SECOND AMENDMENT
                             TO EMPLOYMENT AGREEMENT
                                     BETWEEN

                              WILLIAM L. WESTERMAN
                                       AND
                        RIVIERA HOLDINGS CORPORATION AND
                          RIVIERA OPERATING CORPORATION


         This SECOND AMENDMENT dated as of July 15, 2003, to the Employment
Agreement by and among RIVIERA HOLDINGS CORPORATION ("RHC"), and its
wholly-owned subsidiary, RIVIERA OPERATING CORPORATION ("ROC") (collectively the
"COMPANY"), and WILLIAM L. WESTERMAN ("EXECUTIVE").

         WHEREAS, the Parties entered into an Employment Agreement dated as of
November 21, 1996 (the "Agreement"), and said Agreement is currently in effect;

         WHEREAS, on December 6, 2000, the Parties amended the Agreement by way
of a First Amendment to Employment Agreement ("First Amendment");

         WHEREAS, at the request of the RHC Compensation Committee at its March
3, 2003 meeting, in order to reduce the Company's liability to Executive, it was
decided that commencing April 1, 2003, and continuing the first day of each
quarter thereafter, Executive is to be paid the following in cash:
o        the quarterly interest credited to his Retirement Account one (1)
         quarter in arrears; and
o        a distribution of $250,000 from the principal balance of his Retirement
         Account;

         WHEREAS, in addition to his $600,000 Base Salary and in accordance with
the First Amendment, Executive has received a net incentive bonus of $400,000 in
each of the preceding two (2) years based upon targets previously established;

         WHEREAS, the Company desires that its compensation arrangement with
Executive more accurately reflect the expectation of the parties; and

         WHEREAS, this Second Amendment to Employment Agreement ("Second
Amendment"), has been approved by the COMPANY's Board of Directors and the
Compensation Committee.

         NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the parties hereto agree as follows:

1. The following shall replace Paragraph 4 of the Agreement in its entirety:

                  4(a)     Executive shall receive a salary at the rate of
                           $600,000 per annum, payable bi-weekly in arrears
                           ("Base Salary") through December 31, 2002. Effective
                           January 1, 2003, and for the remainder of the Term,
                           Executive shall receive a salary at the rate of
                           $1,000,000 per annum, bi-weekly in arrears ("Total
                           Salary").

                  4(b)     For a period of twenty-four  (24) months  following
                           the termination of this Agreement for any reason
                           except cause ("Termination Date")  ("Non-Competition
                           Term"),  Executive hereby covenants and agrees that
                           Executive shall not, directly or indirectly (as a
                           director, officer, partner, member, manager, employee
                           or agent of any other person), engage in any business
                           activity which is in competition with the Company
                           within a radius of  seventy-five  miles from the
                           location of any hotel and/or  casino  business then
                           currently  operated by Company ("Non-Competition
                           Covenant").  As consideration for the Non-Competition
                           Covenant,  Executive shall be  entitled  to  receive,
                           and the  Company  shall  pay,  a  total  fee of Five
                           Hundred  Thousand  Dollars ($500,000.00)
                           ("Non-Competition  Fee"), in accordance with the next
                           sentence. The Non-Competition Fee shall be paid in
                           two (2) equal annual installments of Two Hundred
                           Fifty Thousand Dollars ($250,000.00).  The first
                           installment  shall be paid within five (5) business
                           days of the Termination Date and the second
                           installment shall  be  paid  on the first anniversary
                           of the Termination Date.  The Company  hereby  agrees
                           that, irrespective  of the  duration  of  the
                           Non-Competition  Covenant,  the  Company's obligation
                           to pay  the Non-Competition  Fee shall survive the
                           Executive's death and shall thereafter be paid to
                           Executive's estate (or designated  beneficiary) until
                           the entire  Non-Competition Fee has been paid in full
                         . Executive shall be entitled to the entire
                           Non-Competition Fee as delineated above
                           notwithstanding  whether Executive might be engaged
                           as a consultant for the Company and/or remains a
                           Substantial  Stockholder of the Company, as defined
                           in the Company's Articles of Incorporation,
                           subsequent to the Termination Date.

2. Paragraph 5 of the Agreement shall be changed as follows:

(i) The first sentence of Paragraph 5 shall be changed to read as follows:

                           Through December 31, 2002, Executive shall be
                           entitled to participate in the Company's Senior
                           Management Compensation Plan or such other Executive
                           bonus plan as shall be established by the Company's
                           Board of Directors (collectively the "Plan").

(ii) The following sentence shall be added to the end of Paragraph 5:

                           Effective January 1, 2003, Executive shall not be
                           eligible to participate in the Plan.

3.                Except as amended by this Second Amendment, the terms and
                  conditions of the Agreement and First Amendment to Agreement
                  shall remain in full force and effect.

         IN WITNESS WHEREOF, the parties have duly executed this AGREEMENT as of
the day and year first written above.



RIVIERA HOLDINGS CORPORATION                RIVIERA OPERATING CORPORATION



By:_____________________________            By:_____________________________
     DUANE KROHN, Treasurer                       DUANE KROHN, Treasurer




EXECUTIVE


-------------------------------
WILLIAM L. WESTERMAN