<PAGE>

                        EXHIBIT 10.1

<PAGE>


              [RIO HOTEL & CASINO, INC. LETTERHEAD]
                                
                                
                                
                                
                       September 24, 1998
                                
                                
David P. Hanlon
7174 Durango Street
Las Vegas, Nevada  89120

     
     RE:  EMPLOYMENT AGREEMENT
          
Dear Dave:

     This  letter (this "Letter") is made with reference to  that
certain  Employment  Agreement dated as  of  November  25,  1996,
between  Rio  Hotel & Casino, Inc. (the "Company")  and  you,  as
further  amended by that First Amendment to Employment  Agreement
dated  as of August 31, 1997, by and between the Company and  you
(collectively, the Employment Agreement, as amended by the  First
Amendment to Employment Agreement, shall hereinafter be  referred
to as the "Employment Agreement").

          1.     In  accordance  with  Paragraph  10(c)  of   the
     Employment Agreement, the Company is hereby terminating your
     employment  with  the  Company and the Employment  Agreement
     effective October 9, 1998 (the "Effective Date").
     
          2.    Upon  the Effective Date, you will no  longer  be
     employed by the Company or any of its subsidiaries  and  all
     executive officer and/or director positions you hold in  the
     Company or executive officer and/or director positions  held
     by  you  in  any  of  the  Company's  subsidiaries  will  be
     terminated on the Effective Date.
     
          3.    In  accordance  with Paragraph  10(c)(i)  of  the
     Employment Agreement, you will be entitled to a "Base Salary
     Termination  Payment" of Two Million and  no/100ths  Dollars
     ($2,000,000 U.S.).
     
          4.    In  accordance with Paragraph 10(c)(iii)  of  the
     Employment  Agreement,  you  will  be  entitled  to  receive
     reimbursement for expenses incurred, but not yet reimbursed,
     which   the  Company  and  you  presently  estimate  to   be
     approximately Thirty Thousand and no/100ths Dollars ($30,000
     U.S.).   These  payments will be made upon completion  of  a
     mutually  acceptable accounting which will be completed  and
     agreed  to on or before the Effective Date and will be  paid
     to you by a separate check on the Effective Date.
     
<PAGE>

David P. Hanlon
September 24, 1998
Page 2

          5.   Any deferred compensation pursuant to Paragraph  9
     of  the Employment Agreement, including any interest accrued
     thereon,  if  any, will be paid to you as  provided  in  the
     deferred compensation plan.
     
          6.    Any other compensation and benefits to which  you
     are entitled under applicable plans, programs and agreements
     of  the  Company as described in Paragraph 10(c)(v)  of  the
     Employment Agreement, which are not presently expected to be
     material  in  amount  and  in no  event  represent  monetary
     payments in excess of $50,000, will be paid to you as of the
     Effective Date.
     
          7.    Under  the terms of the Rio Hotel & Casino,  Inc.
     Long  Term  Incentive Plan, on October  8,  1996,  you  were
     granted  an option to purchase up to 500,000 shares  of  the
     Company's  common  stock  (the  "Hanlon  Option").   As   of
     October  8, 1998, you will be fully vested under the  Hanlon
     Option  to  purchase 300,000 shares of the Company's  common
     stock.   In consideration for a mutual release of all claims
     between  the  Company and you arising out of the termination
     of  your  employment  and of the Employment  Agreement,  but
     preserving all provisions of the Employment Agreement  which
     survive  such  termination pursuant  to  the  terms  of  the
     Employment Agreement, the Company's Board of Directors will,
     upon  the Effective Date, authorize the full vesting of  the
     option  to  purchase  the remaining 200,000  shares  of  the
     Company's common stock under the Hanlon Option.  The  mutual
     release  of  claims discussed herein will  be  in  form  and
     substance  mutually agreed upon between you and the  Company
     on or before the Effective Date.
     
          8.    Notwithstanding  your termination  of  employment
     from  the  Company and its subsidiaries and  resignation  as
     officer and director of the Company and its subsidiaries  on
     or before the Effective Date, there are certain projects for
     which  you have had primary responsibility in the  past  and
     about  which you possess certain important information which
     the Company believes will be helpful to the Company to carry
     such  projects forward.  Accordingly, the Company will enter
     into  a  consulting agreement ("Consulting Agreement")  with
     you on terms and conditions substantially in accordance with
     Exhibit A hereto, which will have the following terms:
     
               a.     You  will  be  engaged  as  an  independent
          consultant  to the Company for a period of twelve  (12)
          months  from  the  Effective Date to consult  with  the
          Company for the projects identified as follows:
          
                    (i)  Skip Barber School of Racing
               
                    (ii) Modular Technology Project
               
                    (iii)Butch Harmon School/Rio Secco Golf Club
               
<PAGE>

David P. Hanlon
September 24, 1998
Page 3

                    (iv) Peterhoff Museum Exhibit
               
          (collectively, the "Consulting Projects").

               b.    Pursuant  to  the Consulting Agreement,  you
          will  be compensated Thirty Five Thousand and no/100ths
          Dollars ($35,000 U.S.) per month, payable upon the last
          day  of  each  and  every month,  for  twelve  calendar
          months.   The Consulting Agreement will be  solely  for
          consulting purposes within the terms described  therein
          and  will not be deemed for any purposes whatsoever  to
          be  an employment agreement or otherwise contravene  or
          diminish  the  termination of your  employment  or  the
          Employment Agreement as stated herein.
          
          9.     While   this  notification  of  termination   is
     effective  immediately for all purposes, the Effective  Date
     and  the payments due to you in accordance with this  notice
     are subject to the following, all of which must occur on  or
     before the Effective Date:
     
               a.    Resolution  of  an accounting  in  form  and
          substance mutually satisfactory to the Company and  you
          of   amounts  to  be  reimbursed  to  you  pursuant  to
          Paragraph 10(c)(iii) of the Employment Agreement;
          
               b.   Identification by you of material steps to be
          completed  under the Consulting Projects  described  in
          Paragraph 8 above;
          
               c.   Execution of a mutual release as described in
          Paragraph 7; and
          
               d.    Approval by the Company's Board of Directors
          of the material terms and conditions of this Agreement,
          which  approval is expected to occur on or  before  the
          Effective Date.
          
     In  the event the steps outlined in this Paragraph 9 are not
completed  by  the  Effective  Date,  your  employment  and   the
Employment  Agreement  will  be  terminated  in  accordance  with
Paragraph 10(c) thereof, and you will be entitled only  to  those
payments   specified  in  Paragraph  10(c)  of   the   Employment
Agreement.

<PAGE>

David P. Hanlon
September 24, 1998
Page 4

     Please  execute and date this Letter to confirm  the  mutual
understandings and agreements set forth herein.

                              Sincerely,
                              Rio Hotel & Casino, Inc.
                              
                              
                              /s/ James A. Barrett, Jr.
                              --------------------------------
                              James A. Barrett, Jr., President
                              
                              
                              
Agreed to and Accepted this 24
day of September, 1998 by
David P. Hanlon


/s/ David P. Hanlon
------------------------------
DAVID P. HANLON

<PAGE>

                        RELEASE AGREEMENT
                                
     THIS  RELEASE  AGREEMENT  (this  "Agreement")  is  made  and
entered  into as of the 9TH day of October 1998, by  and  between
Rio  Hotel  & Casino, Inc., a Nevada corporation, whose principal
place  of business is 3700 West Flamingo Road, Las Vegas,  Nevada
89103   ("Rio"),  and  David  P.  Hanlon,  an  individual,  whose
residence address is 7174 Durango Street, Las Vegas, Nevada 89120
("Hanlon").

                            RECITALS

     WHEREAS, Rio and Hanlon entered into that certain Employment
Agreement  dated as of November 25, 1996, as further  amended  by
that  First  Amendment  to  Employment  Agreement  dated  as   of
August 31, 1997 (collectively, the "Employment Agreement").

     WHEREAS, Hanlon has resigned from any and all officer and/or
director   positions   for   Rio  and   its   subsidiaries   (the
"Resignation").

     WHEREAS, Rio has terminated the Employment Agreement and the
employment   of   Hanlon  by  Rio  and  its   subsidiaries   (the
"Termination")  on the terms and conditions set  forth  in  their
September   24,   1998   letter   agreement   (the   "Termination
Agreement").

     WHEREAS,  Rio and Hanlon desire to enter into this Agreement
for  the  purposes of releasing any past, current  and/or  future
claims and/or disputes among and between the parties with respect
to the Employment Agreement, the Termination, the Resignation and
any other matter related thereto.

     NOW, THEREFORE, for and in consideration of the premises and
mutual   covenants,  agreements,  understandings,   undertakings,
representations,  warranties and promises,  and  subject  to  the
conditions  hereinafter set forth, and intending  to  be  legally
bound thereby, the parties do hereby covenant and agree that  the
Recitals  set  forth  above are true and  accurate,  and  further
covenant and agree as follows:

                    I.   TERMS AND CONDITIONS

     A.    CONSIDERATION.  As consideration for  this  Agreement,
Rio  agrees to pay to Hanlon and Hanlon agrees to accept from Rio
payment  of  Two Million and no/100ths Dollars ($2,000,000  U.S.)
representing the severance payment to be due to Hanlon under  the
terms of the Employment Agreement as a result of the Termination.
Hanlon  hereby acknowledges and represents that no other payment,
including  any payment under the change-of-control provisions  of
the Employment Agreement, will be due and owing by the Company to
Hanlon as a result of the Termination.

     B.    GENERAL  RELEASE.   For  valuable  consideration,  the
sufficiency  of  which is hereby acknowledged,  Rio  and  Hanlon,
jointly  and/or  individually, on  behalf  of  themselves,  their
respective   insurers,   principals,  successors,   predecessors,
parents,    affiliates,   subsidiaries,   divisions,    officers,
directors,  shareholders, employees, attorneys, heirs,  executors
and administrators, hereby remise, acquit and forever release the
other  party,  and  their  respective  successors,  predecessors,
parents, affiliates, subsidiaries, divisions, including, but  not
limited  to  their respective officers, directors,  shareholders,
managers,  employees, advisors, consultants, insurers, attorneys,
heirs,  executors, administrators and authorized  representatives
from  any  and  all claims, demands, damages, debts, liabilities,
actions, causes

<PAGE>

of  action or suits of whatsoever kind or nature, presently known
or   unknown,  actual  or  contingent,  asserted  or  unasserted,
foreseeable or unforeseeable, unanticipated or unsuspected, which
any  of  them  has  or  may have now or in  the  future,  arising
directly  or  indirectly  out  of  or  involving  the  Employment
Agreement,  the  Resignation,  the Termination,  the  Termination
Agreement  and  any  other  matter  related  thereto,  excluding,
however,  paragraphs 12 and 13 of the Employment Agreement  which
survive.

     C.    ADDITIONAL RELEASE.  Hanlon, for himself, his  agents,
heirs,   successors,  assigns,  representatives,  executors   and
administrators does hereby and forever release and discharge Rio,
including   its  predecessors  and  successors,  its   affiliated
entities  and  its  past  and present Board  members,  employees,
agents,  attorneys, accountants, representatives, successors  and
assigns,  from any and all causes of action, actions,  judgments,
liens,  indebtedness, damages, losses, claims,  liabilities,  and
demands   of   whatsoever  kind  and  character  in  any   manner
whatsoever, including but not limited to any claim for breach  of
contract,  breach of implied covenant, breach of oral or  written
promise,  wrongful termination, infliction of emotional distress,
defamation,  interference with contract relations or  prospective
economic  advantage, negligence, misrepresentation or  employment
discrimination,   and   including  without   limitation   alleged
violations of Nevada Revised Statutes Section 608.017 and Section
613.310  prohibiting  discrimination  based  on  race,  religious
creed,  color,  national origin, ancestry,  physical  disability,
mental disability, medical condition, marital status, sex or  age
over  40,  Title  VII  of the 1964 Civil Rights  Act  prohibiting
discrimination  based on race, color, religion, sex  or  national
origin,  the  Family  and Medical Leave Act, the  Americans  With
Disabilities Act prohibiting discrimination based on  disability,
AND   THE   AGE  DISCRIMINATION  IN  EMPLOYMENT  ACT  PROHIBITING
DISCRIMINATION BASED ON AGE OVER 40, as these statutes have  been
from  time  to  time  amended, excepting only  those  obligations
expressly  recited  herein or to be performed  hereunder  and  my
claims  to vested interests in employee benefit plans as  defined
exclusively in written plan documents.

     D.    FUTURE  LITIGATION.   Rio and Hanlon,  jointly  and/or
individually,  covenant  and  agree  to  forever   refrain   from
instituting,  prosecuting, maintaining,  or  assisting  with  any
claims,  suits and actions, which arise out of, or is or may  be,
in whole or in part, based upon, related to or connected with the
Employment  Agreement,  the  Resignation,  the  Termination,  the
Termination Agreement and any other matter related thereto or any
way to or with respect to the subject matter of this Agreement as
they relate to the parties.

     E.   ACKNOWLEDGEMENTS AND AGREEMENTS OF HANLON.  Through the
execution of this Agreement, Hanlon hereby acknowledges that:

          1.    He  has the right to consider this Agreement  for
     twenty-one (21) days before signing it;
     
          2.   If he signs this Agreement prior to the expiration
     of  twenty-one  (21) days, he waives this right  freely  and
     voluntarily;
     
          3.    He  has the right to revoke this Agreement for  a
     period of seven days after he signs it;
     
          4.    This  Agreement  shall not  become  effective  or
     enforceable  until the seven (7) day revocation  period  has
     expired without the Agreement having been revoked;
     
          5.   This Agreement will be final and binding after the
     expiration of the revocation period in subsection 4 of  this
     Section  E.   He agrees not to challenge its enforceability.
     If  he  attempts  to  challenge the enforceability  of  this
     Agreement,  he shall initially tender to Rio,  by  certified
     funds delivered to Rio, all monies received pursuant to this
     
                                2
                                
<PAGE>

     Agreement, and invites Rio to retain such monies  and  agree
     with  Hanlon  to cancel this Agreement.  In  the  event  Rio
     accepts  this offer, Rio shall retain such monies  and  this
     Agreement  shall  be canceled.  In the event  Rio  does  not
     accept  such  offer, Rio shall so notify  Hanlon  and  shall
     place  such  monies  in an interest-bearing  escrow  account
     pending  resolution  of  the  dispute  as  to  whether  this
     Agreement  shall  be  set  aside and/or  otherwise  rendered
     unenforceable.
     
          6.    Hanlon  is  aware  of his  right  to  consult  an
     attorney, has been advised to consult with an attorney,  and
     has  had  the  opportunity to consult with an  attorney,  if
     desired, prior to signing this Agreement; and
     
          7.   Hanlon has carefully read this Agreement including
     the  Release,  acknowledges that he has not  relied  on  any
     representation or statement, written or oral, not set  forth
     in  this  document and warrants and represents  that  he  is
     signing this Agreement voluntarily.
     
     F.    BINDING EFFECT.  The terms of this Agreement shall  be
binding  upon, and shall inure to the benefit of Rio, Hanlon  and
their respective heirs, successors and assigns.  The term Rio, as
used in this Agreement, shall include, but is not limited to  its
predecessors  and  successors and its past or  present  insurers,
principals,   affiliates,  subsidiaries,   divisions,   officers,
directors,   stockholders,  employees   attorneys,   accountants,
representatives, assigns, heirs, executors, and administrators as
well  as,  upon consummation of that certain transaction  whereby
(i)  HEI  Acquisition  Corp.  III, a wholly-owned  subsidiary  of
Harrah's  Entertainment, Inc. ("Harrah's"), will merge  with  and
into  Rio,  with Rio continuing as the surviving corporation  and
(ii) each outstanding share of Rio common stock will be converted
into  the  right to receive one share of Harrah's  common  stock,
Harrah's  and  its predecessors and successors and  its  past  or
present    insurers,   principals,   affiliates,    subsidiaries,
divisions,    officers,   directors,   stockholders,    employees
attorneys,   accountants,   representatives,   assigns,    heirs,
executors, and administrators.

     G.    READ  AND  UNDERSTOOD.  Each party to  this  Agreement
represents  and  warrants that the terms of this  Agreement  have
been completely read and are fully understood after advice of its
counsel  and  voluntarily accepted for the purposes of  making  a
full,  final and complete compromise and settlement as  described
in this Agreement.

     H.    NO  UNDUE  INFLUENCE.  Each party  to  this  Agreement
represents and warrants that he or it has not been influenced  to
any  extent in entering this Agreement by any representations  or
statements  made  by  any  other  party  (or  any  other  party's
representatives, attorneys or insurers) concerning  their  claims
or   the  propriety  of  the  settlement  provided  for  in  this
Agreement,  but  has  relied solely upon  his,  her  or  its  own
judgment  and  the  judgment  and  advice  of  his,  her  or  its
respective attorneys and other consultants.

     I.    DIFFERENCE  IN  FACTS.  Each party to  this  Agreement
fully understands that the facts presently known to him or it may
later  be found to be different, and expressly accept and  assume
the  risk  that  the  facts may be found to be  different.   This
Agreement  shall be effective in all respects and  shall  not  be
subject  to  termination  or  rescission  because  of  any   such
difference in facts.

                     II.  GENERAL PROVISIONS

     A.   ASSIGNMENTS.  The rights of Hanlon under this Agreement
are personal to Hanlon and may not be assigned or transferred  to
any  other person, firm or corporation without the prior  express
written  consent of Rio.  Any attempted assignment by  Hanlon  is
void.

                                3
                                
<PAGE>

     B.   COOPERATION.  The Parties agree to cooperate fully with
each other in order to achieve the purposes of this Agreement and
to  take  all  actions  not specifically described  that  may  be
required to carry out the purposes and intent of this Agreement.

     C.    MODIFICATION OF AGREEMENT.  Any modification  of  this
Agreement  or  additional obligation assumed by either  party  in
connection with this Agreement shall be binding only if evidenced
in  an  express  writing signed by each party  or  an  authorized
representative of each party.

     D.    NOTICES.   Any notice provided for or concerning  this
Agreement  shall  be in writing and be deemed sufficiently  given
when  sent  by certified mail, return receipt requested,  Express
Mail, Federal Express, or similar conventional means of expedited
delivery and proof of delivery, to the respective address of each
party as set forth at the beginning of this Agreement.  A copy of
a  notice to Rio shall also be provided to Rio's General  Counsel
at  the same address.  Any change of address for notices shall be
given to all parties by notice in writing the receipt of which is
duly  acknowledged in writing or sent certified mail to the  then
proper address of each other party.

     E.    GOVERNING LAW.  It is agreed that this Agreement shall
be  governed by, construed, and enforced in accordance  with  the
laws of the State of Nevada.

     F.    EFFECT OF PARTIAL INVALIDITY.  The invalidity  of  any
portion  of  this Agreement will not and shall not be  deemed  to
affect  the  validity of any other provision.  In the event  that
any  provision  of  this Agreement is held  to  be  invalid,  the
parties agree that the remaining provisions shall be deemed to be
in  full  force and effect as if they had been executed  by  both
parties  subsequent to the expungement of the invalid  provision.
In  the  event that a provision is found in a judicial proceeding
to be unenforceable as written, but enforceable if modified, then
the  provision  shall be deemed to be so modified to  the  extent
necessary  to  cause  it  to be enforceable  retroactive  to  the
original date of this Agreement.

     G.    ENTIRE AGREEMENT.  This Agreement shall constitute the
entire agreement between the parties with respect to their mutual
release  of claims, and any prior understanding or representation
of  any  kind concerning such release which precedes the date  of
this  Agreement shall not be binding upon either party except  to
the  extent incorporated in this Agreement.  This Agreement  does
not impact the Consulting Agreement of even date herewith between
Rio and Hanlon.

     H.     NEUTRAL  INTERPRETATION.   The  provisions  contained
herein  shall not be construed in favor of or against  any  party
because  that  party or its counsel drafted this  Agreement,  but
shall be construed as if all parties prepared this Agreement, and
any rules of construction to the contrary are hereby specifically
waived.   The  terms of this Agreement were negotiated  at  arm's
length by the parties hereto.

     IN  WITNESS  WHEREOF, the parties hereto  have  caused  this
Agreement to be executed by their duly authorized representatives
and to be effective as of the date first above written.
                                     

Rio Hotel & Casino, Inc.,            David P. Hanlon,
   a Nevada corporation                 an individual
                                                          
By:  /s/James A. Barrett, Jr.        By:  /s/ David P. Hanlon
   ---------------------------          -------------------------
                                              David P. Hanlon
Its: President
    --------------------------

                                4

<PAGE>


                      CONSULTING AGREEMENT
                                
     THIS  CONSULTING AGREEMENT (this "Agreement"), effective  as
of  the  9th  day of October, 1998, by and between  Rio  Hotel  &
Casino,  Inc.,  a  Nevada corporation, whose principal  place  of
business  is  3700  West Flamingo Road, Las Vegas,  Nevada  89103
("Rio")  and  David  P.  Hanlon, an individual,  whose  residence
address   is  7174  Durango  Street,  Las  Vegas,  Nevada   89120
(hereinafter referred to as "Consultant").

                            RECITALS
                                
     A.   Consultant has special skills, knowledge, abilities and
experiences  in  the dealings of Rio and in the various  projects
and business opportunities of Rio and its subsidiaries.

     B.     Consultant  desires  to  be  engaged  by  Rio  as  an
independent contractor to render consulting services to Rio  upon
the terms and conditions set forth herein.

     NOW,  THEREFORE,  in consideration of the mutual  covenants,
promises  and  agreements contained herein, and intending  to  be
legally bound hereby, the parties hereto covenant and agree  that
the Recitals are true and correct and further agree as follows:

                            SECTION I
                                
                       CONSULTING SERVICES
                                
     A.     ENGAGEMENT.   Rio  hereby  engages  Consultant,   and
Consultant   hereby  accepts  his  engagement  by  Rio,   as   an
independent contractor, to render services in the capacity  of  a
consultant, subject to the terms and conditions herein set  forth
for  a  period, commencing as of the date hereof, and terminating
as of one calendar year afterwards (the "Term").

     B.     SERVICES.   Consultant's  services  to  be   rendered
hereunder  shall  include, but not be limited  to,  the  services
described on Exhibit A attached hereto ("Services").

     C.    COMMUNICATIONS.  In the performance  of  his  services
hereunder,  Consultant shall report to the President of  Rio,  or
his   designee.    Consultant  shall  maintain   regular   direct
communications  with  the  President of  Rio,  or  his  designee,
including  confidential written reports  on  the  status  of  his
activities  pursuant to this Agreement at such times  as  may  be
requested by the President of Rio, or his designee.

     D.    INDEPENDENT CONTRACTOR.  Consultant is  entering  into
this Agreement and in the performance of his duties hereunder  as
an  independent  contractor.  No term  or  condition  under  this
Agreement  nor  any manner or method of payment  hereunder  shall
create any relationship between Rio and Consultant other than  as
expressed in this Section I.D.  Consultant shall not in any  way,
at  any time, or under any circumstances, be, or be construed  to
be, an employee, partner, or joint venturer of Rio.

<PAGE>

                           SECTION II
                                
                              FEES
                                
     A.    CONSULTING FEE.  For all services rendered pursuant to
this   Agreement,  Rio  agrees  to  pay  Consultant   a   monthly
compensation  in  the  amount  of Thirty  Five  Thousand  Dollars
($35,000.00) payable on the last day of each month of the Term.

     B.    TAXES.  Consultant shall be solely responsible for and
shall pay when due all federal, state and local income taxes  and
all other taxes due on his behalf for any compensation or benefit
received under this Agreement, including, without limitation, all
federal  withholding  taxes, FICA and Social  Security,  and  any
worker's compensation premiums.

                           SECTION III
                                
                         CONFIDENTIALITY
                                
     A.   CONFIDENTIALITY.  Consultant acknowledges in performing
his  obligations  hereunder he will have access  to  confidential
information  which is proprietary to and a valuable trade  secret
of Rio, including but not limited to information concerning Rio's
business, customers, suppliers, marketing methods, files,  credit
and  collection techniques and files, trade secrets  and  various
unpublished  techniques and "know-how" as well as  any  materials
prepared  by  Consultant  using such  information  (collectively,
"Confidential   Information"),  and  that   any   disclosure   or
unauthorized  use  thereof will cause irreparable  harm  to  Rio.
Accordingly, Consultant covenants and agrees that he will at  all
time  during and after the term of this Agreement hold  all  such
information in strictest confidence and will:

          1.   Use any such Confidential Information for the sole
     and limited purpose of performing his obligations hereunder;
     
          2.    Not  copy  any such Confidential  Information  in
     whole or in part, except as necessary in performance of  his
     obligations hereunder;
     
          3.    Not  reveal  or  disclose any  such  Confidential
     Information  to any person, firm, corporation or  any  other
     entity  whatsoever, without Rio's express  written  consent,
     except  as such revelation or disclosure may be required  in
     connection  with  Consultant's  performance  of  his  duties
     hereunder  or  as  required by law or a court  of  competent
     jurisdiction.
     
          5.     Use  his  reasonable  efforts  to  protect   the
     confidentiality of Confidential Information; and
     
          5.   Return to Rio all such Confidential Information in
     whatever  tangible form and all copies and  records  thereof
     upon  Rio's request therefor or at the termination  of  this
     Agreement.
     
     B.    ENFORCEMENT.  Consultant further acknowledges that Rio
will  suffer  substantial irreparable  injury  in  the  event  of
Consultant's  breach  of  the provisions  of  this  Section  III.
Consultant therefore agrees that, in the event of his  actual  or
threatened  breach  of the provisions of this  Section  III,  Rio
shall  be  entitled to seek and obtain such temporary restraining
orders,

                                2
                                
<PAGE>

preliminary  injunctions or permanent injunctions  as  Rio  deems
appropriate, restraining Consultant from violating the provisions
of  this Section III.  Nothing contained in this Agreement  shall
prohibit Rio from pursuing any other remedies available for  such
breach  or  threatened breach, including the recovery of  damages
from  Consultant.  If Rio commences legal proceedings to restrain
Consultant from violating the provisions of this Section III  and
obtains such restraints in such proceedings, Consultant agrees to
reimburse  Rio  for  all  costs  incurred  in  prosecuting   such
proceeding, including court costs and reasonable attorneys' fees.
If  Rio  commences legal proceedings to restrain Consultant  from
violating the provisions of this Section III and does not  obtain
such  restraints  in  said proceedings, Rio agrees  to  reimburse
Consultant  for all costs incurred in defending such proceedings,
including court costs and reasonable attorneys' fees.  If Rio  or
Consultant  commences  legal proceedings  against  the  other  to
enforce this Agreement, the prevailing party shall be entitled to
an  award of all attorneys' fees and costs reasonably incurred in
prosecuting or defending the action.

     C.    SURVIVAL.   The restrictions and obligations  of  this
Section  III  shall  survive  the  expiration,  cancellation   or
termination  of  this  Agreement  and  shall  continue  to   bind
Consultant and Rio.

                           SECTION IV
                                
                           TERMINATION
                                
     A.     EVENTS  OF  TERMINATION.   This  Agreement  and   the
engagement  of  Consultant by Rio shall terminate  prior  to  the
expiration  of the Term, upon the occurrence of any  one  of  the
following events:

          1.    Consultant's continuing or repeated breach of any
     material  terms  and conditions of this Agreement  following
     written notice to Consultant of such breach;
     
          2.    Rio's  failure to pay at the times specified  the
     sums owed Consultant in accordance with this Agreement.
     
          3.    Consultant's failure or inability to  secure  and
     maintain  any license or approval required of Consultant  by
     any  gaming  authority  ("Gaming Regulatory  Agency")  whose
     jurisdiction Rio is subject to or by the laws or regulations
     of    such    jurisdictions   pertaining   to   Consultant's
     relationship with Rio pursuant to this Agreement; or
     
          4.    Upon thirty (30) days written notice from Rio  to
     Consultant.
     
     B.   EFFECT OF TERMINATION.  In the event this Agreement and
the engagement of Consultant are terminated:

          1.     Pursuant  to  Section  IV(A)(1)  or  (3),   then
     Consultant  shall  be  entitled to be compensated  hereunder
     through the date of termination and all other provisions  of
     this Agreement shall be null and void, except as provided in
     Section III hereof.
     
          2.     Pursuant  to  Section  IV(A)(2)  or  (4),   then
     Consultant  shall  be entitled to the compensation  provided
     hereunder in Section II(A) for the balance of the Term,  and
     Consultant  shall  have  no further obligations,  except  as
     provided in Section III hereof.
     
                                3
                                
<PAGE>

                            SECTION V
                                
                      REGULATORY COMPLIANCE
                                
     Consultant  and  Rio acknowledge and agree that  any  Gaming
Regulatory  Agency may assert a right to review and approve  this
Agreement,  as  well  as  a right to insist  that  Consultant  be
licensed.   Consultant and Rio each agree to comply expeditiously
with  all  such requests from any Gaming Regulatory Agency.   Rio
shall  pay  all related costs and expenses incurred in connection
with such investigations and proceedings pertaining to Consultant
while  Consultant  remains  engaged  by  Rio  pursuant  to   this
Agreement, except disciplinary or enforcement proceedings against
Consultant.  Consultant and Rio shall comply with and be bound by
all   decisions,  opinions  and  orders  issued  by  any   Gaming
Regulatory Agency regarding this Agreement and any matter related
thereto.

                           SECTION VI
                                
                          MISCELLANEOUS
                                
     A.    ASSIGNMENTS.   The  rights of  Consultant  under  this
Agreement  are personal to Consultant and may not be assigned  or
transferred to any other person, firm or corporation without  the
prior  express written consent of Rio.  Any attempted  assignment
by Consultant is void.

     B.    COMPLIANCE  WITH LAWS.  At all times during  the  term
hereof,  both  parties agree that its actions and  those  of  its
representatives,  agents  and consultants  will  be  entirely  in
accordance  with  all  applicable  laws,  rules,  ordinances  and
regulations of all states, counties, and municipalities in  which
such party conducts business.  In connection with this Agreement,
Consultant  acknowledges that there exist certain  casino  gaming
licenses currently issued to Rio and its affiliates, the laws  of
which   may   require  Rio  to  disclose  private  or   otherwise
confidential information about Consultant.  Consultant agrees  to
refrain from all conduct that may negatively affect such licenses
as  well as prospective licenses.  Consultant further agrees that
this  Agreement  shall terminate immediately at Rio's  option  if
Consultant  is  required  to  be  licensed,  qualified  or  found
suitable   and   is  denied  such  licensure,  qualification   or
suitability.

     C.   COOPERATION.  The Parties agree to cooperate fully with
each other in order to achieve the purposes of this Agreement and
to  take  all  actions  not specifically described  that  may  be
required to carry out the purposes and intent of this Agreement.

     D.    MODIFICATION OF AGREEMENT.  Any modification  of  this
Agreement  or  additional obligation assumed by either  party  in
connection with this Agreement shall be binding only if evidenced
in  writing  signed by each party or an authorized representative
of each party.

     E.    NOTICES.   Any notice provided for or concerning  this
Agreement  shall  be in writing and be deemed sufficiently  given
when  sent  by certified mail, return receipt requested,  Express
Mail, Federal Express, or similar conventional means of expedited
delivery and proof of delivery, to the respective address of each
party as set forth at the beginning of this Agreement.  A copy of
a  notice to Rio shall also be provided to Rio's General  Counsel
at  the same address.  Any change of address for notices shall be
given to all parties by notice in writing the receipt of which

                                4
                                
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is  duly  acknowledged in writing or sent certified mail  to  the
then proper address of each other party.

     F.    GOVERNING LAW.  It is agree that this Agreement  shall
be  governed by, construed, and enforced in accordance  with  the
laws of the State of Nevada.

     G.    EFFECT OF PARTIAL INVALIDITY.  The invalidity  of  any
portion  of  this Agreement will not and shall not be  deemed  to
affect  the  validity of any other provision.  In the event  that
any  provision  of  this Agreement is held  to  be  invalid,  the
parties agree that the remaining provisions shall be deemed to be
in  full  force and effect as if they had been executed  by  both
parties  subsequent to the expungement of the invalid  provision.
In  the  event that a provision is found in a judicial proceeding
to be unenforceable as written, but enforceable if modified, then
the  provision  shall be deemed to be so modified to  the  extent
necessary  to  cause  it  to be enforceable  retroactive  to  the
original date of this Agreement.

     H.    ENTIRE AGREEMENT.  This Agreement shall constitute the
entire  agreement between the parties with respect to the matters
described  herein, and any prior understanding or  representation
of  any  kind preceding the date of this Agreement shall  not  be
binding  upon  either party except to the extent incorporated  in
this Agreement.

     IN  WITNESS  WHEREOF, the parties hereto  have  caused  this
Agreement to be executed by their duly authorized representatives
and to be effective as of the date first above written.

RIO HOTEL & CASINO, INC.           
      a Nevada corporation
                                   
                                   
By:  /s/ James A. Barrett, Jr.     By:  /s/ David P. Hanlon
                                        David P. Hanlon, an
Its: President                          individual
     
                                5
<PAGE>

                            EXHIBIT A
                                
                MATERIAL STEPS TO BE PERFORMED BY
     DAVID P. HANLON IN CONNECTION WITH CONSULTING PROJECTS
                                
                                
SKIP BARBER SCHOOL OF RACING

     (1)  Review all agreements and associated documents.
          
     (2)  Monitor status of agreements and associated documents.
          
     (3)  Provide  liaison and support to Rio and Barber  in  the
          discharge   of   their   responsibilities   under   the
          agreements and associated documents.
          
     (4)  Visit  the  Barber  School sites when  appropriate  and
          necessary.
          
     (5)  Provide such status reports to Rio as requested.
          
MODULAR TECHNOLOGY

     (1)  Meet  and communicate as appropriate with Rio to review
          the status of the Pecos Projects.
          
     (2)  Provide  liaison and support to the parties to  aid  in
          the   discharge   of   their   responsibilities   under
          agreements between them.
          
     (3)  Provide status reports to Rio as requested.
          
BUTCH HARMON SCHOOL OF GOLF/RIO SECCO GOLF CLUB

     (1)  Provide  such status reports, attend such meetings  and
          tour facilities as Rio shall request.
          
PETERHOF MUSEUM EXHIBIT

     (1)  Meet  with  Tom  Roberts of Rio and Bob  Nargassans  of
          Encore  Entertainment to determine what remains  to  be
          done  to  complete  delivery of the  artifacts  to  the
          Company  and  to open the Peterhof Museum Exhibit  (the
          "Exhibit").
          
     (2)  Assist  Messrs. Roberts and Nargassans in  coordinating
          the arrival of the Russian delegation.
          
     (3)  Review plans for the Exhibit's grand opening and assist
          in  coordinating  media coverage,  working  with  Jania
          Lambert  of  Rio and Lee Solters, an outside consultant
          providing public relations and media service to Rio.
          
                                6
                                
<PAGE>

     (4)  Provide such support to Mr. Roberts as is necessary  to
          aid  in  the discharge of the parties' responsibilities
          under the various governing agreements.
          
     With  regard  to  each  of  these  consulting  projects,  be
available  to  the  President  and Chairman  of  Rio  to  discuss
problems and suggested actions to resolve them.

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