THIRD AMENDMENT

                                       TO

                              EMPLOYMENT AGREEMENT

                                       OF

                                 ROBERT VANNUCCI



         This THIRD AMENDMENT TO EMPLOYMENT  AGREEMENT dated as of March 3, 2003
("THIRD  AMENDMENT"),  by and between RIVIERA HOLDINGS  CORPORATION ("RHC"), and
its wholly-owned subsidiary, RIVIERA OPERATING CORPORATION ("ROC") (collectively
the "COMPANY"), and ROBERT VANNUCCI ("EXECUTIVE").

         WHEREAS, the  parties  entered  into an Employment Agreement on July 1,
1998 ("AGREEMENT");

         WHEREAS,  the parties  amended the  AGREEMENT by way of an AMENDMENT TO
EMPLOYMENT AGREEMENT dated October 1, 2000 ("AMENDMENT");

         WHEREAS,  the parties  further amended the AGREEMENT by way of a SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT dated July 1, 2002 ("SECOND AMENDMENT"); and

         WHEREAS,  the  parties  desire  to  further  amend  its  AGREEMENT  and
amendments thereto by way of this THIRD AMENDMENT.

         NOW, THEREFORE,  in consideration of the mutual agreements  hereinafter
set forth,  the parties  hereto agree to amend the AGREEMENT and all  amendments
thereto as follows:

         1. Paragraph  4(b) of the AMENDMENT  shall be amended in its entirety
to read as follows:

            (b)  Restricted Stock:  (i) Commencing July 1, 2003, and continuing
                                        for each quarter during the TERM of
                                        AGREEMENT, EXECUTIVE shall receive in
                                        EXECUTIVE's sole discretion, either a
                                        cash payment of $25,000 less applicable
                                        taxes, or  $25,000 of RHC Restricted
                                        Stock from treasury stock at the closing
                                        price on the first day of each  quarter,
                                        or next  business day as applicable; and

                                   (ii) Commencing July 1, 2003, EXECUTIVE shall
                                        receive in EXECUTIVE's sole discretion,
                                        either cash or RHC Restricted Stock from
                                        treasury stock at the closing  price  on
                                        March 15, of each applicable year, or
                                        next  business day as applicable, in an
                                        amount equal to the EXECUTIVE level
                                        incentive earned(e.g., at one-hundred
                                        percent (100%), EXECUTIVE awarded an
                                        additional $100,000 in  RHC Restricted
                                        Stock at market price from treasury
                                        stock).

          2.      In the event there is a conflict  between this THIRD AMENDMENT
                  and the  AGREEMENT or  amendments  thereto,  the terms of this
                  THIRD AMENDMENT shall control.

          3.      Except as changed by this THIRD AMENDMENT, all other terms and
                  conditions of the AGREEMENT and all  amendments  thereto shall
                  remain in full force and effect.

         IN  WITNESS  WHEREOF,  the  parties  hereto  have  agreed to this THIRD
AMENDMENT TO EMPLOYMENT AGREEMENT as of the day and year first written above.


COMPANY:                                    EXECUTIVE:

RIVIERA HOLDINGS CORPORATION                ROBERT VANNUCCI
and its wholly-owned subsidiary
RIVIERA OPERATION CORPORATION



By:______________________________           __________________________
     WILLIAM L. WESTERMAN                   ROBERT VANNUCCI
     Chief Executive Officer