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                                                                 EXHIBIT 10.01


                                  AMENDMENT NO. 2 
                            TO THE EMPLOYMENT AGREEMENT
                                        OF
                                 JAMES H. MCKENNON


     This Amendment No. 2 ("Amendment") to the Employment Agreement between
Aladdin Gaming, LLC ("Company"), Aladdin Gaming Holdings, LLC ("Gaming
Holdings") and James H. McKennon ("Executive") is made and entered into this
27th day of January, 1999.

     WHEREAS, the Company, Gaming Holdings and Executive entered into an
Employment Agreement effective as of April 15, 1997.

     WHEREAS, the Company, Gaming Holdings and Executive entered into the
McKennon Contribution and Amendment Agreement on February 28, 1998, which, in
part, amended the Employment Agreement, (the Employment Agreement, as amended by
the McKennon Contribution and Amendment Agreement, herein after collectively
referred to as "Employment Agreement").

     WHEREAS, the Employment Agreement, based on then-current information,
would, subject to certain understandings and conditions, vest the Executive with
fifty percent (50%) of his/her Restricted Membership Interests (as defined in
the Employment Agreement) by the expiration of the term of the Employment
Agreement;

     WHEREAS, the current development of the Aladdin Hotel and Casino will not
permit the vesting of fifty percent (50%) of the Executive's Restricted
Membership Interests by the expiration of the term of the Employment Agreement;
and

     WHEREAS, the Board of Directors for the Company and Gaming Holdings have
approved amending the Employment Agreement to provide, subject to certain
conditions, that the Executive would be vested with fifty percent (50%) of the
Executive's Restricted Membership Interests by the expiration of the term of the
Employment Agreement.

     Now, therefore, in consideration of the foregoing, and the following mutual
covenants and agreements, the parties agree as follows:

     1.   AMENDMENT.  Pursuant to Section 9(d) of the Employment Agreement,
Section 4(f) of the Employment Agreement is deleted in its entirety and replaced
with the following:

          f.   RIGHT TO PURCHASE LLC MEMBERSHIP INTEREST.  On the Execution
          Date, Executive has the right to purchase a restricted membership
          interest in the capital of Gaming Holdings equal to One Percent
          (1.0%) of the total membership interests of Gaming Holdings for a
          total purchase price of Six Hundred Dollars ($600), which amount
          equals One Hundred Percent (100%) of the fair 

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          market value of
          Executive's membership interest on the date of purchase (the
          "Holdings Restricted Membership Interest").

               (1)   During the Term, the Holdings Restricted Membership
               Interest vests as follows:

               (i)   Twenty-five Percent (25%) of the Holdings Restricted
                     Membership Interest on the date that the Company opens
                     and begins operating the Aladdin Hotel & Casino (the
                     "Operational Date") and Executive executes and agrees
                     to be bound by the Company's Operating Agreement; and

               (ii)  Twenty-five Percent (25%) of the Holdings Restricted
                     Membership Interest upon the expiration of the four-year 
                     term of this Agreement (provided Executive was employed 
                     by the Company at such expiration);

               (iii) Twenty-five Percent (25%) of the Holdings Restricted
                     Membership Interest on each succeeding annual
                     anniversary of the Operational Date to the Termination
                     Date;

               (2)   In addition to the vesting of Holdings Restricted
               Membership Interest pursuant to Section 4(f)(1)(ii), further
               upon expiration of the four-year term of this Agreement
               (provided Executive was employed by the Company at such
               expiration), any unvested Holdings Restricted Membership
               Interest vests only as follows:

               (i)   If the Company does not continue to employ Executive
                     for reason(s) not constituting Cause as defined in
                     Section 5(d)(1-4) hereof or if the Executive does not
                     continue his employment at the request of the Company
                     for reason(s) constituting Good Reason as defined in
                     Section 5(d)(5), then an additional twenty-five
                     percent (25%) of the Holdings Restricted Membership
                     Interest vests; or

               (ii)  If the Executive's employment with the Company
                     continues, the twenty-five percent (25%) of the
                     Holdings Restricted Membership Interest continues to
                     vest in accordance with Section 4(f)(1)(iii) above as
                     though there had been no Termination Date.

               (3)   If Executive's employment terminates, the Company has
               the right to repurchase any unvested portion 

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               of the Holdings Restricted Membership Interest for the purchase 
               price originally paid by Executive.

               (4)   While Gaming Holdings remains a pass-through entity
               for federal income tax purposes, Gaming Holdings will
               periodically distribute cash, to the extent available, to
               Executive in an amount equal to the increase in his
               cumulative tax liability with respect to his interest in
               Gaming Holdings and Gaming Holdings may, at the discretion
               of the Gaming Holdings Board, periodically distribute
               additional cash, to the extent available, to Executive to
               satisfy any additional tax liability arising from his
               interest in Gaming Holdings in excess of distributions
               otherwise receivable.

     2.   GAMING LAW.  Anything to the contrary herein or in the Employment
Agreement notwithstanding, the parties hereto agree and acknowledge that they
are subject to and that they shall comply in all respects with the gaming laws
of the State of Nevada, including the Nevada Gaming Control Act and (or any
successor statute) the rules and regulations promulgated by the Nevada Gaming
Commission and the State Gaming Control Board.  To the extent anything in this
Amendment or the Employment Agreement is inconsistent with any gaming laws or
regulations, the gaming laws and regulations shall control.

     3.   ASSIGNMENT.  This Agreement shall be binding upon and inure to the
benefit of any successor of the Company or Gaming Holdings.  Any such successor
of the Company or Gaming Holdings shall be deemed substituted for the Company or
Gaming Holdings under the terms of this Agreement for all purposes.  As used
herein, "successor" shall include any person, firm, corporation or other
business entity which at any time, whether by purchase, merger or otherwise,
directly or indirectly acquires all or substantially all of the assets or
business of the Company or Gaming Holdings and supercede any prior understanding
or agreements between the parties hereto and Aladdin Holdings, LLC.

     4.   ENTIRE AGREEMENT.  This Amendment and the Employment Agreement
represent the entire agreement and understanding between the Company, Gaming
Holdings, Aladdin Holdings, LLC and Executive concerning the matters herein and
supercede any prior understandings or agreements between the parties hereto and
Aladdin Holdings, LLC.

     5.   REMAINING AGREEMENT EFFECTIVE.  Any provision of the Employment
Agreement not amended by this Amendment shall remain in full force and effect.

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     6.   NO ORAL MODIFICATION, CANCELLATION OR DISCHARGE.  This Amendment may
only be amended, canceled or discharged in writing singed by the Executive,
Gaming Holdings and the Company.

     7.   GOVERNING LAW.  This Amendment shall be governed by the laws of the
state of Nevada.

     8.   CAPITALIZED TERMS.  Capitalized terms not defined herein shall have
the meanings described thereto in the Employment Agreement.

     9.   COUNTERPARTS.  This Amendment may be executed in any number of
counterparts, each of which shall be considered an original, but all such shall
together constitute but one and the same contract.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above-written.

                                     ALADDIN GAMING, LLC
          

                                     By: /s/ RICHARD J. GOEGLEIN
                                         -------------------------------------
                                         Richard J. Goeglein
                                         President and Chief Executive Officer
          
          
          
                                     ALADDIN GAMING HOLDINGS, LLC
          
          
          
                                     By: /s/ RICHARD J. GOEGLEIN
                                         -------------------------------------
                                         Richard J. Goeglein
                                         President and Chief Executive Officer
          
          
          
                                     EXECUTIVE
          
          
                                         /s/ JAMES H. MCKENNON
                                         ----------------------------
                                         Name: James H. McKennon
                                         Title: Senior Vice President