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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

        This Employment Agreement (the "Agreement") is entered into as of July
5, 1999 between Fitzgeralds Gaming Corporation, a Nevada corporation (the
"Company") and Michael E. McPherson, an individual ("Executive").

                             PRELIMINARY STATEMENTS

        The Company is in the business of owning and operating casino hotel
resorts (the "Company Business"). Executive is currently employed by the Company
as Senior Vice President and Chief Financial Officer of the Company.

        The Company desires to retain the services of Executive, and Executive
desires to be so retained, on the terms and conditions herein contained.

                                    AGREEMENT

        In consideration of the various covenants and agreements hereinafter set
forth, the parties hereto agree as follows:

        1. Term of Employment. The Company hereby employs Executive and
Executive accepts such employment commencing on the date of this Agreement (the
"Commencement Date") and terminating on the third anniversary of the
Commencement Date, unless sooner terminated as hereinafter provided; provided,
however, that the term of this Agreement may be extended for successive one (1)
year terms upon the mutual agreement of the parties hereto.

        2. Services to be Rendered.

                2.1. Duties. Executive shall be employed to serve in the
capacity of Executive Vice President and Chief Financial Officer of the Company,
with the duties and powers customarily associated with such position. Executive
shall also perform such other duties pertaining to the Company business as the
President of the Company may from time to time direct, provided such duties are
consistent with the role of Executive Vice President and Chief Financial Officer
of an entity of similar size and nature. Executive hereby consents to serve as
an officer and/or director of the Company or any subsidiary or any company,
partnership or entity which, directly or indirectly, controls, is controlled by
or is under common control with the Company (an "affiliate") without any
additional salary or compensation except as expressly set forth in this
Agreement, if so requested by the Board, provided that any such appointment will
not materially increase the scope of Executive's duties in effect as of the date
of this Agreement.

                2.2. Exclusive Services. Executive shall at all times
faithfully, industriously and to the best of his ability, experience and talents
perform to the satisfaction of the President all of the duties that may be
assigned to him hereunder and shall devote such time to the performance of these
duties as may be necessary therefor. Executive shall be available to perform the
duties assigned to him pursuant to this Agreement; provided, however, that
Executive may devote time to charitable or civic activities or his personal
investments, to the extent that the same do not materially interfere with his
time and attention to the affairs of the Company.


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        3. Compensation and Benefits. The Company shall pay the compensation and
benefits expressly set forth in this Agreement to Executive during the term of
this Agreement and Executive shall accept such compensation and benefits as
payment in full for all services rendered by Executive to or for the benefit of
the Company.

                3.1. Base Salary. Beginning on July 5, 1999, Executive shall be
entitled to a base salary (the "Base Salary") of $250,000 per annum. The Base
Salary shall increase by a minimum of five percent (5%) on the fifth day of July
of each year during the term of this Agreement. The exact increase in the Base
Salary shall be recommended by the President and approved by the compensation
committee, if any, appointed by the Board. The Base Salary shall accrue in equal
monthly installments in arrears and shall be payable in accordance with the
payroll practices of the Company in effect from time to time.

                3.2. Discretionary Bonus. In addition to the Base Salary,
Executive shall be entitled to such bonus compensation as Executive may be
awarded, from time to time, by the Board or by a compensation committee, if any,
appointed by the Board.

                3.3. Term and Group Life Insurance. The Company shall pay all
premiums due and payable with respect to a $500,000 term life insurance policy
and a $100,000 group life insurance policy, in each case for the benefit of
Executive or his designees.

                3.4. Expenses. The Company shall reimburse Executive for
reasonable out-of-pocket expenses incurred in connection with the Company
Business and the performance of his duties pursuant to this Agreement, subject
to such policies as the President may from time to time establish.

                3.5 State Income Taxes. In the event that travel incurred in the
rendering of services by the Executive should result in the Executive incurring
a state income tax liability, the Company agrees to reimburse the Executive for
such state income tax liability, including penalties and interest and for the
cost of preparing such state income tax returns. The Company's responsibility
for the aforementioned state tax liability will not be extinguished with the
termination of the Employee Agreement.

                3.6. Vacation. Executive shall be entitled to paid vacation to
be taken at a time or times which will not materially interfere with his duties
as set forth in this Agreement. Unused vacation shall be paid to the Executive
upon the termination of this Agreement.

                3.7. Benefits. Executive shall be entitled to participate in the
Company's hospitalization, Executive Medical, group health and disability
benefit plans and all pension plans, profit-sharing plans, savings plans,
deferred compensation plans, stock option plans, health and accident plans and
other benefits and plans as the Company provides to its senior executives to the
extent such plans are established by the Company and to the extent that
Executive is eligible to participate in such plans.

                3.8. Withholding and Other Deductions. All compensation payable
to Executive hereunder shall be subject to such deductions as the Company is
from time to time required to make


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pursuant to law, governmental regulation or order.

                3.9. Retention and Severance Program. Notwithstanding anything
contained in this Agreement to the contrary, Executive shall be entitled to all
benefits contained in the Company's Retention and Severance Program at such time
as such Retention and Severance Program is adopted by the Board. In the event of
any inconsistency between this Agreement and the Retention and Severance
Program, the document containing the terms and conditions which are more
favorable to Executive with respect to the issue in question, in Executive's
sole discretion, shall supersede and control.

        4. Representations and Warranties of Executive. Executive represents and
warrants to the Company that (i) Executive is under no contractual or other
restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of his duties hereunder, or the other rights of the
Company hereunder and (ii) Executive is under no physical or mental disability
that would hinder the performance of his duties under this Agreement.

        5. Certain Covenants.

                5.1. Noncompetition. From and after the Commencement Date and
until the expiration or earlier termination of this Agreement (such period, the
"Restricted Period"), Executive shall not have any ownership interest (of record
or beneficial) in, or have any interest as an employee, salesman, consultant,
officer or director in, or otherwise aid or assist in any manner, any firm,
corporation, partnership, proprietorship or other business that engages in a
business in direct competition with the Company, in any county, city or part
thereof in which the Company or any affiliate of the Company owns, operates, or
manages a facility or establishment engaged in the Company Business at any time
during the term of this Agreement; provided, however, that Executive may own,
directly or indirectly, solely as an investment, securities of any entity which
are traded on any national securities exchange if Executive (i) is not a
controlling person of, or a member of a group which controls, such entity; or
(ii) does not, directly or indirectly, own one percent (1%) or more of any class
of securities of any such entity. The determination as to whether Executive has
violated this Section 5.1 shall be made in good faith by the Board.

                5.2. Trade Secrets. During the term of this Agreement and
thereafter, Executive shall hold in a fiduciary capacity for the benefit of the
Company or its affiliates, and their respective businesses, all secret or
confidential information of the Company which shall not be public knowledge.

                5.3. Rights and Remedies Upon Breach. If Executive breaches or
threatens to commit a breach of any of the provisions of this Section 5 (the
"Restrictive Covenants"), the Company shall have the right and remedy to have
the Restrictive Covenants specifically enforced by any court having equity
jurisdiction, all without the need to post a bond or any other security or to
prove any amount of actual damage or that money damages would not provide an
adequate remedy, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide adequate remedy to the Company.


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                5.4. Severability of Covenants/Blue Penciling. 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 effect, without regard to the
invalid portions. If any court determines that any of the Restrictive Covenants,
or any part thereof; are unenforceable because of the duration of such provision
or the area covered thereby, such court shall have the power to reduce the
duration or area of such provision and, in its reduced form, such provision
shall then be enforceable and shall be enforced. Executive hereby waives any and
all right to attack the validity of the Restrictive Covenants on the grounds of
the breadth of their geographic scope or the length of their term.

                5.5. Enforceability in Jurisdictions. The Company and Executive
intend to and do hereby confer jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the geographical scope of such
covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company and Executive that such
determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical 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.

        6. Proprietary Rights.

                6.1. Disclosure of Executive's Knowledge. Executive shall make
available to the Company at no cost to the Company all knowledge possessed by
him relating to any methods, developments, inventions and/or improvements,
whether patented, patentable or unpatentable, which concern in any way the
Company Business, whether acquired by Executive before or during the term of
employment, provided that nothing herein shall be construed as requiring any
disclosure where any such method, development, invention and/or improvement is
lawfully protected from disclosure as a trade secret of any third party or by
any other lawful bar to such disclosure.

                6.2. Ownership of Patent Rights, Copyrights, and Trade Secrets.
To the fullest extent permitted by Nevada law, Executive shall assign, and does
hereby assign, to the Company all of Executive's right, title and interest in
and to all inventions, improvements, developments, trade secrets, discoveries,
computer software, tradenames and trademarks conceived, improved, developed,
discovered or written by Executive, alone or in collaboration with others,
during the term of this Agreement which relate in any manner to the Company
Business, whether or not the same shall be conceived, improved, developed,
discovered or written during customary working hours on the Company's premises.
During the term of this Agreement, Executive shall promptly and fully disclose
to the Company all matters within the scope of this Section 6.2, and shall, upon
request of the Company, execute, acknowledge, deliver and file any and all
documents necessary or useful to vest in the Company all of Executive's right,
title and interest in and to all such matters. All expenses incurred in
connection with the execution, acknowledgment, delivery and filing of any papers
or documents within the scope of this Section 6.2 shall be borne by the Company.
All matters within the scope of this Section 6.2 shall constitute trade secrets
of the Company subject to the provisions of Section 5.2 of this Agreement, until
such matters cease to be trade secrets by operation of law.


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        7. Termination.

                7.1. Death or Total Disability of Executive. If Executive dies
or becomes totally disabled during the term of this Agreement, Executive's
employment hereunder shall automatically terminate; provided, however, that in
the event of Executive's death or total disability, Executive shall be entitled
to receive the Base Salary which would have otherwise been paid to him, but for
the death or total disability for a period of the lesser of six (6) months or
(ii) the remainder of the term of this Agreement. For these purposes, Executive
shall be deemed totally disabled if Executive has, in fact, not fully discharged
Executive's duties hereunder for a period of one hundred eighty (180) days due
to a physical or mental incapacitation.

                7.2. Termination for Good Cause. Executive's employment
hereunder may be terminated by the Company for "good cause." The term "good
cause" is defined as any one or more of the following occurrences:

                        (a) Executive's conviction by, or entry of a plea of
guilty or nolo contendere in, a court of competent and final jurisdiction for
any crime involving moral turpitude or would constitute a felony in the
jurisdiction involved;

                        (b) Executive's conviction of the commission of an act
of fraud, whether prior to or subsequent to the date hereof upon the Company;

                        (c) Executive's continuing repeated willful failure or
refusal to perform Executive's duties as required by this Agreement;

                        (d) the failure of Executive to obtain and maintain any
requisite license, permit or approval based on suitability from any state,
county, or other governmental authority having jurisdiction over the gaming
operations of the Company (the "Gaming Authorities") which would preclude
Executive from carrying out his duties as set forth in this Agreement;

                        (e) Executive's breach of any other provision of this
Agreement, provided that termination of Executive's employment pursuant to
Section 7.2(c) or this Section 7.2(f) shall not constitute valid termination for
good cause unless Executive shall have first received written notice from the
Board stating with specificity the nature of such breach and affording Executive
fifteen (15) days to correct the breach alleged; provided, however, that if such
breach cannot be cured within such fifteen (15) day period, Executive shall be
afforded a reasonable time period thereafter to cure such breach provided that
Executive commences the cure of such breach within the fifteen (15) day period
and diligently proceeds to cure such breach to completion.

                7.3. Resignation of Executive. The Company shall have the right
to terminate this Agreement and Executive's employment hereunder due to the
voluntary resignation of Executive, provided that Executive shall deliver no
less than sixty (60) days prior written notice of such resignation to the Board,
which notice may be waived by the Board.

                7.4. Severance Compensation. Upon the occurrence of any of the
events referred to in Sections 7.2 or 7.3 above, Executive (or Executive's heirs
or representatives) shall be entitled to receive only such portion (if any) of
the Base Salary as may theretofore have accrued but be


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unpaid on the date on which the termination shall take effect.

                7.5. Return of the Company's Property. If this Agreement is
terminated, the Company shall have the right, at its option, to require
Executive to vacate his offices prior to the effective date of termination and
to cease all activities on the Company's behalf. Upon the termination of his
employment in any manner, Executive shall immediately surrender to the Company
all lists, books and records of, or in connection with, the Company Business,
and all other property belonging to the Company, it being distinctly understood
that all such lists, books and records, and other documents, are the property of
the Company.

        8. Arbitration. Any claim or controversy arising out of or relating to
this Agreement shall be settled by arbitration in Las Vegas, Nevada, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction. There shall be three (3) arbitrators,
one to be chosen directly by each party at will, and the third arbitrator to be
selected by the two (2) arbitrators so chosen. Each party shall pay the fees of
the arbitrator it selects and of its own attorneys, the expenses of its
witnesses and all other expenses connected with presenting its case. Other costs
of the arbitration, including the cost of any record or transcripts of the
arbitration, administrative fees, the fee of the third arbitrator, and all other
fees and costs, shall be borne equally by the parties.

        9. General Relationship. Executive shall be considered an employee of
the Company within the meaning of all federal, state and local laws and
regulations including, but not limited to, laws and regulations governing
unemployment insurance, workers' compensation, industrial accident, labor and
taxes.

        10. Miscellaneous.

                10.1. Modification, Prior Claims. This Agreement sets forth the
entire understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements including, without limitation, prior
employment agreements, between them concerning such subject matter, and may be
modified only by a written instrument duly executed by each party.

                10.2. Assignment. The rights of the Company under this Agreement
may, without the consent of Executive, be assigned by the Company, in its sole
and unfettered discretion, (i) to any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or otherwise,
directly or indirectly, acquires all or substantially all of the assets or
business of the Company, and (ii) to any subsidiary or affiliate of the Company.

                10.3. Survival. The covenants, agreements, representations and
warranties contained in or made pursuant to this Agreement shall survive
Executive's termination of employment with the Company and/or its affiliates.

                10.4. Third Party Beneficiaries. This Agreement does not create,
and shall not be construed as creating, any rights enforceable by any person not
a party to this Agreement.

                10.5. Waiver. The failure of either party hereto at any time to
enforce performance


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by the other party of any provision of this Agreement shall in no way affect
such party's rights thereafter to enforce the same, nor shall the waiver by
either party of any breach of any provision hereof be deemed to be a waiver by
such party of any other breach of the same or any other provision hereof.

                10.6. Hiring At Will. Any continuance of Executive's employment
by the Company after the term of this Agreement shall be deemed a hiring at will
(unless such continuance is the subject of a new written agreement) and shall be
subject to termination with or without cause by either party upon delivery of
notice thereof.

                10.7. Section Headings. The headings of the several Sections in
this Agreement are inserted solely for the convenience of the parties and are
not a part of and are not intended to govern, limit or aid in the construction
of any term or provision hereof.

                10.8. Notices. All notices, requests and other communications
hereunder shall be in writing and shall be delivered by courier or other means
of personal service (including by means of a nationally recognized courier
service or professional messenger service), or sent by telex or telecopy or
mailed first class, postage prepaid. by certified mail, return receipt
requested, in all cases, addressed to:

         Company:                   Fitzgeralds Gaming Corporation
                                    301 Fremont Street
                                    Las Vegas, Nevada 89101
                                    Attn:  Chairman, Compensation Committee

                                          of Board of Directors

         With a copy to:            Fitzgeralds Gaming Corporation
                                    301 Fremont Street
                                    Las Vegas, Nevada 89101
                                    Attn:  General Counsel

         Executive:                 Michael E. McPherson
                                    245 Meadow Brook Drive
                                    Reno, Nevada 89509

All notices, requests and other communications shall be deemed given on the date
of actual receipt or delivery as evidenced by written receipt, acknowledgment or
other evidence of actual receipt or delivery to the address. In case of service
by telecopy, a copy of such notice shall be personally delivered or sent by
registered or certified mail, in the manner set forth above, within three (3)
business days thereafter. Any party hereto may from time to time by notice in
writing served as set forth above designate a different address or a different
or additional person to which all such notices or communications thereafter are
to be given.

                10.9. Severability. All Sections, clauses and covenants
contained in this Agreement are severable, and in the event any of them shall be
held to be invalid by any court, this


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Agreement shall be interpreted as if such invalid Sections, clauses or covenants
were not contained herein.

                10.10. Governing Law and Venue. This Agreement is to be governed
by and construed in accordance with the laws of the State of Nevada applicable
to contracts made and to be performed wholly within such State, and without
regard to the conflicts of laws principles thereof. Subject to Section 8 of this
Agreement, any suit brought hereon shall be brought in the state or federal
courts sitting in Clark County, Nevada, the parties hereto hereby waiving any
claim or defense that such forum is not convenient or proper. Each party hereby
agrees that any such court shall have in personam jurisdiction over it and
consents to service of process in any manner authorized by Nevada law.

                10.11. Non-transferability of Interest. None of the rights of
Executive to receive any form of compensation payable pursuant to this Agreement
shall be assignable or transferable except through a testamentary disposition or
by the laws of descent and distribution upon the death of Executive. Any
attempted assignment, transfer, conveyance, or other disposition (other than as
aforesaid) of any interest in the rights of Executive to receive any form of
compensation to be made by the Company pursuant to this Agreement shall be void.

                10.12. Attorneys' Fees. Subject to the provisions of Section 8
of this Agreement with respect to arbitration, if any legal action, arbitration
or other proceeding is brought for the enforcement of this Agreement, or because
of any alleged dispute, breach, default or misrepresentation in connection with
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs it incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.

                10.13. Gender. Where the context so requires, the use of the
masculine gender shall include the feminine and/or neuter genders and the
singular shall include the plural, and vice versa, and the word "person" shall
include any corporation, firm, partnership or other form of association.

                10.14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.

                10.15. Construction. The language in all parts of this Agreement
shall in all cases be construed simply, according to its fair meaning, and not
strictly for or against any of the parties hereto. Without limitation, there
shall be no presumption against any party on the ground that such party was
responsible for drafting this Agreement or any part thereof.

                10.16. Approval of the Gaming Authorities. Notwithstanding
anything contained in this Agreement, this Agreement and the terms and
conditions contained herein shall be contingent upon receipt of all requisite
approvals, if any, of the applicable Gaming Authorities.

                10.17. Board Action. Any Board action referenced in this
Agreement shall be performed only with the affirmative vote of a majority of the
disinterested members of the Board.


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        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date hereinabove set forth.

COMPANY:                                    EMPLOYEE:

Fitzgeralds Gaming Corporation,
a Nevada corporation

By: /s/ PHILIP D. GRIFFITH                  /s/ MICHAEL E. MCPHERSON
   --------------------------------         -----------------------------------
   Name: Philip D. Griffith                 Michael E. McPherson
   Title: Chairman, President & CEO

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