<PAGE>

                                                                   EXHIBIT 10.20
                  ___________________________________________

                              EMPLOYMENT AGREEMENT
                  ___________________________________________


     THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 24th
day of September, 2001, to be effective as of the Effective Date (as hereafter
defined), by and between HOLLYWOOD CASINO SHREVEPORT ("Employer") and GARY A.
GREGG ("Employee").

                            W I T N E S S E T E T H:

     WHEREAS, Employer is a partnership, duly formed and existing under the laws
of the State of Louisiana, and owns the Hollywood Casino in Shreveport,
Louisiana (the "Casino") and has a need for qualified, experienced personnel;

     WHEREAS, Employee is an adult individual currently residing at 10809 Sleepy
River Avenue, Las Vegas, Nevada 89134;

     NOW, THEREFORE, for and in consideration of the foregoing recitals, and in
consideration of the mutual covenants, agreements, understandings, undertakings,
representations, warranties and promises hereinafter set forth, and intending to
be legally bound thereby, Employer and Employee do hereby covenant and agree as
follows:

     1.  DEFINITIONS.  As used in this Agreement, the words and terms
         -----------
hereinafter defined have the respective meanings ascribed to them herein, unless
a different meaning clearly appears from the context:

          (a)  "Cause"  means any of the following: (i) Employee's failure (for
                -----
          any reason other than as the result of a Complete Disability) to
          perform Employee's duties under this Agreement with a reasonable
          degree of diligence, competence and effectiveness; (ii) Employee's
          engagement in any personal misconduct involving dishonesty,
          illegality, or moral turpitude which is materially detrimental or
          injurious to the business interests, reputation or goodwill of
          Employer or Employer's Affiliates; (iii) Employee's engagement in any
          material act of dishonesty, disloyalty, or infidelity
<PAGE>

          against Employer or Employer's Affiliates; (iv) Employee's breach of
          or other failure to perform under any of the material terms and
          covenants of this Agreement; (v) Employee's willful violation of any
          policy established by Employer with respect to the operation of
          Employer's business and affairs, or the conduct of Employer's
          employees; (vi) Employee's insubordination with respect to, or willful
          failure, in any material respect, to carry out all reasonable and
          lawful instructions issued by the President of HCS I, Inc., the
          Managing General Partner of Employer, or his designee; and (vii)
          Employee's failure to maintain in force and in good standing any and
          all licenses, permits and/or approvals required of Employee by the
          relevant governmental authorities for the discharge of the obligations
          of Employee under this Agreement. All determinations of the existence
          of "Cause," including without limitation any determination with
          respect to performance, reasonableness, effectiveness, materiality and
          injury, shall be made in good faith by the Board of Directors of
          Employer's Managing General Partner and shall be conclusive as to all
          parties.

          (b) "Complete Disability" means the inability of Employee, due to
               -------------------
          illness or accident or other mental or physical incapacity, to perform
          his obligations under this Agreement for a period of one hundred
          eighty (180) calendar days in the aggregate over a period of five
          hundred (500) consecutive calendar days, such "Complete Disability" to
          become effective upon the expiration of such one hundred eightieth
          (180th) day.

          (c) "Effective Date" means September 24, 2001.
               --------------

          (d) "Employee" means Employee as earlier defined in this Agreement.
               --------

          (e) "Employer" means Employer as earlier defined in this Agreement.
               --------

          (f) "Employer's Affiliates" means any parent, subsidiary or affiliated
               ---------------------
          corporation or other legal entity of Employer.

          (g) "Prior Employment" means any prior employment Employee has had
               ----------------
          with either Employer or Employer's Affiliates.

     2.   PRIOR EMPLOYMENT.  Employee represents and warrants that, as of the
          ----------------
Effective Date, other than this Agreement Employee is neither a party to nor
subject to any agreement governing or restricting his employment or in any way
limiting his ability to perform fully and completely his duties under, and
comply with the terms set forth in, this Agreement.   Employee

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<PAGE>

further represents and warrants that, in performing his employment duties under
this Agreement, he will not violate any agreement between him and any prior
employer, or any obligation imposed upon him by any federal or state statute or
common-law provision relating to the disclosure of trade secrets and/or
proprietary information. This Agreement supersedes and replaces any and all
prior employment agreements, whether written or oral, by and between Employee,
on the one side, and Employer or Employer's Affiliates, on the other side. From
and after the Effective Date, Employee shall be the employee of Employer solely
under the terms of and pursuant to the conditions set forth in this Agreement.

     3.   BASIC EMPLOYMENT AGREEMENT.  Subject to the terms and conditions
          --------------------------
hereinafter set forth, Employer hereby employs Employee during the Term
hereinafter specified to serve under a title and with such duties not
inconsistent with those set forth in Paragraph 4 of this Agreement, as the same
may be modified and/or assigned to Employee by Employer from time to time.

      4.  DUTIES OF EMPLOYEE. Employee shall perform such duties assigned to
          ------------------
Employee by Employer as are generally associated with the duties of General
Manager of the Casino, or such similar duties as may be assigned to Employee by
the President of the Managing General Partner of the Employer, or his designee,
including but not limited to: (i) the efficient and continuous operation of the
Casino and its related operations; (ii) the preparation of relevant budgets and
operating plans and the allocation of relevant funds; (iii) the selection and
delegation of duties and responsibilities of subordinates; (iv) the direction,
review and oversight of all operations and programs under Employee's
supervision; and (v) such other and further duties as are assigned by Employer
to Employee.

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<PAGE>

     5.   ACCEPTANCE OF EMPLOYMENT. Employee hereby unconditionally accepts  the
          ------------------------
employment set forth hereunder, under the terms and conditions set forth in this
Agreement.  Employee hereby covenants and agrees that, during the Term of this
Agreement, Employee will devote the whole of his normal and customary working
time and best efforts solely to the performance of Employee's duties under this
Agreement.

     6.   TERM. The term of this Agreement (the "Term") shall commence on the
          ----
Effective Date and, unless sooner terminated as provided herein, expire on
December 31, 2003.

     7.   SPECIAL TERMINATION PROVISIONS. Notwithstanding the provisions of
          ------------------------------
Paragraph 6 above, this Agreement and all parties' rights and obligations
hereunder shall terminate upon the occurrence of any of the following events:

          (a) the death of Employee;

          (b) the giving of written notice from Employer to Employee of the
          termination of this Agreement upon the Complete Disability of
          Employee;

          (c) the giving of written notice by Employer to Employee of the
          termination of this Agreement upon the discharge of Employee for
          Cause;

          (d)  the giving of written notice by Employer to Employee of the
          termination of this Agreement without Cause; provided, however, that
          such notice must be accompanied by Employer's written tender to
          Employee of Employer's unconditional commitment to continue to pay to
          Employee the compensation set forth in Paragraph 8(a) of this
          Agreement through the date upon which this Agreement would have
          expired on its own terms but for such termination;

          (e)  cause beyond the control of Employer and without its fault or
          negligence.  Such causes may include, but are not limited to, acts of
          god or a public enemy, acts of government in either its sovereign or
          contractual capacity, fires, floods, epidemics, quarantine
          restrictions, strikes, riots, freight embargoes, power outages or
          unusually severe weather conditions.

     8.   COMPENSATION TO EMPLOYEE. For and in complete consideration of
          ------------------------

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<PAGE>

Employee's full and faithful performance of his duties under this Agreement,
Employer hereby covenants and agrees to pay to Employee, and Employee hereby
covenants and agrees to accept from Employer, the following items of
compensation:

     (a)  Base Salary. Employer hereby covenants and agrees to pay to Employee,
          -----------
and Employee hereby covenants and agrees to accept from Employer, an annual base
salary of Two Hundred Twenty-Five Thousand and No/100 Dollars ($225,000),
payable in such equal regular installments as is Employer's custom and usage.
Such base salary shall be exclusive of and in addition to any other benefits
which Employer, in its sole discretion, may make available to Employee,
including, but not limited to, any bonus plans, company life insurance plan or
medical and/or hospitalization plans.

     (b)  Annual Bonus.  Commencing with the calendar year commencing January 1,
          ------------
2002 and for each calendar year thereafter, so long as Employee remains an
employee of Employer for the entire calendar year and the Employer attains
earnings before interest, taxes, depreciation, amortization, land lease and
management fees ("Cash Flow") for such calendar year equal to or in excess of
$24 million, Employee shall be entitled to receive an annual bonus (the "Annual
Bonus") in the amount, and corresponding to the amounts of Cash Flow, set forth
on Exhibit "A" to this Agreement.  The Annual Bonus will be payable by Employer
to Employee by no later than each April 15th following the calendar year for
which the Annual Bonus is calculated, commencing April 15, 2003.

     (c)  Employee Benefit Plans. Employer hereby covenants and agrees that it
          ----------------------
shall include Employee, if otherwise eligible, in any company life insurance
plans, medical and/or hospitalization plans, and/or any and all other benefit
plans which may be placed in effect by Employer during the Term

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<PAGE>

of this Agreement, as such plans may be modified by Employer from time to time
in its sole discretion. Nothing in this Agreement shall require Employer to
establish any employee benefit plan or to maintain any such plan in existence.

     (d)  Expense Reimbursement.  During the Term of this Agreement, Employer
          ---------------------
shall either pay directly or reimburse Employee for Employee's reasonable
expenses incurred for the benefit of Employer in accordance with Employer's
general policy regarding reimbursement, as the same may be amended, modified or
changed from time to time, provided that Employee timely submits to Employer
appropriate documentation of such expenses.

     (e)  Licensing Expenses.  Employer hereby covenants and agrees that
          ------------------
Employer shall pay all licensing fees and expenses incurred by Employee in
securing and maintaining such licenses and permits required of Employee in order
to perform his duties under this Agreement.

     (f)  Vacations and Holidays.  Commencing as of the Effective Date of this
          ----------------------
Agreement, Employee shall be entitled to (i) annual paid vacation leave in
accordance with Employer's standard policy therefor, as such policy may be
modified by Employer from time to time in its sole discretion (but in any event,
no less than two weeks per year), to be taken at such times as selected by
Employee and approved by Employer, and (ii) the following paid holidays (or, at
Employer's option, an equivalent number of paid days off): New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
up to three (3) additional floating holidays which vary from year to year.

     (g)  Payroll Deductions; Continued Employment Required.  All of the
          -------------------------------------------------
compensation provided to Employee under this Agreement shall be subject to such
payroll deductions as are required by law.  Except to the extent otherwise
provided in Paragraph 7(d) of this Agreement,

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<PAGE>

Employee's right to continue to receive the compensation set forth in this
Agreement shall be expressly conditioned on Employee's remaining employed by
Employer under this Agreement.

     (h)     Relocation Expenses.  Subject to Employer's prior approval of the
             -------------------
amount thereof, promptly upon presentation of receipts therefor, Employer shall
reimburse Employee for the actual out-of-pocket expenses incurred by Employee in
moving from Employee's residence in Las Vegas, Nevada to Shreveport, Louisiana,
other than any such costs relating to the purchase or sale of any house.

     9.   LICENSING REQUIREMENTS.
          ----------------------

     (a)  Employer and Employee hereby covenant and agree that this Agreement
may be subject to the approval of the Louisiana Gaming Control Board and any
other jurisdiction in which Employer or Employer's Affiliates conducts business
(the "Gaming Authorities") pursuant to the provisions of the Louisiana Riverboat
Economic Development and Gaming Control Act and any other applicable law and the
regulations promulgated thereunder (collectively, the "Gaming Acts").  In the
event this Agreement is required to be approved by the Gaming Authorities and is
not so approved by the Gaming Authorities, this Agreement shall immediately
terminate and shall be null and void and of no further force or effect;
provided, however, should this Agreement not be approved by the Gaming
Authorities, Employer and Employee shall hereby covenant and agree that, with
the exception of the provisions of Paragraph 8 of this Agreement, this Agreement
shall be deemed modified and amended so as to receive the appropriate approval
from the Gaming Authorities.

     (b)  Employer and Employee hereby covenant and agree that, in order for
Employee to discharge the duties required under this Agreement, Employee may be
required to hold casino

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employee licenses (the "Licenses") as issued by one or more of the Gaming
Authorities pursuant to the terms of the Gaming Acts and as otherwise required
by this Agreement. In the event that any of the Gaming Authorities objects to
the renewal of Employee's License, or any of the Gaming Authorities refuses to
renew Employee's applicable License, Employer, at Employer's sole cost and
expense, shall promptly defend such action and shall take such reasonable steps
as may be required to secure such Gaming Authority's approval. The foregoing
notwithstanding, if such Gaming Authority's refusal to renew Employee's License
arises as a result of any of the events described in Paragraph 1(a) of this
Agreement, Employer's obligations under this Paragraph 9 shall not be operative
and Employee shall promptly reimburse Employer upon demand for any expenses
incurred by Employer pursuant to this Paragraph 9.

     10.  CONFIDENTIALITY. Employee hereby warrants, covenants and agrees that,
          ---------------
without the prior express written approval of Employer, Employee shall hold in
the strictest confidence and shall not disclose to any person, firm, corporation
or other entity, any and all of Employer's confidential information, including,
but not limited to: (i) information or other documents concerning Employer's
business, customers or suppliers; (ii) Employer's marketing methods, files and
credit and collection techniques and files; or (iii) Employer's trade secrets
and other "know-how" or information not of a public nature, regardless of how
such information came into the custody of Employee. The warranty, covenant and
agreement set forth in this Paragraph 10 shall not expire, shall survive this
Agreement and shall be binding upon Employee without regard to the passage of
time or other events.

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<PAGE>

     11.  RESTRICTIVE COVENANT.  Employee hereby covenants and agrees that,
          --------------------
during the Term of this Agreement and for so long thereafter as Employer
continues to pay any form of compensation to Employee (e.g., in accordance with
Paragraph 7(d)), Employee shall not directly or indirectly, either as a
principal, agent, employee, employer, consultant, partner, shareholder of a
closely held corporation or shareholder in excess of five percent (5%) of a
publicly traded corporation, corporate officer or director, or in any other
individual or representative capacity, engage or otherwise participate in any
manner or fashion in any business that is in competition with the principal
business activity of Employer or Employer's Affiliates in or about the
Shreveport/Bossier City market.  Employee hereby further acknowledges and agrees
that the restrictive covenant contained in this Paragraph 11 is reasonable as to
duration, terms and geographical area and that the same protects the legitimate
interests of Employer and Employer's Affiliates, imposes no undue hardship on
Employee and is not injurious to the public.

     12.  BEST EVIDENCE. This Agreement shall be executed in original and
          -------------
"Xerox" or photostatic copies and each copy bearing original signatures in ink
shall be deemed an original.

     13.  SUCCESSION. This Agreement shall be binding upon and inure to the
          ----------
benefit of Employer and Employee and their respective successors and assigns.

     14.  ASSIGNMENT. Employee shall not assign this Agreement or delegate his
          ----------
duties hereunder without the express written prior consent of Employer thereto.
Any purported assignment by Employee in violation of this Paragraph 14 shall be
null and void and of no force or effect.    Employer shall have the right to
assign this Agreement freely; provided, however, that in the event of such an
assignment by Employer and the assignee subsequently defaults under the terms of
this Agreement, Employer shall remain liable for compliance with the terms of
Paragraph 8 of this

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Agreement.

     15.  AMENDMENT OR MODIFICATION. This Agreement may not be amended,
          -------------------------
modified, changed or altered except by a writing signed by both Employer and
Employee.

     16.  GOVERNING LAW. This Agreement shall be governed by and construed in
          -------------
accordance with the laws of the State of Louisiana in effect on the Effective
Date of this Agreement.

     17.  NOTICES. Any and all notices required under this Agreement shall be in
          -------
writing and shall either hand-delivered; mailed by certified mail, return
receipt requested; or sent via telecopier addressed to:

          TO EMPLOYER:                  Hollywood Casino Shreveport
                                        c/o HCS I, Inc.
                                        Two Galleria Tower, Suite 2200
                                        13455 Noel Road, LB 48
                                        Dallas, Texas 75240
                                        Attention: General Counsel

          TO EMPLOYEE:                  Gary A. Gregg
                                        10809 Sleepy River Avenue
                                        Las Vegas, Nevada 89134

     All notices hand-delivered shall be deemed delivered as of the date
actually delivered. All notices mailed shall be deemed delivered as of three (3)
business days after the date postmarked.  All notices sent via telecopier shall
be deemed delivered as of the next business day following the date of the
confirmation of delivery. Any changes in any of the addresses listed herein
shall be made by notice as provided in this Paragraph 17.

     18.  INTERPRETATION. The preamble recitals to this Agreement are
          --------------
incorporated into and made a part of this Agreement. Titles of paragraphs are
for convenience only and are not to be considered a part of this Agreement.

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<PAGE>

     19.  SEVERABILITY. In the event any one or more provisions of this
          ------------
Agreement is declared judicially void or otherwise unenforceable, the remainder
of this Agreement shall survive and such provisions shall be deemed modified or
amended so as to fulfill the intent of the parties hereto.

     20.  DISPUTE RESOLUTION. Except for equitable actions seeking to enforce
          ------------------
any of the provisions of Paragraphs 10 and 11 of this Agreement, as to which the
parties expressly agree that jurisdiction shall lie solely with the 26th
Judicial District Court of Bossier Parish, Louisiana, and agree to submit to the
personal jurisdiction of such court, any and all claims, disputes or
controversies between the parties hereto arising from or otherwise relating to
this Agreement or any alleged breach thereof, on the written demand of either of
the parties hereto, shall be submitted to and be determined solely by final and
binding arbitration held in Shreveport, Louisiana in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association.
This Agreement to arbitrate shall be specifically enforceable in any court of
competent jurisdiction, and an arbitrator's award in connection with any such
dispute may be enforced by any court with jurisdiction thereof.

     21.  WAIVER. None of the terms of this Agreement, including this Paragraph
          ------
21, or any term, right or remedy hereunder shall be deemed waived unless such
waiver is in writing and signed by the party to be charged therewith and in no
event by reason of any failure to assert or delay in asserting any such term,
right or remedy or similar term, right or remedy hereunder.

     22.  PAROL. This Agreement constitutes the entire agreement between
          -----
Employer and Employee with respect to the subject matter hereto and this
Agreement supersedes any prior or contemporaneous understandings, agreements or
undertakings by and between Employer and

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Employee with respect to the subject matter hereof.

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<PAGE>

     IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties
hereto have executed and delivered this Agreement as of the year and date first
above written.

                              HOLLYWOOD CASINO SHREVEPORT

                              By:   HCS I, Inc., its managing general partner


                                    By:  ______________________________
                                         Edward T. Pratt III
                                         President


                              ___________________________________
                              Gary A. Gregg

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                                  EXHIBIT "A"
                                  -----------
<TABLE>
<CAPTION>


Cash Flow                         Bonus*
-------------------------------  --------
<S>                              <C>

          $24 million            $ 70,000
          $25 million            $ 81,667
          $26 million            $ 93,333
          $27 million            $105,000
          $28 million            $116,667
          $29 million            $128,333
          $30 million            $140,000
          $31 million            $152,000
          $32 million            $164,000
          $33 million            $176,000
          $34 million            $188,000
          $35 million            $200,000
          $36 million            $215,000
          $37 million            $230,000
          $38 million            $245,000
          $39 million            $260,000
          $40 million or more    $275,000

</TABLE>

_________________________________________________
* For Cash Flow amounts between $24 million and $40 million that are not
reflected above, the Annual Bonus will be extrapolated from the foregoing
amounts.

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