<PAGE>
 
     Coast Hotels and Casinos, Inc.

     EXHIBIT 10.25



                                 EMPLOYMENT AGREEMENT


     This Employment Agreement ("Agreement" is entered into on January 1, 1997
by and between Coast Hotels & Casinos, Inc. A Nevada Corporation ("Employer")
and Harlan Braaten ("Employee").

 

1.   SCOPE OF DUTIES.  Employer hereby employs Employee as its President and
     Chief Operating Officer to perform such executive duties as are commonly
     attendant upon these offices and such further normal executive duties as
     may be specified from time to time by the Board of Directors through their
     designated representative.  In construing the provisions of this Agreement,
     "Employer" shall also include Coast Resorts, Inc. and Coast West, Inc. and
     any subsequently formed corporations affiliated with Employer wherein
     Employee is chosen to be President and Chief Operating Officer by the Board
     of Directors.

 

2.   TERM OF AGREEMENT.  The term of this agreement shall commence on October
     31, 1995 and terminate December 31, 1998.  Employee has represented to
     Employer that he is not currently under contract to any entity other than
     Coast Hotels & Casinos, Inc.

 

3.   EMPLOYEE'S COMPENSATION PACKAGE.  Employee shall receive:

 

          a.   An initial annual salary of $250,000;

 

b.         Reimbursement for all reasonable business and travel expenses
         incurred by Employee in performing his duties hereunder, payable 
         in accordance with Employer's customary practices;

                                       1
<PAGE>
 
c.            A bonus of at least fifty (50%) of his annual salary if specified
          annual goals as set forth in Exhibit A attached hereto are met for
          each year of the term of this contract.  a new Exhibit A will be
          prepared for each year this contract is in effect, listing the
          specified annual goals for the pertinent year.  Both Employer and
          Employee will sign the Exhibit A at the earliest convenient time;

 

 

d.         Health insurance for Employee and his spouse and dependent children
          residing with him under the most favorable medical and dental plan
          offered by Employer, including a plan offered exclusively for
          executives if such plan exists;

 

e.         Four weeks vacation per year;

 

f.         Insurance coverage (including disability and life) provided to
          executive employees of Employer;

 

g.         Pension plan coverage provided to executive Employees of Employer;
          and


h.         All other perquisites currently available to executive employees
          of Employer;

 

4.   STOCK OPTIONS.  Employer will provide to Employee, stock options with the
     strike price being equal to the completed offering price of any initial
     public offering ("IPO") for Coasts Resorts, Inc.,.  When the IPO is
     complete, Employee will have an option to purchase shares amounting to two
     (2%) of the outstanding shares of Coast Resorts, Inc.  The option will be
     fully vested as to one-third of the shares at the completion of the IPO and
     will vest in an additional one-third of the shares on the first anniversary
     of the completion of the IPO and on the final one-third of the shares on
     the second anniversary of the completion of the IPO, provided that Employee
     is still employed by Employer.  

                                       2
<PAGE>
 
     Notwithstanding the foregoing, it is the understanding of both Employer and
     Employee that the options will be granted pursuant to an IRS qualified
     stock option and that Employer and Employee will cooperate fully in
     insuring that the options are issued in connection with a qualified stock
     option plan. Should Coast Resorts, Inc. fail to complete an IPO by December
     31, 1997, Employee will be paid a one time bonus of $250,000.

 

5.   GAMING LICENSURE.  Employee acknowledges and agrees that the laws of Nevada
     require that Employee may be investigated for suitability and licensing.
     Employee shall fully cooperate with the appropriate governmental
     authorities in order that he may obtain all certificates, permits and
     licenses required in connection with his employment hereunder.  Employee
     further acknowledges and agrees that in the event he fails to so cooperate
     or he fails to obtain, within the time specified by the Nevada Gaming
     Commission and all other governmental agencies having jurisdiction, or
     thereafter maintain, in good standing and in full force and effect, during
     the term hereof, all required certificates, permits and licenses in
     connection with his employment hereunder, employer may terminate this
     agreement, in which event Employer shall have no further liability or
     obligation whatsoever to Employee hereunder, notwithstanding anything to
     the contrary contained therein.

6.   NO COMPETITION AGREEMENT.  In consideration hereof and in consideration of
     the grant of options contained herein, Employee covenants and agrees that
     during the term of this agreement, he shall not, directly or indirectly,
     engage in, participate in or otherwise be connected in any way (other than
     through a passive ownership role) with any firm, person, corporation, or
     other entity that is engaged in for profit business.  in addition to all
     other rights provided to Employer hereunder, if Employee breaches any of
     his obligations contained in this paragraph or fails to comply with the
     terms of paragraph 5 herein, Employer shall have the right to terminate
     this agreement but any such termination shall not be deemed an election of
     remedies and Employer expressly reserves all other legal and equitable
     remedies.  Employee further agrees that he shall not at any time during the
     term of this Agreement or thereafter without Employer's written consent,
     disclose to other persons or business entities any trade secrets or other
     confidential information and all information concerning Employer's
     customers constitute Employer's exclusive property, that all of the
     restrictions on his activities contained in this Agreement are required for
     Employer's reasonable protection and that in the event of any breach of the
     agreement by him, Employer will be entitled if it so elects, to institute
     and prosecute proceedings at law or in equity to obtain damages with
     respect to such breach, to enforce the specific performance of this
     agreement or to enjoin Employee 

                                       3
<PAGE>
 
     from engaging in any activity in violation
     hereof.

 

7.   TERMINATION OF AGREEMENT.  This Agreement may be terminated by Employer at
     anytime during the term hereof for good cause.  Upon any such termination,
     Employer shall have no further liability or obligation whatsoever to
     Employee hereunder except as expressly set forth in this Agreement.  Good
     cause shall be defined as:

 

     a.   Employee's death or disability, which is hereby defined to mean his
          incapacity for medical reasons certified to by a licensed physician
          which precludes the substantial performance of his duties hereunder
          for a substantially consecutive period of six (6) months;

 

     b.   Employee's insubordination which is of such degree and kind as to
          make a continuing relationship between Employee and the Chairman of
          the Board of Directors impossible as determined in good faith by the
          Board of Directors;


     c.   Employee's arrest on a felony offense, provided that probable cause
          existed for such arrest.

 

     d.   Employee's misconduct, insubordination, inattention to Employer's
          business, failure to substantially perform his duties or other
          material breach of this Agreement, which is not remedied by Employee
          to the good faith satisfaction of Employer within fifteen days
          following his receipt of written notice thereof.

 

8.   SEVERANCE PAY.  If Employee is terminated for any reason other than set
     forth in paragraph 5 or 7 (c), in lieu of any amounts provided for in this
     contract (other than amounts provided for in paragraph 9), Employee shall
     be entitled to $250,000 or his annual salary on the date of termination,
     whichever is greater and any prorata earned bonus.  Employee's contract
     will continue from year to year after initial term unless given 90 days'
     notice before december 31st of current year in which Employee will be
     entitled to his severance package.

                                       4
<PAGE>
 
9. CHANGE OF CONTROL. Employer acknowledges that Michael Gaughan and Jerry
   Herbst together currently own in excess of 40% of Coast Resorts, Inc. stock.
   If Messrs. Gaughan and Herbst divest themselves of the Coast Resorts, Inc.
   stock (other than through gifts or testamentary transfers) so that they no
   longer own five percent (5%) of the outstanding stock of Coast Resorts, Inc.,
   Employee shall be entitled to a lump sum payment of $250,000 from Employer
   (in addition to any amounts payable under paragraph 8) if Employee is
   terminated within six (6) months after the divestment of the stock of coast
   resorts, inc. by Messrs. Gaughan and Herbst.

 

10.  SEVERABILITY.  If any provision hereof is unenforceable, illegal or invalid
     for any reason whatsoever, such fact shall not affect the remaining
     provisions hereof.  If any of the provisions hereof which impose
     restrictions on Employee are, with respect to such restrictions, determined
     by a final judgment by any court of competent jurisdiction to be
     unenforceable or invalid, such provision should be severed and the
     remainder of the provisions enforced.

 

11.  NO WAIVER.  No failure or delay on the part of the Employer or Employee in
     exercising any right, power or remedy hereunder shall operate as a waiver
     thereof nor shall any single or partial exercise of any such right, power
     or remedy preclude any other right, power or remedy hereunder.  The
     remedies herein provided are cumulative and not exclusive of any remedies
     provided by law.

 

12.  ENTIRE AGREEMENT.  This instrument contains the entire agreement between
     Employer and Employee.  It may not be changed orally but only by an
     Agreement in writing signed by the party against whom enforcement of any
     waiver, change, modification, extension or discharge is sought.  No
     amendment, modification, termination or waiver of any provision of this
     Agreement nor consent to any departure by the Employee therefrom shall in
     any event be effective unless the same shall be in writing and signed by a
     duly authorized officer of Employer or Employee, as the case may be.  Any
     such waiver or consent shall be effective only in the specific instance and
     for the specific purpose for which given.

 

13.  CHOICE OF LAW.  This Agreement shall be controlled, construed and enforced
     in accordance with the laws of Nevada.

                                       5
<PAGE>
 
14.  NOTICES.  All notices, demands, and other communications required or
     permitted hereunder shall be given by hand delivery (with a receipt
     acknowledging hand delivery), overnight delivery service or by certified
     mail return receipt requested, and by facsimile.  Notice will be deemed to
     have been duly given on the day of hand delivery and one day after having
     been sent by overnight delivery or by certified mail return receipt
     requested and by facsimile.

 

    All notices and other communications shall be delivered or sent to:

 

                    Employer
                    --------

 

                         Coast Hotels & Casinos, Inc.

                         4500 West Flamingo Road

                         Las Vegas, Nevada 89103

                         Facsimile: 365-7566

 

                    Employee
                    --------

 

                         Harlan Braaten

                         8641 Highacre Drive

                         Las Vegas, Nevada 89128

                         Facsimile:254-7460

                                       6