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                                                                 EXHIBIT 10.35

                DEFERRED COMPENSATION AGREEMENT

     This DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and 
entered into as of the 16th day of January, 1997 by and between HILTON HOTELS 
CORPORATION, a Delaware corporation (together with its successors and assigns 
permitted under this Agreement, the "Company"), and ARTHUR M. GOLDBERG (the 
"Executive").

     WHEREAS, the Executive is an Executive Vice President of the Company and 
President of the Company's Gaming Division;

     WHEREAS, the Company, the Executive and Bally Entertainment Corporation, 
a Delaware corporation ("Bally"), have entered into an Amended Consulting and 
Employment Agreement dated as of November 12, 1996 as amended by a First 
Amendment thereto dated as of December 14, 1996 (collectively, the 
"Employment Agreement"), which Employment Agreement constitutes an amendment 
and restatement of a Consulting Agreement dated as of June 6, 1996 (the 
"Consulting Agreement") between the Company and the Executive;

     WHEREAS, the Company desires to provide the Executive with certain 
deferred compensation payments in recognition of (i) the valuable services 
provided by the Executive to the Company in assisting the Company in 
obtaining gaming commission approvals of the Company's acquisition of Bally 
and facilitating a smooth integration of the Company's and Bally's gaming 
operations, (ii) the valuable services which the Executive is now providing 
and will provide in the future to the Company and (iii) the fact that

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the compensation provided by the Company to the Executive under the 
Employment Agreement was established in the Consulting Agreement, was 
intended to compensate the Executive for less than full-time services for the 
Company and has not been increased to reflect the Executive's full-time 
employment by the Company under the Employment Agreement;

     NOW, THEREFORE, in consideration of the premises and mutual covenants 
contained herein, the Company and the Executive (individually a "Party" and 
together the "Parties") agree as follows:

     1.  DEFINITIONS.  Capitalized terms which are not defined in this 
Agreement shall have the meanings assigned to them in the Employment 
Agreement.

     2.  DEFERRED COMPENSATION. 

          (a)  The Company shall pay the Executive $2,400,000, in a lump sum, 
on that date (the "Payment Date") which is thirty (30) days after the earlier 
of (i) the last day of the Company's taxable year in which the Executive 
ceases to be a "covered employee" within the meaning of Code Section 
162(m)(3) or (ii) the date upon which the Company's deduction with respect to 
all of such deferred salary shall no longer be subject to limitation under 
Code Section 162(m) or any successor section thereto. Such amount shall be 
credited with interest from the date of this Agreement to the day immediately 
preceding the

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Payment Date at a floating rate equal to the rate which Morgan Guaranty 
announces from time to time as its prime lending rate, as in effect from time 
to time, compounded quarterly, and such accrued interest shall be paid to the 
Executive on the Payment Date (said payment plus interest collectively 
referred to as the "Deferred Compensation").

          (b)  The Deferred Compensation shall be paid in accordance with the 
following provisions:

              (1)  The Company agrees to pay the Deferred Compensation on the
                   Payment Date by wire transfer to an account designated by 
                   the Executive prior to the Payment Date.

              (2)  The Company agrees to pay the Deferred Compensation in any
                   and all events on the Payment Date without setoff or offset
                   for any claim whatsoever against the Executive or any of 
                   his affiliates. The existence of any claim or cause of 
                   action on the part of the Company or any of its affiliates
                   against the Executive or his affiliates, whether predicated
                   on this Agreement or otherwise shall not constitute a
                   defense or entitle the Company to an offset against the 
                   payment

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                   of the Deferred Compensation in full on the Payment Date.

              (3)  Failure to pay the Deferred Compensation on the Payment 
                   Date shall constitute a default, without any need for the
                   Executive to have given notice or demand of any kind to 
                   the Company, which notices and demands of any kind are
                   expressly waived by the Company.

              (4)  In the event of a default, the Executive shall be entitled
                   to be paid, upon demand, (i) one hundred twenty (120%)
                   percent of the Deferred Compensation plus interest on 
                   said amount from the Payment Date until paid at the rate of
                   eighteen (18%) percent per annum (the "Default Rate"); plus
                   all reasonable attorneys' fees and other costs of 
                   collection incurred by the Executive in effecting 
                   collection of the amounts due hereunder, whether or not a
                   legal action is instituted or prosecuted to judgment.
                   All such costs and expenses shall be added to the amount
                   due under this Section 2, shall be payable on demand,

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                   and shall bear interest at the Default Rate from the date
                   incurred until paid in full.

              (5)  In the event of a default, notwithstanding the provisions 
                   of Section 13 of this Agreement: (i) the Executive shall be
                   entitled to sue the Company to effect collection of the
                   amounts due hereunder; (ii) the Company hereby consents to
                   personal jurisdiction and venue and to the exclusive
                   jurisdiction of the Superior Court of the State of New 
                   Jersey, Essex County, and the United States District Court
                   for the District of New Jersey for the purpose of all legal
                   proceedings arising out of or relating to this Section 2;
                   (iii) the Company agrees that the service or delivery of
                   process of any such lawsuit shall constitute lawful and
                   valid service of process if made in accordance with any
                   of the methods by which notices may be given pursuant to
                   Section 14; and (iv) the Company waives any defense based
                   upon personal jurisdiction, venue, improper service,

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                   and the right to assert a claim of FORUM NON CONVENIENS
                   or the like.

     3.  PARACHUTE PAYMENTS.

          (a)  If it shall be determined that any payment, distribution, or
benefit received or to be received by the Executive under this Agreement (the 
"Payments") would be subject to the excise tax imposed by Code Section 4999 
(the "Excise Tax"), then the Executive shall be entitled to receive an 
additional payment from the Company (the "Excise Tax Gross-Up Payment") in an 
amount such that the net amount retained by the Executive, after the 
calculation and deduction of any Excise Tax (together with any penalties and 
interest that have been or will be imposed on the Executive in connection 
therewith) on the Payments and any federal, state, and local income taxes, 
excise tax, and payroll taxes (including the tax imposed by Code Section 
3101(b)) on the Excise Tax Gross-Up Payment provided for in this subsection 
3(a), shall be equal to the Payments. In determining this amount, the amount 
of the Excise Tax Gross-Up Payment attributable to federal income taxes shall 
be reduced by the maximum reduction in federal income taxes that could be 
obtained by the deduction of the portion of the Excise Tax Gross-Up Payment 
attributable to state and local income taxes. Finally, the Excise Tax 
Gross-Up Payment shall be subject to income, excise, or payroll tax 
withholding to the extent required by applicable law.

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          (b)  All determinations required to be made under this Section 3, 
including whether and when an Excise Tax Gross-Up Payment is required and the 
amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized 
in arriving at such determination, except as specified in subsection 3(a) 
above, shall be made by the Company's independent auditors (the "Accounting 
Firm"), which shall provide detailed supporting calculations both to the 
Company and the Executive within 15 business days after the Company makes any 
Payments to the Executive. The determination of tax liability and the 
assumptions made by the Accounting Firm shall be subject to review by the 
Executive's tax advisors, and, if the Executive's tax advisors do not agree 
with the determination reached by the Accounting Firm, then the Accounting 
Firm and the Executive's tax advisors shall jointly designate a 
nationally-recognized public accounting firm, which shall make the 
determination. All fees and expenses of the accountants and tax advisors 
retained by either the Executive or the Company shall be borne by the 
Company. Any Excise Tax Gross-Up Payment, as determined pursuant to this 
subsection 3(b), shall be paid by the Company to the Executive within five 
days after the receipt of the determination. Any determination by a 
jointly-designated public accounting firm shall be binding upon the Company 
and the Executive.

          (c)  As a result of the uncertainty in the application of Code 
Section 4999 at the time of the initial

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determination by the Company, it is possible that the Executive may be 
required to make one or more payments of Excise Tax to the Internal Revenue 
Service, together with interest and/or penalties that have been imposed upon 
the Executive in connection therewith, whether upon the Executive's filing of 
his original or amended tax returns or upon a subsequent audit, 
administrative appeal or judicial determination, which exceed the amounts 
taken into account in determining the initial Excise Tax Gross-Up Payment 
made pursuant to Section 3(a) (such excess payments referred to as the 
"Deficiency"). In such an event, there shall be an additional Excise Tax 
Gross-Up Payment computed on the Deficiency in the same manner as the Excise 
Tax Gross-Up Payment in Section 3(a) above, and the same shall be promptly 
paid by the Company to or for the benefit of the Executive. In the event that 
any Excise Tax Gross-Up Payment exceeds the amount subsequently determined 
to be due, such excess shall constitute a loan from the Company to the 
Executive payable on the fifth day after demand by the Company (together with 
interest at the rate provided in Section 1274(b)(2)(B) of the Code).

          (d)  Notwithstanding anything herein to the contrary, no Excise 
Tax Gross-Up Payment shall be made pursuant to this Section 3 if, and to the 
extent that, such Excise Tax Gross-Up Payment has already been paid by the 
Company pursuant to the Employment Agreement.

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     4.  EFFECT OF AGREEMENT.

     Except as specifically provided in this Agreement, this Agreement shall 
not affect nor have any force or effect upon any other agreement to which the 
Executive is a party and/or beneficiary.

     5.  ASSIGNABILITY; BINDING NATURE.

     This Agreement shall be binding upon and inure to the benefit of the 
Parties and their respective successors, heirs (in the case of the 
Executive), and assigns. No rights or obligations of the Company under this 
Agreement may be assigned or transferred by the Company, except that such 
rights or obligations may be assigned or transferred pursuant to a merger or 
consolidation in which the Company is not the continuing entity, or the sale 
or liquidation of all or substantially all of the assets of the Company; 
PROVIDED, HOWEVER, that the assignee or transferee is the successor to all or 
substantially all of the assets of the Company and such assignee or 
transferee assumes the liabilities, obligations, and duties of the Company, 
as contained in this Agreement, either contractually or as a matter of law. 
The Company further agrees that, in the event of a sale of assets or 
liquidation as described in the preceding sentence, it shall take whatever 
action it legally can in order to cause such assignee or transferee to 
expressly assume the liabilities, obligations, and duties of the Company 
hereunder. No rights or

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obligations of the Executive under this Agreement may be assigned or 
transferred by the Executive, except that all of his rights may be 
transferred by will or operation of law.

     6.  REPRESENTATION.

     The Company represents and warrants that it is fully authorized and 
empowered to enter into this Agreement and that the performance of its 
obligations under this Agreement will not violate any agreement between it 
and any other person, firm, or organization.

     7.  ENTIRE AGREEMENT.

     This Agreement contains the entire understanding and agreement among the 
Parties concerning the subject matter hereof and supersedes all prior 
agreements, understandings, discussions, negotiations, and undertakings, 
whether written or oral, among the Parties with respect thereto.

     8.  AMENDMENT OR WAIVER.

     No provision in this Agreement may be amended unless such amendment is 
agreed to in writing and signed by the Executive and an authorized officer of 
the Company. No waiver by either Party of any breach by the other Party of 
any condition or provision contained in this Agreement to be performed by the

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other Party shall be deemed a waiver of a similar or dissimilar condition or 
provision at the same or any prior or subsequent time. Any waiver must be in 
writing and signed by the Executive or an authorized officer of the Company.

     9.  SEVERABILITY.

     In the event that any provision or portion of this Agreement shall be 
determined to be invalid or unenforceable for any reason, in whole or in 
part, the remaining provisions of this Agreement shall be unaffected thereby 
and shall remain in full force and effect to the fullest extent permitted by 
law.

     10.  SURVIVORSHIP.

     The respective rights and obligations of the Parties hereunder shall 
survive any termination of the Executive's employment by, or consulting 
arrangements with, the Company to the extent necessary to the intended 
preservation of such rights and obligations.

     11.  BENEFICIARIES/REFERENCES.

     The Executive shall be entitled, to the extent permitted under any 
applicable law, to select and change a beneficiary or beneficiaries to 
receive any compensation or benefit payable hereunder following the 
Executive's death by 

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giving the Company written notice thereof. In the event of the Executive's 
death or a judicial determination of his incompetence, reference in this 
Agreement to the Executive shall be deemed, where appropriate, to refer to 
his beneficiary, estate, or other legal representative.

     12.  GOVERNING LAW / JURISDICTION.

     This Agreement shall be governed by and construed and interpreted in 
accordance with the laws of New Jersey without reference to principles of 
conflict of laws.

     13.  RESOLUTION OF DISPUTES.

     Any disputes arising under or in connection with this Agreement shall, 
at the election of the Executive or the Company, be resolved by binding 
arbitration, to be held in Trenton, New Jersey in accordance with the rules 
and procedures of the American Arbitration Association. Judgment upon the 
award rendered by the arbitrator(s) may be entered in any court having 
jurisdiction thereof. Costs of the arbitration or litigation, including, 
without limitation, reasonable attorneys' fees of all Parties, shall be borne 
by the Company. Pending the resolution of any arbitration or court 
proceeding, the Company shall continue payment of all amounts due the 
Executive under this Agreement and all benefits to which the Executive is 
entitled at the time the dispute arises.

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     14.  NOTICES.

     Any notice given to a Party shall be in writing and shall be deemed to 
have been given when delivered personally or sent by certified or registered 
mail, postage prepaid, return receipt requested, duly addressed to the Party 
concerned at the address indicated below or to such changed address as such 
Party may subsequently give such notice of:


          If to the Company, to:

          Hilton Hotels Corporation
          9336 Civic Center Drive
          Beverly Hills, CA 90210
          Attention: General Counsel

          with a copy to:

          Latham & Watkins
          1001 Pennsylvania Avenue, N.W.
          Washington, D.C. 20004
          Attention: Bruce E. Rosenblum, Esq.

          and:

          If to the Executive, to:

          Mr. Arthur M. Goldberg
          380 Middlesex Avenue
          Carteret, NJ 07008

          with a copy to:

          Frank L. Stifelman, Esq.
          Orloff, Lowenbach, Stifelman & Siegel, P.A.
          101 Eisenhower Parkway
          Roseland, New Jersey 07068

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     15.  HEADINGS.

     The headings of the sections contained in this Agreement are for 
convenience only and shall not be deemed to control or affect the meaning or 
construction of any provision of this Agreement.

     16.  COUNTERPARTS.

     This Agreement may be executed in two or more counterparts.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of 
the date first written above.

                                HILTON HOTELS CORPORATION


                                By:     /s/ STEPHEN F. BOLLENBACH
                                   ----------------------------------
                                     STEPHEN F. BOLLENBACH
                                     President and
                                     Chief Executive Officer


                                       /s/ ARTHUR M. GOLDBERG
                                 ------------------------------------
                                 ARTHUR M. GOLDBERG


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