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                                                                   EXHIBIT 10.16

                               GUARANTY AGREEMENT

                  GUARANTY AGREEMENT, dated as of March 30, 2001 (as amended,
modified or supplemented from time to time, this "Guaranty"), made by each of
the undersigned (each a "Guarantor" and, collectively, the "Guarantors"). Except
as otherwise defined herein, capitalized terms used herein and defined in the
Revolving Credit Agreement (as in effect on the date hereof) shall be used
herein as therein defined.

                              W I T N E S S E T H:

                  WHEREAS, JCC Holding Company ("JCC Holding"), Jazz Casino
Company, L.L.C. ("JCC" or the "Company"), Harrah's Entertainment, Inc. ("HET"),
a Delaware corporation, Harrah's Operating Company, Inc. ("HOC"), a Delaware
corporation, and Harrah's New Orleans Management Company ("HNOMC"), a Nevada
corporation, as lenders (HET, HOC and HNOMC, as lenders pursuant to the
Revolving Credit Agreement, together with an additional lenders thereunder from
time to time, being herein called the "Lenders"), have entered into a Revolving
Credit Agreement, dated as of March 30, 2001, providing for the making of
Revolving Loans and the issuance of, and participation in, Letters of Credit as
contemplated therein and the incurrence of Letter of Credit Obligations in
respect of certain Letters of Credit outstanding as of the Initial Borrowing
Date as contemplated therein (as used herein, the term "Revolving Credit
Agreement" means the Revolving Credit Agreement described above in this
paragraph, as the same may be amended, modified or supplemented from time to
time);

                  WHEREAS, the proceeds of the Revolving Loans will be used, in
part, to finance the operation of the Casino and to provide for the Company's
working capital and general corporate requirements;

                  WHEREAS, the Guarantors own a substantial beneficial interest
in the parent of the Company and will obtain substantial economic and other
benefits as a result of the operation of the Casino;

                  WHEREAS, it is a condition precedent to the consummation of
the Plan of Reorganization, and the willingness of Bankers Trust Company
("BTCo") to allow the Existing Letters of Credit (as defined in the Revolving
Credit Agreement as originally in effect) to remain outstanding, that each
Guarantor shall have executed and delivered this Guaranty; and

                  WHEREAS, each Guarantor will obtain benefits from BTCo's
agreement to allow the Existing Letters of Credit to remain outstanding and,
accordingly, desires to execute this Guaranty in order to satisfy the condition
described in the preceding paragraph;

                  NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which are
hereby acknowledged, each Guarantor hereby makes the following representations
and warranties to BTCo and hereby covenants and agrees with BTCo as follows:

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                  1. Each Guarantor, jointly and severally, irrevocably and
unconditionally guarantees: to BTCo the entire payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) all obligations and
liabilities of the Company to BTCo with respect to the Existing Letters of
Credit (as same may be amended, modified, extended or supplemented from time to
time), including, without limitation, all obligations to reimburse BTCo for any
drawings pursuant thereto, and to pay interest owing with respect thereto, in
accordance with the requirements of Section 2.14 of the Revolving Credit
Agreement, (y) all regularly accruing fees payable with respect to the Existing
Letters of Credit (as same may be amended, modified, extended or supplemented
from time to time), including, without limitation, all fees payable with respect
thereto pursuant to Section 3.1 of the Revolving Credit Agreement and (z) all
increased cost payments, tax payments or gross-ups, indemnification obligations
and other amounts and obligations payable pursuant to the Revolving Credit
Agreement or the other Credit Documents (as defined in the Revolving Credit
Agreement), in each case to the extent (and only to the extent) relating to the
Existing Letters of Credit (as same may be amended, modified, extended or
supplemented from time to time) or the Letter of Credit Obligations relating
thereto (all such principal, unpaid drawings, interest, fees and other amounts
described above in this Section 1 being collectively herein called the
"Guaranteed Obligations"). Each Guarantor understands, agrees and confirms that
BTCo may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against such Guarantor without proceeding against any other
Guarantor, the Company or any other Credit Party, against any security for the
Guaranteed Obligations, or under any other guaranty covering all or a portion of
the Guaranteed Obligations.

                  2. Additionally, each Guarantor, jointly and severally,
unconditionally and irrevocably, guarantees the payment of any and all
Guaranteed Obligations to BTCo whether or not due or payable by the Company upon
the occurrence in respect of the Company of any of the events specified in
Sections 6.1(e), (f) and (g) of the Revolving Credit Agreement (as originally in
effect), and unconditionally and irrevocably, jointly and severally, promises to
pay such Guaranteed Obligations to BTCo, or order, on demand, in lawful money of
the United States. This Guaranty shall constitute a guaranty of payment, and not
of collection.

                  3. The liability of each Guarantor hereunder is exclusive and
independent of any security for or other guaranty of the Guaranteed Obligations
of the Company whether executed by such Guarantor, any other Guarantor, any
other guarantor of the Guaranteed Obligations or by any other party, and the
liability of each Guarantor hereunder shall not be affected or impaired by any
circumstance or occurrence whatsoever, including, without limitation: (a) any
direction as to application of payment by the Company or by any other party, (b)
any other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations, (c) any
payment on or in reduction of any such other guaranty or undertaking, (d) any
dissolution, termination or increase, decrease or change in personnel by the
Company, (e) any payment made to BTCo on the indebtedness which BTCo repays the
Company pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding, (f) any action or inaction by BTCo as contemplated in
Section 6 hereof, or (g) any invalidity, irregularity or unenforceability of all
or part of the Guaranteed Obligations or of any security therefor.


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                  4. The obligations of each Guarantor hereunder are independent
of the obligations of any other Guarantor, any other guarantor of the Guaranteed
Obligations or the Company, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any such other guarantor or the Company and whether or not any
other Guarantor, any such other guarantor of the Guaranteed Obligations or the
Company be joined in any such action or actions. Each Guarantor expressly
acknowledges and agrees that any payment by the Company or other circumstance
which operates to toll any statute of limitations as to the Company shall
operate to toll the statute of limitations as to each Guarantor.

                  5. Each Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by BTCo against, and any other notice to, any party liable thereon (including
such Guarantor, any other Guarantor or any other guarantor of the Guaranteed
Obligations or the Company).

                  6. BTCo may at any time and from time to time without the
consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:

                  (a) change the manner, place or terms of payment of, and/or
         change or extend the time of payment of, renew or alter, any of the
         Guaranteed Obligations (including any increase or decrease in the rate
         of interest thereon), any security therefor, or any liability incurred
         directly or indirectly in respect thereof, and the guaranty herein made
         shall apply to the Guaranteed Obligations as so changed, extended,
         renewed or altered;

                  (b) take and hold security for the payment of the Guaranteed
         Obligations and sell, exchange, release, surrender, realize upon or
         otherwise deal with in any manner and in any order any property by
         whomsoever at any time pledged or mortgaged to secure, or howsoever
         securing, the Guaranteed Obligations or any liabilities (including any
         of those hereunder) incurred directly or indirectly in respect thereof
         or hereof, and/or any offset thereagainst;

                  (c) exercise or refrain from exercising any rights against the
         Company or others or otherwise act or refrain from acting;

                  (d) release or substitute any one or more endorsers,
         guarantors, the Company or other obligors;

                  (e) settle or compromise any of the Guaranteed Obligations,
         any security therefor or any liability (including any of those
         hereunder) incurred directly or indirectly in respect thereof or
         hereof, and may subordinate the payment of all or any part thereof to
         the payment of any liability (whether due or not) of the Company to
         creditors of the Company other than BTCo;


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                  (f) apply any sums by whomsoever paid or howsoever realized to
         any liability or liabilities of the Company to BTCo regardless of what
         liabilities of the Company remain unpaid;

                  (g) consent to or waive any breach of, or any act, omission or
         default under any of the Credit Documents or any of the instruments or
         agreements referred to therein, or otherwise amend, modify or
         supplement any of the Credit Documents or any of such other instruments
         or agreements; and/or

                  (h) act or fail to act in any manner which may deprive such
         Guarantor of its right to subrogation against the Company to recover
         full indemnity for any payments made pursuant to this Guaranty.

                  7. No invalidity, irregularity or unenforceability of all or
any part of the Guaranteed Obligations or of any security therefor shall affect,
impair or be a defense to this Guaranty, and this Guaranty shall be primary,
absolute and unconditional notwithstanding the occurrence of any event or the
existence of any other circumstances which might constitute a legal or equitable
discharge of a surety or guarantor except payment in full in cash of the
Guaranteed Obligations.

                  8. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of BTCo in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein expressly specified are cumulative and not exclusive of any rights or
remedies which BTCo would otherwise have. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of BTCo to any other or further action in any circumstances without notice or
demand. It is not necessary for BTCo to inquire into the capacity or powers of
the Company or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.

                  9. Any indebtedness or other liabilities of the Company now or
hereafter held by or owing to any Guarantor (other than in connection with the
Credit Documents and the Minimum Payment Guaranty Documents) is hereby
subordinated to the Guaranteed Obligations of the Company to BTCo, and such
indebtedness and other liabilities of the Company held by or owing to any
Guarantor, if BTCo, after an Event of Default has occurred, so requests, shall
be collected, enforced and received by such Guarantor as trustee for BTCo and be
paid over to BTCo on account of the Guaranteed Obligations of the Company to
BTCo, but without affecting or impairing in any manner the liability of such
Guarantor under the other provisions of this Guaranty. Prior to the transfer by
any Guarantor of any note or negotiable instrument evidencing any indebtedness
or other liabilities (other than in connection with the Credit Documents and the
Minimum Payment Guaranty Documents) of the Company to such Guarantor, such
Guarantor shall mark such note or negotiable instrument with a legend that the
same is subject to this


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subordination. Without limiting the generality of the foregoing, each Guarantor
hereby agrees with BTCo that it will not exercise any right of subrogation which
it may at any time otherwise have as a result of this Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all
Guaranteed Obligations have been irrevocably paid in full in cash.

                  10. (a) Each Guarantor waives any right (except as shall be
required by applicable statute and cannot be waived) to require BTCo to: (i)
proceed against the Company, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; (ii) proceed against or exhaust any
security held from the Company, any other Guarantor, any other guarantor of the
Guaranteed Obligations or any other party; or (iii) pursue any other remedy in
BTCo's power whatsoever. Each Guarantor waives any defense based on or arising
out of any defense of the Company, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party other than payment in full of the
Guaranteed Obligations, including, without limitation, any defense based on or
arising out of the disability of the Company, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Company other
than payment in full of the Guaranteed Obligations. BTCo may, at its election,
foreclose on any security held by the Lenders or the Collateral Agent by one or
more judicial or nonjudicial sales, whether or not every aspect of any such sale
is commercially reasonable (to the extent such sale is permitted by applicable
law), or exercise any other right or remedy BTCo may have against the Company or
any other party, or any security, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Guaranteed
Obligations have been paid in full. Each Guarantor waives any defense arising
out of any such election by BTCo, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of such Guarantor against the Company or any other party or any security.

                  (b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Company's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that BTCo shall have no duty to advise
any Guarantor of information known to them regarding such circumstances or
risks.

                  11. Each Guarantor agrees that this Guaranty may be enforced
only by the action of BTCo and that no other Person shall have any right
individually to seek to enforce or to enforce this Guaranty, it being understood
and agreed that such rights and remedies may be exercised by BTCo upon the terms
of this Guaranty.

                  12. In order to induce BTCo to allow the Existing Letters of
Credit to remain outstanding after the date of the effectiveness of the Plan of
Reorganization as Letters of Credit pursuant to the Revolving Credit Agreement,
each Guarantor makes the following representations, warranties and agreements to
and for the benefit of BTCo, all of which shall

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survive the execution and delivery of this Guaranty and the Credit Documents,
and the effectiveness of the Plan of Reorganization, with the effectiveness of
the Plan of Reorganization, being deemed to constitute a representation and
warranty that the matters specified in this Section 12 are true and correct on
and as of such date (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date):

                  (a) Existence and Qualification; Power; Compliance With Laws.
         Each Guarantor is duly formed, validly existing and in good standing
         under the laws of its jurisdiction of formation. Each Guarantor is duly
         qualified or registered to transact business and is in good standing in
         each other jurisdiction in which the conduct of its business or the
         ownership or leasing of its properties makes such qualification or
         registration necessary, except where the failure so to qualify or
         register and to be in good standing could not (i) reasonably be
         expected to have any material adverse effect whatsoever upon the
         validity or enforceability of this Guaranty or any Credit Document,
         (ii) reasonably be expected to be material and adverse to the condition
         (financial or otherwise), assets, business or operations of the
         Guarantors, taken as a whole, or (iii) reasonably be expected to
         materially impair the ability of the Guarantors, taken as a whole, to
         perform their obligations hereunder and under the Credit Documents.
         Each Guarantor has all requisite corporate power and authority to
         conduct its respective business, to own and lease its respective
         properties and to execute and deliver this Guaranty and to perform its
         obligations hereunder and under the Credit Documents. Each Guarantor is
         in compliance with all laws and legal requirements applicable to its
         respective business, has obtained all authorizations, consents,
         approvals, orders, licenses and permits from, and has accomplished all
         filings, registrations and qualifications with, or obtained exemptions
         from any of the foregoing from, any governmental agency that are
         necessary for the transaction of its business, except where the failure
         so to comply, file, register, qualify or obtain exemptions could not
         (i) reasonably be expected to have any material adverse effect
         whatsoever upon the validity or enforceability of any Credit Document,
         (ii) reasonably be expected to be material and adverse to the condition
         (financial or otherwise), assets, business or operations of HET and its
         Subsidiaries, taken as a whole, or (iii) reasonably be expected to
         materially impair the ability of the Guarantors, taken as a whole, to
         perform their obligations hereunder and under the Credit Documents.

                  (b) Authority; Compliance with Other Agreements and
         Instruments and Government Regulations. The execution, delivery and
         performance by each Guarantor of this Guaranty and each other Credit
         Document to which it is a party have been duly authorized by all
         necessary corporate action and do not and will not:

                           (i) require any consent or approval not heretofore
                  obtained of any partner, director, stockholder, security
                  holder or creditor of such Guarantor;

                           (ii) violate or conflict with any provision of such
                  Guarantor's charter, articles of incorporation or bylaws or
                  analogous formation documents, as applicable;


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                           (iii) result in or require the creation or imposition
                  of any Lien upon or with respect to any property now owned or
                  leased or hereafter acquired by such Guarantor;

                           (iv) violate any requirement of law applicable to
                  such Guarantor;

                           (v) result in a breach by such Guarantor of or
                  constitute a default by such Guarantor under, or cause or
                  permit the acceleration of any obligation owed under, any
                  indenture or loan or credit agreement or any other material
                  contract to which such Guarantor is a party or by which such
                  Guarantor or any of its property is bound or affected;

         and no Guarantor or Subsidiary of a Guarantor that had on the last day
         of the most recently ended fiscal quarter total assets (determined in
         accordance with GAAP) of $50,000,000 or more (each such Subsidiary, a
         "Significant Subsidiary") is in violation of, or default under, any
         requirement of law or agreement described in clause (v) above, except
         to the extent any such defaults or violations, either individually or
         in the aggregate, could not (x) reasonably be expected to have any
         material adverse effect whatsoever upon the validity or enforceability
         of any Credit Document, (y) reasonably be expected to be material and
         adverse to the condition (financial or otherwise), assets, business or
         operations of HET and its Subsidiaries, taken as a whole, or (z)
         reasonably be expected to materially impair the ability of the
         Guarantors, taken as a whole, to perform their obligations hereunder or
         under the Credit Documents.

                  (c) No Governmental Approvals Required. Except as previously
         obtained or made, no authorization, consent, approval, order, license
         or permit from, or filing, registration or qualification with, any
         governmental agency is or will be required to authorize or permit under
         applicable laws the execution, delivery and performance by the
         Guarantors of this Guaranty and the other Credit Documents to which any
         of them is a party.

                  (d) Financial Statements. The statements of financial
         condition of HET and its Subsidiaries at December 31, 2000, and the
         related statements of income and cash flow and changes in shareholders'
         equity of HET and its Subsidiaries for the fiscal year ended on such
         date, copies of which were furnished to BTCo prior to the date hereof,
         present fairly the financial condition of HET and its Subsidiaries at
         the date of such statements of financial condition and the results of
         the operations of HET and its Subsidiaries for such fiscal year. All
         such financial statements have been prepared in accordance with
         generally accepted accounting principles and practices consistently
         applied.

                  (e) No Other Liabilities; No Material Adverse Effect. As of
         the date hereof, no Guarantor had any material liability or material
         contingent liability not reflected or disclosed in the financial
         statements described in clause (d) above, other than liabilities and
         contingent liabilities arising in the ordinary course of business since
         the date of such financial statements. Since December 31, 2000, nothing
         has occurred which could (i)

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         reasonably be expected to have any material adverse effect whatsoever
         upon the validity or enforceability of this Guaranty or any Credit
         Document, (ii) reasonably be expected to be material and adverse to the
         condition (financial or otherwise), assets, business or operations of
         HET and its Subsidiaries, taken as a whole, or (iii) reasonably be
         expected to materially impair the ability of the Guarantors, taken as a
         whole, to perform their obligations hereunder or under the Credit
         Documents.

                  (f) Litigation. There are no actions, suits, proceedings or
         investigations pending as to which any Guarantor or any of its
         Subsidiaries has been served or has received notice or, to the
         knowledge of any Guarantor, threatened against or affecting any
         Guarantor or any of its Subsidiaries or any property of any of them
         before any Governmental Agency (as defined in the HET Credit Agreement)
         in which there is any reasonable possibility of an adverse decision
         which could materially adversely affect the business, consolidated
         financial position or results of operations of the Guarantors, taken as
         a whole, or which in any manner draws into question the validity or
         enforceability of this Guaranty or any of the Credit Documents.

                  (g) Binding Obligations. This Guaranty and each Credit
         Document to which any Guarantor is a party will, when executed and
         delivered by such Guarantor, constitute the legal, valid and binding
         obligation of such Guarantor, enforceable against such Guarantor in
         accordance with its terms, except as enforcement may be limited by
         applicable liquidation, conservatorship, bankruptcy, moratorium,
         rearrangement, receivership, insolvency, reorganization or similar
         debtor relief laws affecting the rights of creditors generally, or
         equitable principles relating to the granting of specific performance
         and other equitable remedies as a matter of judicial discretion.

                  (h) No Guarantor Default or Event of Default. No event has
         occurred and is continuing that is a Guarantor Default or a Guarantor
         Event of Default.

                  (i) Disclosure. No written statement made by the chief
         executive officer, president, chief financial officer, treasurer, any
         vice president or any secretary of any Guarantor to BTCo in connection
         with this Guaranty or any Credit Document or in connection with any
         transaction contemplated herein or therein as of the date thereof
         contained any untrue statement of a material fact or omitted a material
         fact necessary to make the statement made not misleading in light of
         all the circumstances existing at the date the statement was made.

                  (j) Tax Liability. Each Guarantor and its respective
         Subsidiaries have filed all tax returns which are required to be filed,
         and have paid, or made provision for the payment of, all taxes with
         respect to the periods, property or transactions covered by said
         returns, or pursuant to any assessment received by such Guarantor or
         any of its Subsidiaries, except (a) such taxes, if any, as are being
         contested in good faith by appropriate proceedings and as to which
         adequate reserves have been established and maintained and (b)
         immaterial taxes and tax returns so long as no material item or portion

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         of property of such Guarantor or any of its Subsidiaries is in jeopardy
         of being seized, levied upon or forfeited.

                  (k) Gaming Regulations. Each Guarantor and each of their
         respective Subsidiaries is in compliance in all material respects with
         all Gaming Regulations that are applicable to them and their
         businesses.

                  (l) Solvency. On and as of the date hereof, and giving effect
         to the Indebtedness being guaranteed by the Guarantors hereunder, each
         Guarantor shall be solvent. For purposes of this clause (l), "solvent,"
         as to any Person shall mean that (a) the sum of the assets of such
         Person, both at a fair valuation and at present fair saleable value,
         exceeds its liabilities, including its probable liability in respect of
         contingent liabilities, (b) such Person will have sufficient capital
         with which to conduct its business as presently conducted and as
         proposed to be conducted and (c) such Person has not incurred debts,
         and does not intend to incur debts, beyond its ability to pay such
         debts as they mature. For purposes of the immediately preceding
         sentence, "debt" means any liability on a claim, and "claim" means (x)
         a right to payment, whether or not such right is reduced to judgment,
         liquidated, unliquidated, fixed, contingent, matured, unmatured,
         disputed, undisputed, legal, equitable, secured, or unsecured, or (y) a
         right to an equitable remedy for breach of performance if such breach
         gives rise to a payment, whether or not such right to an equitable
         remedy is reduced to judgment, fixed, contingent, matured, unmatured,
         disputed, undisputed, secured or unsecured. With respect to any such
         contingent liabilities, such liabilities shall be computed at the
         amount which, in light of all the facts and circumstances existing at
         the time, represents the amount which can reasonably be expected to
         become an actual or matured liability.

                  13. Each Guarantor covenants and agrees that on and after the
Effective Date and until no Existing Letter of Credit remains outstanding and
all Guaranteed Obligations are indefeasibly paid in full:

                  (a) Incorporation by Reference. Each Guarantor will comply
         with each of the covenants contained in Sections 5.1 through 5.9 of the
         HET Credit Agreement and Sections 6.1 through 6.7 of the HET Credit
         Agreement and Sections 7.1 and 7.2 of the HET Credit Agreement, which
         Sections, together with all definitions in the HET Credit Agreement
         applicable to such Sections, are hereby incorporated by reference as if
         set forth herein in their entirety, provided that:

                           (i) all references to "Parent" therein shall mean and
                  be a reference to "HET" herein;

                           (ii) all references to "the Company" therein shall
                  mean and be a reference to "HOC" herein;

                           (iii) all references to the "Borrower" or "Borrowers"
                  therein shall mean and be a reference to "HOC", "Marina
                  Associates" or any other "Borrower" (as defined in the HET
                  Credit Agreement) herein;

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                           (iv) all references to "this Agreement," "herein,"
                  "hereunder" and words of similar import therein shall mean and
                  be a reference to this "Guaranty";

                           (v) all references to "Parent and the Borrowers"
                  therein shall mean and be a reference to "HET, HOC and any
                  other Borrower (as defined in the HET Credit Agreement)"
                  herein;

                           (vi) all references to "Parent or any Company"
                  therein shall mean and be a reference to "HET, HOC or any
                  Subsidiary Company" herein;

                           (vii) all references to the "Administrative Agent"
                  therein shall mean and be a reference to "BTCo" herein;

                           (viii) all references to any "Lender" or the
                  "Lenders" therein shall mean and be a reference to "BTCo"
                  herein;

                           (ix) all references to the "Requisite Lenders"
                  therein shall mean and be a reference to "BTCo" herein;

                           (x) all references to a "Default" therein shall mean
                  and be a reference to a "Guarantor Default" herein and as
                  defined below; and

                           (xi) all references to an "Event of Default" therein
                  shall mean and be a reference to a "Guarantor Event of
                  Default" herein and as defined below.

                  As used herein, the term "Guarantor Default" shall mean any
         event, act or condition which with notice or lapse of time, or both,
         would constitute a Guarantor Event of Default.

                  (b) HET hereby agrees to deliver to the Administrative Agent
         at the time of the delivery of the financial statements pursuant to
         Sections 7.1(a) and (c) of the HET Credit Agreement, a certificate of
         the chief financial officer, controller or treasurer of HET setting
         forth (x) the senior implied indebtedness ratings, if any, assigned by
         Moody's Investors Services (or its successors) and Standard & Poor's
         Rating Services (or its successors) to HOC's Indebtedness at the end of
         such fiscal quarter or year, as the case may be, and (y) the
         Consolidated Interest Coverage Ratio (as defined in the HET Credit
         Agreement) at the end of such fiscal quarter or year, as the case may
         be.

                  14. As used herein, the term "Guarantor Event of Default"
shall mean the occurrence of any of the following specified events:

                  (a) Any representation or warranty of any Guarantor made
         herein or in any certificate or other writing delivered by any
         Guarantor pursuant hereto, proves to have been incorrect when made or
         reaffirmed; or

                  (b) Any Guarantor or any of their respective Significant
         Subsidiaries (as defined in the HET Credit Agreement) (i) fails to pay
         the principal, or any principal

                                      -10-
<PAGE>   11

         installment, of any present or future indebtedness for borrowed money
         of $100,000,000 or more including without limitation the Short Term
         Loan Agreement (as defined in the HET Credit Agreement), or any
         guaranty of present or future indebtedness for borrowed money of
         $100,000,000 or more, on its part to be paid, when due (or within any
         stated grace period), whether at the stated maturity, upon
         acceleration, by reason of required prepayment or otherwise or (ii)
         fails to perform or observe any other term, covenant or agreement on
         its part to be performed or observed, or suffers any event to occur, in
         connection with any present or future indebtedness for borrowed money
         of $100,000,000 or more, or of any guaranty of present or future
         indebtedness for borrowed money of $100,000,000 or more, if as a result
         of such failure or sufferance any holder or holders thereof (or an
         agent or trustee on its or their behalf) has the right to declare such
         indebtedness due before the date on which it otherwise would become
         due; or

                  (c) This Guaranty, at any time after its execution and
         delivery and for any reason other than the agreement of BTCo or
         satisfaction in full of all the Guaranteed Obligations ceases to be in
         full force and effect or is declared by a court of competent
         jurisdiction to be null and void, invalid or unenforceable in any
         respect which, in any such event in the reasonable opinion of BTCo, is
         materially adverse to the interests of BTCo; or any Guarantor denies in
         writing that it has any further liability or obligation hereunder, or
         purports in writing to revoke, terminate or rescind same; or

                  (d) A final judgment against HET or any of its Significant
         Subsidiaries is entered for the payment of money in excess of
         $25,000,000 and, absent procurement of a stay of execution, such
         judgment remains unsatisfied for thirty calendar days after the date of
         entry of judgment, or in any event later than five days prior to the
         date of any proposed sale thereunder; or any writ or warrant of
         attachment or execution or similar process is issued or levied against
         all or any material part of the property or assets of any such Person
         and is not released, vacated or fully bonded within thirty calendar
         days after its issue or levy; or

                  (e) Any Guarantor or any of their respective Significant
         Subsidiaries institutes or consents to the institution of any
         proceeding under Title 11 of the United States Code entitled
         "Bankruptcy," as now or hereafter in effect, or any successor thereto
         (the "Bankruptcy Code") relating to it or to all or any part of its
         property or assets, or is unable or admits in writing its inability to
         pay its debts as the mature, or makes an assignment for the benefit of
         creditors; or applies for or consents to the appointment of any
         receiver, trustee, custodian, conservator, liquidator, rehabilitator or
         similar officer for it or for all or any part of its property or
         assets; or any receiver, trustee, custodian, conservator, liquidator,
         rehabilitator or similar officer is appointed without the application
         or consent of that Person and the appointment continues undischarged or
         unstayed for 60 calendar days; or any proceeding under the Bankruptcy
         Code relating to any such Person or to all or any part of its property
         or assets is instituted without the consent of that Person and
         continues undismissed or unstayed for 60 calendar days; or

                  (f) Any Pension Plan (as defined in the HET Credit Agreement)
         maintained by HET or any of its Subsidiaries is determined to have a
         material "accumulated funding

                                      -11-

<PAGE>   12

         deficiency" as that term is defined in Section 302 of ERISA except to
         the extent that any such deficiencies could not, individually or in the
         aggregate, (i) reasonably be expected to have any material adverse
         effect whatsoever upon the validity or enforceability of this Guaranty
         or any Credit Document, (ii) reasonably be expected to be material and
         adverse to the condition (financial or otherwise), assets, business or
         operations of the Guarantors, taken as a whole, or (iii) reasonably be
         expected to materially impair the ability of the Guarantors, taken as a
         whole, to perform their obligations hereunder or under the Credit
         Documents; or

                  (g) The occurrence of a License Revocation with respect to a
         license issued to HET or any of its Subsidiaries by any Gaming
         Authority of the States of New Jersey or Nevada with respect to gaming
         operations at any gaming facility accounting for 5% or more of the
         consolidated gross revenues of HET and its Subsidiaries that continues
         for thirty calendar days; or

                  (h) Guarantor Changes of Control. Any Guarantor Change of
         Control (which, for purposes of this Guaranty, shall mean any "Change
         of Control" as defined in the HET Credit Agreement) shall have
         occurred; or

                  (i) Acceleration of Obligations pursuant to the Revolving
         Credit Agreement; Etc. The maturity of any loans pursuant to the
         Revolving Credit Agreement shall have been accelerated in accordance
         with the remedial provisions contained therein, or for any reason the
         commitments to lend pursuant to the Revolving Credit Agreement shall
         have terminated.

                  As used herein, the term "HET Credit Agreement" shall mean the
Five Year Loan Agreement, dated as of April 30, 1999, among HET, HOC, Marina
Associates, the financial institutions party thereto, BTCo, as Syndication
Agent, Canadian Imperial Bank of Commerce and Societe Generale, as Documentation
Agents, Commerzbank AG, PNC Bank, National Association and Wells Fargo Bank,
N.A., as Co-Documentation Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (without giving effect to any amendments,
modifications or supplements thereof or thereto after April 30, 1999 unless, and
to the extent, BTCo specifically agrees to give effect to the respective change
for purposes of this Guaranty (although amendments modifications, supplements or
terminations thereof shall be given effect for purposes of determining whether
such credit facility remains in effect or has terminated)).

                  15. Upon the occurrence and during the continuance of any
Event of Default or any Guarantor Event of Default, BTCo shall have the right to
require HET and HOC to (x) pay to BTCo within three Business Days of such demand
by BTCo to the Guarantors, such additional amount of cash, to be held as
security by BTCo for the Company's reimbursement and other obligations in
respect of Existing Letters of Credit then outstanding, as is equal to 103% of
the face amount of all Existing Letters of Credit then outstanding and (y) pay
to BTCo in cash any amounts then owed to BTCo, on a joint and several basis,
pursuant to the terms of this Guaranty. Notwithstanding anything to the contrary
contained herein, if an Event of Default specified in Section 6.1(e), (f) or (g)
of the Revolving Credit Agreement or a Guarantor Event of Default

                                      -12-
<PAGE>   13


specified in Section 14(e) hereof shall occur, the result which would occur upon
the demand of BTCo as specified in the immediately preceding sentence shall
occur automatically without the demand of BTCo; provided that the amounts
payable by HET and HOC under this Section 15 shall be calculated without giving
effect to any reductions to such amounts (except to the extent such reductions
resulted from the payment thereof in cash), whether such reductions resulted
from any event of the type described in Section 6.1(e), (f) or (g) of the
Revolving Credit Agreement, Section 14(e) hereof or otherwise.

                  16. Notwithstanding anything to the contrary contained herein,
in the Revolving Credit Agreement or in an other Credit Document, no Guarantor
shall consent, or shall permit the Lenders to consent, to any change, waiver,
discharge, amendment, modification or termination of the Revolving Credit
Agreement or any other Credit Document which would (x) require the consent of
BTCo in accordance with Section 8.11 of the Revolving Credit Agreement (as in
effect on the Effective Date) and (y) reduce, limit, terminate or otherwise
adversely affect the rights of BTCo with respect to the Existing Letters of
Credit pursuant to the Revolving Credit Agreement and related Credit Documents.
If there is any breach of the covenant contained in the immediately preceding
sentence, the respective changes, waivers, discharges, amendments, modifications
or terminations which are violative of the requirements of the immediately
preceding sentence shall be given no effect for purposes of this Guaranty.
Furthermore, the Guarantors will not permit the Revolving Credit Agreement to be
terminated or replaced (including as contemplated by Section 5.30 of the
Revolving Credit Agreement) unless (x) all Existing Letters of Credit are
terminated and surrendered to BTCO for cancellation and (y) all amounts owing to
BTCo hereunder with respect to the Existing Letters of Credit are repaid in
full.

                  17. If HET and/or HOC make any payments pursuant to this
Guaranty in respect of the Guaranteed Obligations, HET and/or HOC, as the case
may be, shall be subrogated to the rights of the holders of the respective
Guaranteed Obligations so paid; provided that no payments may be made in respect
of such subrogation claims until all Guaranteed Obligations have been
indefeasibly paid in full.

                  18. The Guarantors hereby jointly and severally agree to pay
all out-of-pocket costs and expenses of BTCo in connection with any amendment,
waiver or consent relating hereto and of BTCo in connection with any enforcement
of this Guaranty (including in each case, without limitation, the fees and
disbursements of counsel employed by BTCo).

                  19. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of BTCo and its successors
and assigns.

                  20. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of
each Guarantor directly affected thereby and with the written consent of BTCo.

                  21. Each Guarantor acknowledges that an executed (or
conformed) copy of each of the Credit Documents has been made available to its
principal executive officers and such officers are familiar with the contents
thereof.


                                      -13-
<PAGE>   14

                  22. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default
(such term to mean and include any "Event of Default" as defined in the
Revolving Credit Agreement) or Guarantor Event of Default, BTCo is hereby
authorized at any time or from time to time, without notice to any Guarantor or
to any other Person, any such notice being expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by BTCo to or for the credit or the
account of such Guarantor, against and on account of the obligations and
liabilities of such Guarantor to BTCo under this Guaranty, irrespective of
whether or not BTCo shall have made any demand hereunder and although said
obligations, liabilities, deposits or claims, or any of them, shall be
contingent or unmatured.

                  23. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of BTCo, 130 Liberty Street, New York, New York 10006,
Attention: Mr Clark Peterson and (ii) in the case of any Guarantor, at its
address set forth opposite its signature below; or in any case at such other
address as any of the Persons listed above may hereafter notify the others in
writing.

                  24. If claim is ever made upon BTCo for repayment or recovery
of any amount or amounts received in payment or on account of any of the
Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Company), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of the Company, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.

                  25. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF BTCO
AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Guaranty may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Guaranty, each Guarantor hereby
irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each Guarantor hereby
further irrevocably waives any claim that any such courts lack jurisdiction over
such Guarantor, and agrees not to plead or claim, in any legal action or
proceeding with respect to this Guaranty brought in any of the aforesaid courts,
that any such court lacks jurisdiction over such Guarantor. Each Guarantor
hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such Guarantor, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Guaranty brought in any of the
aforesaid

                                      -14-
<PAGE>   15

courts, that any such court lacks jurisdiction over such Guarantor. Each
Guarantor hereby irrevocably designates, appoints and empowers CT Corporation
System, with offices on a date hereof at 111 Seventh Avenue, New York, New York
10021 as its designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its property, service of any and all
legal process, summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee and agent shall
cease to be available to act as such, each Guarantor agrees to designate a new
designee, appointee and agent in New York City on the terms and for the purposes
of this provision satisfactory to the Administrative Agent. Each Guarantor
further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such Guarantor at
its address set forth opposite its signature below, such service to become
effective 30 days after such mailing. Each Guarantor hereby irrevocably waives
any objection to such service of process and further irrevocably waives and
agrees not to plead or claim in any action or proceeding commenced under this
Guaranty that service of process was in any way invalid or ineffective. Nothing
herein shall affect the right of any of BTCo to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against each Guarantor in any other jurisdiction.

                  (b) Each Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.

                  (c) EACH GUARANTOR AND BTCO (BY ITS ACCEPTANCE OF THE BENEFITS
OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                  26. It is the desire and intent of each Guarantor and BTCo
that this Guaranty shall be enforced against each Guarantor to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of any Guarantor under this Guaranty shall be adjudicated
to be invalid or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to fraudulent
conveyances or transfers), then the amount of the Guaranteed Obligations of such
Guarantor shall be deemed to be reduced and such Guarantor shall pay the maximum
amount of the Guaranteed Obligations which would be permissible under applicable
law.

                  27. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantors and BTCo.

                                      -15-
<PAGE>   16

                  28. All payments made by any Guarantor hereunder will be made
without setoff, counterclaim or other defense and on the same basis as payments
are made by the Company under Section 3.7 of the Revolving Credit Agreement (as
originally in effect).

                  29. Each Guarantor hereby acknowledges and agrees that BTCo
shall have no obligation whatsoever to amend, modify or supplement, or agree to
any amendment, modification or supplement to, any Existing Letter of Credit, and
that BTCo shall have no obligation whatsoever to issue additional Letters of
Credit pursuant to the Revolving Credit Agreement.

                                      * * *


                                      -16-
<PAGE>   17


                  IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.

ADDRESSES

One Harrah's Court                          HARRAH'S ENTERTAINMENT, INC.,
Las Vegas, NV                               as a Guarantor
Tel: (702) 407-6393
Fax: (702) 579-2671
Attn: General Counsel                       By
                                               -----------------------
                                            Title:

One Harrah's Court                          HARRAH'S OPERATING COMPANY, INC.,
Las Vegas, NV                               as a Guarantor
Tel: (702) 407-6393
Fax: (702) 579-2671
Attn: General Counsel                       By
                                               -----------------------
                                            Title:


Acknowledged and Agreed to:

BANKERS TRUST COMPANY



By
  -----------------------
Title:


<PAGE>   18

furtherance of the consummation of the transactions contemplated by the Manager
Subordination Agreement have been taken in compliance with the respective
documents therefor and all applicable laws. Harrah's Management Company has duly
executed and delivered the Manager Subordination Agreement.

         3. There are no actions, suits or proceedings pending, or to the best
of my knowledge threatened, against Harrah's Management Company or any of its
subsidiaries (i) with respect to the Manager Subordination Agreement executed by
Harrah's Management Company, (ii) with respect to any material indebtedness of
Harrah's Management Company or any of its subsidiaries, or (iii) that could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, conditions (financial or otherwise)
or prospects of Harrah's Management Company and its consolidated subsidiaries
taken as a whole.

         This opinion is furnished by me, as General Counsel of Harrah's
Management Company, to you for your benefit (and the benefit of your assigns and
participants) in connection with the above transactions. This opinion may not be
relied upon by you for any other purpose or furnished to (unless otherwise
required to be so furnished by applicable law or judicial process), quoted to or
relied upon by any other person for any purpose without my prior written
consent.

                                            Very truly yours,

                                            /s/ Kevin Colomb

                                            Kevin Colomb,
                                            General Counsel