MISCELLANEOUS

         13.01  If any action to specifically enforce or enjoin a breach of this
Agreement is necessary, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements in addition to any other
relief to which he or it may be entitled.

         13.02  This Agreement shall be construed and governed by the laws of 
the State of Nevada, without giving effect to conflicts of laws principles
thereof which might refer such interpretations to the laws of a different state
or jurisdiction.

         13.03  This Agreement, and all of the terms and conditions hereof, 
shall bind the EMPLOYER and its successors and assigns and shall bind the
EMPLOYEE and his heirs, executors and administrators. No transfer or assignment
of this Agreement shall release EMPLOYER from any obligation to EMPLOYEE
hereunder. Neither this Agreement, nor any of EMPLOYER'S rights or obligations
hereunder, may be assigned or otherwise subject to hypothecation by EMPLOYEE.
EMPLOYER may assign the rights and obligations of EMPLOYER hereunder, in whole
or in part, to any of EMPLOYER'S subsidiaries, affiliates or parent
corporations, or to any other successor or assign in connection with the sale of
all or substantially all of HARVEYS' assets or stock or in connection with any
merger, acquisition and/or reorganization.


                                     - 18 -
<PAGE>



         13.04  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:
                           EMPLOYEE:
                                    John J. McLaughlin
                                    106 Willow Drive
                                    Zephyr Cove, Nevada 89448
                                    Facsimile:  775-588-6348

                           WITH A COPY TO:

                                    Michael Forman
                                    Klehr, Harrison, Harvey, Branzburg & 
                                    Ellers LLP
                                    1401 Walnut Street
                                    Philadelphia, PA 19102
                                    Facsimile: 215-568-3206

                           EMPLOYER:

                                    HARVEYS CASINO RESORTS
                                    Attn: Corporate Secretary
                                    Highway 50 and Stateline Avenue
                                    Post Office Box 128
                                    Stateline, NV 89449
                                    Facsimile: 775-586-6852

                           WITH A COPY TO:

                                    Kelvin L. Davis
                                    Colony Capital, Inc.
                                    Suite 1200
                                    1999 Avenue of the Stars
                                    Los Angeles, CA 90067
                                    Facsimile: 310-282-8808

                           AND TO:

                                    Jonathan Grunzweig
                                    Skadden, Arps, Slate, Meagher & Flom LLP
                                    Suite 3400
                                    300 South Grand Avenue
                                    Los Angeles, CA 90071
                                    Facsimile: 213-687-5600

         13.05  Nothing contained in this Agreement shall be construed to 
require the commencement of any act contrary to law, and when there is any
conflict between any provision of this Agreement and any statute, law,
ordinance, or regulation, contrary to which the parties


                                     - 19 -
<PAGE>


have no legal right to contract, then the latter shall prevail; but in such an
event, the provisions of this Agreement so affected shall be curtailed and
limited only to the extent necessary to bring it within the legal requirements.

         13.06  The several rights and remedies provided for in this Agreement
shall be construed as being cumulative, and no one of them shall be deemed to be
exclusive of the others or of any right or remedy allowed by law. No waiver by
EMPLOYER or EMPLOYEE of any failure by EMPLOYEE or EMPLOYER, respectively, to
keep or perform any provision of this Agreement shall be deemed to be a waiver
of any preceding or succeeding breach of the same or other provision.

         13.07  This Agreement supersedes any and all other agreements, either
oral or in writing, between the parties hereto with respect to the employment of
the EMPLOYEE by the EMPLOYER (including, without limitation, the Prior
Agreement, Harveys Change in Control Plan and, insofar as it relates to the
subject matter hereof, but except as provided in Section 13.08, the MOU) and,
together with all other plans, agreements and other documents specifically
referenced herein, contains all of the covenants, conditions and agreements
between the parties with respect to such employment. Annex F hereto sets forth a
list of payments to EMPLOYEE pursuant to the MOU, and EMPLOYEE hereby
acknowledges receipt of all such payments. Each party to this Agreement
acknowledges that no representations, inducements, promises or other agreements,
oral or otherwise, have been made by any party, or anyone acting on behalf of
any party, which are not embodied herein, and that no other agreement, statement
or promise not contained in this Agreement shall be valid or binding. Any
addendum to or modification of this Agreement shall be effective only if it is
in writing and signed by the parties to be charged.

         13.08  To the extent applicable, EMPLOYEE shall be entitled to receive 
a gross-up payment with respect to payments made hereunder (including under
agreements referenced herein) and under the MOU to account for the payment of
Internal Revenue Code Section 4999 excise taxes as well as taxes imposed on such
gross up payments, as determined pursuant to the procedures set forth in Annex
D, provided, that EMPLOYEE shall reasonably cooperate with EMPLOYER in
structuring such payments and taking such other actions to limit the extent to



                                     - 20 -
<PAGE>


which such payments may be subject to such excise tax, provided that such
restructuring does not cause EMPLOYEE to suffer additional costs or other
adverse consequences. Notwithstanding anything contained to the contrary
contained herein, the provisions of this Section 13.08 and Annex D hereto shall
survive the expiration or termination of this Agreement for any or no reason.

         13.09 If EMPLOYEE'S employment with the Company is terminated by the
Company without Cause either (i) as a result of a Change in Control (as defined
in the Award Agreement) or (ii) within the 12 month period immediately preceding
a Change in Control (or such longer period, not to exceed 18 months prior to
such Change in Control, during which significant discussions or other material
action regarding such Change in Control occurred) at the request, directly or
indirectly, of a third party who has taken steps reasonably calculated to effect
a Change in Control or otherwise in connection with, or in anticipation of a
Change in Control, EMPLOYEE shall be entitled to receive, at the effective date
of such termination (or, if payable in respect of clause (ii), within ten
business days following such Change in Control), a lump sum payout at maximum of
the bonus otherwise payable to EMPLOYEE with respect to the then current fiscal
year under the Annual Bonus Plan, such amount pro rated through the effective
date of such termination of employment. The amount provided for in the
immediately preceding sentence shall also be paid if EMPLOYEE'S employment with
the Company is terminated for Good Reason if the grounds constituting Good
Reason occur as the result of a Change in Control or within the stated time
frame at the request, directly or indirectly, of such a third party or otherwise
in connection with, or in anticipation of a Change in Control. If (x) no payment
is made pursuant to either of the two immediately preceding sentences, (y)
following a Change in Control and prior to the effective date of termination of
EMPLOYEE'S employment the Annual Bonus Plan is terminated or amendments are made
that materially adversely affect EMPLOYEE and (z) EMPLOYEE'S employment is not
terminated prior to the end of the fiscal year in which such termination or
amendments occur, then, in lieu of any other amounts payable to EMPLOYEE under
the Annual Bonus Plan with respect to such fiscal year, EMPLOYEE shall receive a
lump sum payout at maximum within sixty (60) days following the termination of
the


                                     - 21 -
<PAGE>


Annual Bonus Plan or the fiscal year during which any such material amendments
were made. The provisions of this Section 13.09 shall survive the expiration of
the Term, but only to the extent necessary to determine whether a Change in
Control occurs within the 12 to 18 month period described in clause (ii) of the
first sentence of this Section 13.09.

         13.10  The section headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.

         13.11  Unless expressly provided herein or therein, the expiration of
the Term shall not alter or affect any rights or obligations of EMPLOYER or
EMPLOYEE under any other agreement or plan including, without limitation, the
Award Agreement, the Omnibus Plan, the Deferred Compensation Agreement, of even
date herewith, between EMPLOYER and EMPLOYEE, and, to the extent provided under
Section 7.02 above, the Annual Bonus Plan.


                                     - 22 -
<PAGE>


         13.12  This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original
but all such counterparts together shall constitute one and the same instrument.

                  DATED this 2nd day of February, 1999.

                                            EMPLOYEE:

                                            /s/ John Mclaughlin
                                            ------------------------------------
                                            JOHN J. MCLAUGHLIN

                                            EMPLOYER:

                                            HARVEYS CASINO RESORTS


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



                                     - 23 -

<PAGE>

                            ANNEX A: 1999 OMNIBUS STOCK
                                   INCENTIVE PLAN

     See Exhibit 10.33, 1999 Omnibus Stock Incentive Plan.

<PAGE>

                       ANNEX B: STOCK OPTION AND RESTRICTED
                                  STOCK AGREEMENT

     See Exhibit 10.45, Stock Option and Restricted Stock Agreement dated as 
of February 2, 1999 by and between Harveys Casino Resorts and John J. 
McLaughlin.

<PAGE>

                         ANNEX C: STOCKHOLDERS AGREEMENT
                                   

     See Exhibit 10.34, Stockholders Agreement entered into as of February 2, 
1999 by and among Harveys Casino Resorts, Colony HCR Voteco, LLC, Colony 
Investors III, L.P. and the securityholders of the Company as identified from 
time to time on Schedule A thereto.

<PAGE>


                   ANNEX D: DETERMINATION OF GROSS-UP PAYMENT


     See Exhibit 10.27, Employment Agreement by and between Harveys Casino 
Resorts and Charles W. Scharer, Annex D.

<PAGE>


  Annex E: Example of the Post-Term Restriction Period and Severance Payments
Applicable in Certain Instances in the Event of Termination by EMPLOYER without
                      Cause or by EMPLOYEE for GOOD REASON

         Suppose that the Term is scheduled expire on February 2, 2004,
and that notice has been provided pursuant to Section 3.01 that there will be no
automatic extension of the Term. Suppose, further, that EMPLOYEE'S employment is
terminated on November 2, 2003, I.E., less than one year prior to the expiration
of the Term. Under Section 4.02(a), on these facts, the amount of EMPLOYEE'S
severance will depend on whether EMPLOYER elects to have the non-competition
restrictions of Section 10.01 apply during the Post-Term Restriction Period.

         The length of the Post-Term Restriction Period is measured by
determining the length of time following the scheduled expiration date of the
Term (I.E., February 2, 2004) during which the twelve-month post-termination
non-competition period as set forth in the first paragraph of Section 10.01
would apply if EMPLOYER makes an election so that the provisions of Section
10.01(a), which would otherwise cut off the non-competition period as of the end
of the Term, will not apply. Since EMPLOYEE'S Termination Date, November 2,
2003, is 3 months prior to the scheduled expiration date of the Term, the
Post-Term Restriction Period is (12 minus 3) or 9 months.

Scenario A:  The Post-Term Restriction Period Applies

                  If EMPLOYER elects pursuant to Section 10.01(a) to have the
non-competition period extend through the end of the Post-Term Restriction
Period, EMPLOYEE'S severance is determined under Section 4.02(a), without regard
to Section 4.02(a)(iii). Accordingly, EMPLOYEE'S severance would be equal to the
product of (x) the Applicable Multiplier, which would be (3 + 9) divided by 12,
or 1.0, and (y) the sum of EMPLOYEE'S Base Salary and Annual Bonus as of the
Termination Date. EMPLOYEE would be subject to the restrictions of the first
paragraph of Section 10.01 until November 2, 2004.

Scenario B:  The Post-Term Restriction Period Does Not Apply

                  If EMPLOYER does not elect to have the non-competition period
extend through the end of the Post-Term Restriction Period, EMPLOYEE'S severance
would be determined under Section 4.02(a)(iii). The first part of EMPLOYEE'S
severance would be equal to the product of (x) the Applicable Multiplier, which
would be 3 divided by 12 (or 0.25), and (y) EMPLOYEE'S Base Salary as of the
Termination Date.

                  The second or bonus portion of EMPLOYEE'S severance would be
determined by the Board following the end of the 2003 fiscal year. The Board
would determine the amount of the Annual Bonus EMPLOYEE would have been entitled
to receive under the Annual Bonus Plan as if EMPLOYEE had remained employed
through the end of the 2003 fiscal year, based on HARVEYS (and, as applicable,
EMPLOYEE'S) actual performance (without proration) during the 2003 fiscal year,
as compared with the bonus targets previously established for such year.
EMPLOYER would then be required to pay such bonus amount to EMPLOYEE at the time
bonuses under the Annual Bonus Plan were paid to participants in the plan
generally. Under this


<PAGE>


arrangement, all other things being equal, EMPLOYEE would receive the same bonus
whether his employment was terminated on June 1, 2003, November 2, 2003 or
January 4, 2004.

                  However, to avoid unjust enrichment, if EMPLOYEE'S employment
were to be terminated following the date on which bonuses were determined and
paid for fiscal 2003 (say that the bonuses were paid on January 10, 2004 and
EMPLOYEE'S employment was terminated on January 15, 2004), EMPLOYEE would not be
entitled to receive any severance amount in respect of bonus, but would receive
as severance only Base Salary for the 18 day period between January 15, 2004 and
February 2, 2004.

                  Similar determinations would apply if the Term were
automatically extended for one or more years beyond the fifth anniversary of the
Effective Date, assuming that EMPLOYEE'S employment was terminated within the
one-year period prior to the scheduled expiration of the Term, as so extended.
It is agreed for purposes of Scenario B under this Annex E that bonuses for the
last full fiscal year of the Term will be determined no later than January 31 in
the year in which the Term expires.


<PAGE>


                   ANNEX F: SCHEDULE OF PAYMENTS UNDER THE MOU

<TABLE>
<CAPTION>
                            NATURE OF PAYMENT                                                       AMOUNT
<S>                                                                                               <C>
-------------------------------------------------------------------------------------------------------------
Payment in consideration of termination of right to participate in Long                           $311,195.00
Term Incentive Plan
-------------------------------------------------------------------------------------------------------------
Prior payment under Management Incentive Plan in respect of fiscal 1998                           $179,250.00
-------------------------------------------------------------------------------------------------------------
Payment in partial consideration of termination of right to participate in                        $225,000.00
Supplemental Executive Retirement Plan
-------------------------------------------------------------------------------------------------------------
Advance under Management Incentive Plan in respect of fiscal 1999                                  $55,625.00
-------------------------------------------------------------------------------------------------------------

                                                                              Total:              $771,070.00
</TABLE>