<PAGE>
                                                                   Exhibit 10.29

                               OPERATING AGREEMENT
                                       OF

                          STRATOSPHERE DEVELOPMENT LLC
                      a Delaware limited-liability company
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
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<S>                                                                                                     <C>
ARTICLE I DEFINITIONS....................................................................................3
ARTICLE II INTRODUCTORY MATTERS..........................................................................5
   2.1      Registered Office............................................................................5
   2.2      Other Offices................................................................................5
   2.3      Registered Agent.............................................................................5
   2.4      Purpose......................................................................................5
   2.5      Powers of the Company........................................................................6
ARTICLE III CAPITAL CONTRIBUTIONS........................................................................7
   3.1      Initial Capital..............................................................................7
   3.2      Capital Account of a Series..................................................................7
   3.3      Special Rules With Respect to the Capital Account of a Series................................7
   3.4      Separate Records.............................................................................8
ARTICLE IV PROFITS AND LOSSES............................................................................8
   4.1      Profits and Losses...........................................................................8
   4.2      Series Separate..............................................................................8
ARTICLE V DISTRIBUTIONS..................................................................................8
   5.1      Operating Distributions......................................................................8
ARTICLE VI MEMBERSHIP....................................................................................8
   6.1      Limitation of Liability......................................................................8
   6.2      Powers of the Member.........................................................................9
   6.3      Election of Officers.........................................................................9
   6.4      Member Approval of Actions by the Officers...................................................9
   6.5      Transfer of Interest........................................................................10
ARTICLE VII DISSOLUTION OF THE COMPANY AND  TERMINATION OF A MEMBER'S INTEREST..........................10
   7.1      Dissolution.................................................................................10
   7.2      Resignation.................................................................................10
   7.3      Distribution on Dissolution and Liquidation.................................................10
ARTICLE VIII INDEMNIFICATION............................................................................11
   8.2      Advance Payment of Expenses.................................................................11
   8.3      Determination of Right to Indemnification...................................................11
   8.4      Assets......................................................................................12
ARTICLE IX MISCELLANEOUS PROVISIONS.....................................................................12
   9.1      Insurance...................................................................................12
   9.2      Amendments..................................................................................12
   9.3      Applicable Law; Jurisdiction................................................................12
   9.4      Interpretation..............................................................................12
   9.5      Counterparts and Facsimile Copies...........................................................12
   9.6      Waivers.....................................................................................13
   9.7      No Third Party Beneficiaries................................................................13
</TABLE>


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                               OPERATING AGREEMENT

                                       OF

                          STRATOSPHERE DEVELOPMENT LLC
                      a Delaware limited-liability company



This Operating Agreement ("Agreement") is made and entered into as of the ____
day of _________, 2000, by and among the undersigned, Stratosphere Corporation,
which constitutes the Stratosphere member ("Stratosphere Member"), Arizona
Charlie's, Inc. which constitutes the Arizona Member ("Arizona Member") and
Fresca, LLC, which constitutes the Fresca, LLC Member ("Fresca Member") of
Stratosphere Development LLC, a Delaware limited-liability company (the
"Company"), and the Company, with reference to the recitals set forth below.

                                 R E C I T A L S

      A. The undersigned Members have caused the Company to be organized
pursuant to the provisions of the Act (as defined below); and

      B. The Members and the Company desire by this Agreement to set forth their
agreement as to the relationship between them and as to the conduct of the
business and the affairs of the Company and its separate Series.

THEREFORE, in consideration of the mutual covenants, agreements and promises
made herein, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

      Act. "Act" shall mean the Delaware Limited Liability Company Act.

      Affiliate.  "Affiliate" means with respect to a specified Person, any
other Person who or which is (a) a principal of the specified Person, (b)
directly or indirectly controlling, controlled by or under common control with
the specified Person, or (c) any member, director, officer, manager, relative or
spouse of the specified Person. For purposes of this definition, "control",
"controlling", "controlled" mean the right to exercise, directly or indirectly,
more than fifty percent of the voting power of the stockholders, members or
owners and, with respect to any individual, partnership, trust or other entity
or association, or the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of the controlled
entity.


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      Agreement. "Agreement" means this Operating Agreement, as amended from
time to time.

      Certificate. "Certificate" means the Certification of Formation of the
Company as filed with the Secretary of the State of Delaware, as amended from
time to time.

      Capital Accounts. "Capital Accounts" means the respective capital account
maintained for each of the Stratosphere Member, Arizona Member and Fresca Member
in accordance with this Agreement and the applicable provisions of the Code.

      Capital Contribution. "Capital Contribution" means the total amount of
cash and the agreed fair market value (net of liabilities) of any property
contributed at any time to the capital of a Series of the Company by the Member
who is the Member associated with such Series.

      Cash Available for Distribution. "Cash Available For Distribution" in
respect of a Series means an amount equal to the total cash revenues generated
by or received from the operations of that Series (including proceeds from the
sale of assets for the refinancing of any loan attributable to that Series)
which is available in the accounts of the Series less (i) payments on
indebtedness applicable to that Series (including, without limitation, principal
and accrued but unpaid interest, and including loans or advances by the Member
associated with that Series), (ii) payments for operating expenses, capital
improvements, replacements and all other cash expenditures incurred incident to
the normal operation of the business applicable to that Series, and for legal,
accounting, brokerage or similar service fees relating to that Series and (iii)
reasonable reserves in respect of that Series established by the Member
associated with that Series, based on an assessment of the needs of the business
and operations relating to set aside or allocated for working capital, the
payment of debt service, taxes, insurance and other anticipated costs and
expenses incident to the ownership and operation of the business relating to
that Series.

      Code. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any corresponding United States federal tax statute enacted after
the date of this Agreement. A reference to a specific section of the Code refers
not only to such specific section but also to any corresponding provision of any
United States federal tax statute enacted after the date of this Agreement, as
such specific section or corresponding provision is in effect on the date of
application of the provisions of this Agreement containing such reference.

      Covered Person. "Covered Person" of a Series means (a) the Member or any
Affiliate of the Member associated with that Series, (b) any officers,
directors, stockholders, members, partners, employees, representatives or agents
of the Member, (c) any office, employee, representative or agent of the Company
acting in furtherance of the business of that Series or its Affiliates, or (d)
any Person who was, at the time of the act or omission in question, a Person
described in any of the preceding clauses (a) through (c).


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      Fiscal Year. "Fiscal Year" means that calendar year.

      Interest. "Interest" means, the entire ownership interest with respect to
each Series of the Member related to such Series, including the right of the
Member to any and all benefits to which a member may be entitled as provided
under the Act and this Agreement.

      Person. "Person" means a natural person, any form of business or social
organization and any other non-governmental legal entity including, but not
limited to, a corporation, partnership, association, trust, unincorporated
organization, estate or limited-liability company.

      Records Office. "Records Office" means an office of the Company in Nevada,
which may but need not be a place of its business, at which it shall keep all
records identified in NRS Section 86.241, except that none of the lists required
to be maintained pursuant to NRS Section 86.241 need be maintained in
alphabetical order, nor shall the Company be required to maintain at its Records
Office copies of powers of attorney except those relating to the execution of
the Articles and this Agreement.

      Secretary of State. "Secretary of State" means the office of the Delaware
Secretary of State.

      Series. "Series" means one of three Series of interests: the Stratosphere
Series to which the Stratosphere Member is associated, the Arizona Series to
which the Arizona Member is associated and the Fresca Series to which the Fresca
Member is associated.

                                   ARTICLE II

                              INTRODUCTORY MATTERS

      2.1 Registered Office. The registered office of the Company in the State
of Delaware is located at 2711 Centerville Road, Suite 400, Wilmington, Delaware
19808.

      2.2 Other Offices. The Company may establish and maintain other offices at
any time and at any place or places as the Members may designate or as the
business of the Company may require.

      2.3 Registered Agent. The name and address of the registered agent of the
Company for service of process on the Company in the State of Delaware are
Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington,
Delaware 19808.

      2.4 Purpose. The Company is formed for the object and purpose of, and the
nature of the business to be conducted and promoted by the Company is, engaging
in any lawful act or activity for which limited liability companies may be
formed and engaging


                                       5
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in any and all activities necessary or incidental to the foregoing. Each Series
may have a similar or separate business purpose from each other Series.

      2.5 Powers of the Company. A Member associated with a Series, shall have
the power and authority to take any and all actions necessary, appropriate,
advisable, convenient or incidental to or for the furtherance of the purpose set
forth in Section 2.4, including, but not limited to, the power and authority to:

            (a) borrow money and issue evidence of indebtedness, and to secure
the same by a mortgage, pledge or other lien on any or all of the assets of such
Series;

            (b) conduct its business and operations in any state, territory,
district or possession of the United States or in any foreign country that may
be necessary or convenient to the accomplishment of the purpose of the Company
and/or the Series;

            (c) acquire, by purchase, lease, contribution of property or
otherwise, and own hold, maintain, finance, improve, lease, sell, convey,
mortgage, transfer, demolish or dispose of any real or personal property that
may be necessary, convenient or incidental to the accomplishment of the purpose
of the Company and that Series.

            (d) enter into, perform and carry out contracts of any kind,
including without limitation, contracts with any Member or any Affiliate that
are necessary to, in connection with, convenient to, or incidental to the
accomplishment of the purpose of the Company and or such Series.

            (e) purchase, take, receive, subscribe for or otherwise acquire,
own, hold, vote, use, employ, sell, mortgage, lend, pledge or otherwise dispose
of, and otherwise use and deal in and with, shares or other interests in or
obligations of domestic or foreign entities;

            (f) lend money for any proper purpose, invest and reinvest its funds
and take and hold real and personal property for the payment of funds so loaned
or invested;

            (g) sue and be sued, complain and defend and participate in
administrative or other proceedings, in its name;

            (h) appoint employees, agents and officers of the Company and/or of
the Series, and define their duties and fix their compensation to be paid from
such Series;

            (i) indemnify any person or entity and obtain any and all types of
insurance;

            (j) cease its activities and cancel its insurance;


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<PAGE>
      (k) negotiate, enter into, renegotiate, extend, renew, terminate, modify,
amend, waiver, execute, acknowledge or take any other action with respect to any
lease, contract or security agreement in respect of any assets of the Series.

      (l) pay, collect, compromise, litigate, arbitrate or otherwise adjust or
settle any and all other claims or demands of or against the Company or in
respect of such Series or hold such proceeds against the payment of contingent
liabilities; and

      (m) make, execute, acknowledge and file any and all documents or
instruments necessary, convenient or incidental to the accomplishment of the
purpose of the Company or such Series.

                                  ARTICLE III

                              CAPITAL CONTRIBUTIONS

      3.1 Initial Capital. The initial capital of a Series shall be the Capital
Contribution of the Member associated with that Series, such Capital
Contribution made in exchange for a 100% ownership and profits interest in such
Series and only in such Series. The Member is not required to make any
additional Capital Contributions.

      3.2 Capital Account of a Series. The Capital Account of a Series shall be
established on the Company's books representing the Member associated with that
Series' Capital Contributions to the Company. The Capital Account of a Series of
the Member associated with such Series shall be credited with the amount of its
Capital Contribution and any such subsequent Capital Contributions made by such
Member upon receipt thereof by the Company.

      3.3 Special Rules With Respect to the Capital Account of a Series.

            (a) Consideration of Code. Notwithstanding any other provision of
this Agreement, the Capital Account of a Series shall be maintained and adjusted
in accordance with the Code and the Treasury regulations including Treasury
Regulations Section 1.704-1(b)(2)(iv).

            (b) Time of Adjustment. For purposes of computing the balance in the
Capital Account of a Series, no credit shall be given for any Capital
Contribution which the Member is to make until such Capital Contribution is
actually received with respect of such Series.

            (c) Intent to Comply with Treasury Regulations. All provisions of
this Agreement relating to the maintenance of the Capital Account of a Series
are intended to comply with Treasury Regulations Section 1.704-1(b), and shall
be interpreted and applied in a manner consistent with such Treasury
Regulations. The applicable Member shall make any appropriate modifications in
the event unanticipated events might


                                       7
<PAGE>
otherwise cause this Agreement not to comply with Treasury Regulations Section
1.704-1(b).

      3.4 Separate Records. Separate and distinct records shall be maintained
for each Series. The Assets Associated with each Series shall be held and
accounted for separately from the other assets of the other Series.

                                   ARTICLE IV

                               PROFITS AND LOSSES

      4.1 Profits and Losses. Profits and losses in respect of a Series for any
Fiscal Year shall be allocated and credited to the Capital Account of each
Series.

      4.2 Series Separate. The debts, liabilities and obligations incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets of such Series only, and not against the
assets of the Company generally or any other Series hereof.

                                   ARTICLE V

                                  DISTRIBUTIONS

      5.1 Operating Distributions. Subject to Section 5.2, the Cash Available
For Distribution in respect of a Series shall, at such times as the Member
associated with such Series deems advisable, be distributed to such Member
associated with the Series.

                                   ARTICLE VI

                                   MEMBERSHIP

      6.1 Limitation of Liability. In addition to the procurence of Section 4.3
hereof, no Member shall not be individually liable under a judgment, decree or
order of a court, or in any other manner, for a debt, obligation or liability of
the Company or of any Series except as provided by law or in an agreement signed
by such Member. No Member shall be required to loan any funds to the Company or
in respect of any Series nor shall a Member be required to make any contribution
to the Company in respect of any Series, nor shall the Member be subject to any
liability to the Company or other Member or any third party, as a result of the
Member's negative Capital Account balance in respect of a Series. However,
nothing in this Agreement shall prevent the Member from making secured or
unsecured loans to the Company with respect of a Series.

      6.2 Powers of the Member. Each Member associated with a Series as it
relates to such Series shall have full, exclusive and complete discretion to
manage and control the business and affairs of the Company as it relates to such
Series, to make all decisions affecting the business and affairs of the Company
as it relates to such Series


                                       8
<PAGE>
and to take all such actions as it deems necessary, appropriate or convenient to
or for the furtherance of the purpose of the Company as it relates to such
Series, including, without limitation, the power and authority to execute all
documents and instruments, perform all duties and powers, and do all things on
behalf of the Company as it relates to such Series in all matters necessary,
desirable, convenient or incidental to the purpose of the Company as it relates
to such Series or to delegate to any other Person (including officers) such
power, authority and duties. The Member is an agent of the Company's business
and the actions of the Member taken in such capacity and in accordance with this
Agreement shall bind the Company with respect of the Series to which such Member
is associated. The Member shall be the sole Person with the power to bind the
Company in respect of the Series to which such Member is associated except and
to the extent that such power is expressly delegated to another Person by the
Member in this Agreement or in writing or by oral communication, and such
delegation shall not cause the Member to cease to be the Member. There shall not
be a "manager" (within the meaning of the Act) of the Company.

      6.3 Election of Officers. Members may from time to time appoint any
individuals as officers with such titles as the Members may deem appropriate.
The initial officer will be: Albo J. Antenucci, Jr., as President. Such officers
shall serve until their successors are duly appointed or until their earlier
removal or resignation. Any officer appointed by the Member may be removed at
any time by the Member and any vacancy in any officer shall be filled by the
Member.

      6.4 Member Approval of Actions by the Officers. Unless otherwise required
by this Agreement, actions and consents of the Members may be communicated or
reflected orally, electronically or in writing, and no action need be taken at a
formal meeting. Notwithstanding any other provision of this Agreement, no
officer shall cause or commit the Company or any Series to do any of the
following without the express written consent of the Member associated with the
Series with respect to which the action is being taken:

            (a) appoint and remove any other officer;

            (b) appoint a liquidator upon dissolution;

            (c) determine indemnification rights as set forth in this Agreement;

            (d) sell all or substantially all of the assets of the Company or of
any Series;

            (e) create any lien, mortgage, pledge or other security interest on
the assets of the Company or of any Series or securing indebtedness of any third
party whether or not for the benefit of the Company or any Series;

            (f) change the principal office of the Company or establish any
subsidiary offices of the Company;


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<PAGE>
            (g) commence a voluntary case under any bankruptcy, insolvency or
similar law by the Company or any Series;

            (h) adopt any employee benefit, profit sharing, incentive, bonus,
pension, retirement or option plans; and

            (i) any action requiring the approval of the Member under the Act.

      6.5 Transfer of Interest. The Interest of the Member is personal property,
and such Interest may be transferred or assigned, in whole or in part, in the
sole discretion of the Member.

                                  ARTICLE VII

                         DISSOLUTION OF THE COMPANY AND
                       TERMINATION OF A MEMBER'S INTEREST

      7.1 Dissolution. The Company shall be dissolved and its affairs wound up
when all of the Series have been terminated in accordance with the Act.

      7.2 Resignation. The Member may resign or withdraw as a Member associated
with a Series before the dissolution and winding up of the Company. Subject to
applicable law, if the Member resigns or withdraws, the Member will be entitled
to receive, within a reasonable time after resignation or withdrawal, such
consideration for the Interest with the Series as the Member shall determine in
its sole discretion.

      7.3 Distribution on Dissolution and Liquidation. In the event of the
dissolution of the Company for any reason (including the Company's liquidation
within the meaning of Treasury Regulation 1.704-1(b)(2)(ii)(g)) or of a Series
the business of the Company or of a Series shall be continued to the extent
necessary to allow an orderly winding up of its affairs, including the
liquidation and termination of the Company or of the Series pursuant to the
provisions of this Section 7.3 as promptly as practicable thereafter, and each
of the following shall be accomplished:

            (a) the Member associated with a Series shall elect or appoint a
liquidator for such Series;

            (b) the liquidator shall cause to be prepared a statement setting
forth the assets and liabilities of the Series as of the date of dissolution, a
copy of which statement shall be furnished to the Member associated with the
Series;

            (c) the assets of a Series shall be liquidated by the liquidator as
promptly as possible, but in an orderly and businesslike manner; the liquidator
may, in the exercise of its business judgment, determine not to sell all or any
portion of the assets,


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in which event such assets shall be distributed in kind based upon the fair
market value as of the date of such distribution;

            (d) any profits or losses realized with respect to a Series upon the
sale of its assets shall be recognized and allocated to the Member associated
with such Series;

            (e) the proceeds of sale and all other assets of the Series shall be
applied and distributed as follows and in the following order of priority:

                  (i) to the expenses of liquidation;

                  (ii) to the payment of the debts and liabilities of the
Series;

                  (iii) to the setting up of any reserves which the liquidator
shall determine to be reasonably necessary for contingent, unliquidated or
unforeseen liabilities or obligations of the Series or the Member associated
with the Series arising out of or in connection with the Series. Such reserves
shall be held by the liquidator or paid over to a bank or title company selected
by it, to be held by such bank or title company as escrow holder or liquidator
for the purposes of disbursing such reserves to satisfy the liabilities and
obligations described above; and

                  (iv) the balance (including amounts released from any
unnecessary reserves set up pursuant to Section 7.3(e)(iii)), if any, to the
Member associated with the Series.

                                  ARTICLE VIII

                                 INDEMNIFICATION

      8.1 Indemnification. Each Series shall indemnify each Covered Person to
the fullest extent permitted by law.

      8.2 Advance Payment of Expenses. The expenses of the Member and/or
Officers incurred in defending a civil or criminal action, suit or proceeding
shall be paid by the Series with which the Member and/or Officer is associated
as they are incurred and in advance of the final disposition of the action, suit
or proceeding, upon receipt of an undertaking by or on behalf of the Member to
repay the amount if it is ultimately determined by a court of competent
jurisdiction that the Member is not entitled to be indemnified by the Series.

      8.3 Determination of Right to Indemnification. Any indemnification under
Section 8.1, unless ordered by a court or advanced pursuant to Section 8.2
above, must be made by the Series only as authorized in the specific case upon a
determination that indemnification of the Covered Person is proper in the
circumstances. The determination must be made by the Member associated with the
Series or


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      8.4 Assets. Any indemnification under this Article VIII shall be satisfied
solely out of the assets of the Series involved.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

      9.1 Insurance. A Member associated with a Series may purchase and maintain
insurance, to the extent and in such amounts as the Member shall, in its sole
discretion, deem reasonable, on behalf of Covered Persons of such Series and
such other Persons as the Member shall determine, against any liability that may
be asserted against or expenses that may be incurred by any such Person in
connection with the activities of such Series.

      9.2 Amendments. This Agreement may be amended only by a writing signed by
each Member, provided, however, that any amendments related solely to a Series
may be effected by a writing signed by the Member associated with that Series.

      9.3 Applicable Law; Jurisdiction. This Agreement, and the rights and
obligations of the parties hereto, shall be interpreted and enforced in
accordance with and governed by the laws of the State of Delaware without regard
to the conflict laws of that State.

      9.4 Interpretation. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provisions contained
herein. In the interpretation of this Agreement, the singular may be read as the
plural, and vice versa, the neuter gender as the masculine or feminine, and vice
versa, and the future tense as the past or present, and vice versa, all
interchangeably as the context may require in order to fully effectuate the
intent of the parties and the transactions contemplated herein. Syntax shall
yield to the substance of the terms and provisions hereof.

      9.5 Counterparts and Facsimile Copies. Facsimile copies of this Agreement,
any counterpart of this Agreement or any approval or written consent of the
Member, and facsimile signatures hereon or thereon, shall have the same force
and effect as originals.

      9.6 Waivers. No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver, and n waiver shall
be binding unless evidenced by an instrument in writing and executed by the
party making the waiver.

      9.7 No Third Party Beneficiaries. This Agreement is made solely among and
for the benefit of the Members and the Company and their respective successors
and assigns, and no other Person shall have any rights, interest or claims
hereunder or be entitled to any benefits under or on account of this Agreement
as a third party beneficiary or otherwise.


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                           [signature page to follow]


                                       13
<PAGE>
      IN WITNESS WHEREOF, this Agreement was executed as of the date first-above
written.

                                            MEMBER and STRATOSPHERE
                                            DEVELOPMENT LLC, a Delaware
                                            limited-liability company

                                            STRATOSPHERE CORPORATION


                                            By: /s/ William F. Bischoff
                                                --------------------------------
                                            Name:  William F. Bischoff
                                            Title: Sr. V.P./CFO

                                            MEMBER and STRATOSPHERE
                                            DEVELOPMENT LLC, a Delaware
                                            limited-liability company

                                            ARIZONA CHARLIES INC.


                                            By: /s/ Ron Lurie
                                                --------------------------------
                                            Name:  Ron Lurie
                                            Title: Executive V.P./G.M.


                                            MEMBER and STRATOSPHERE
                                            DEVELOPMENT LLC, a Delaware
                                            limited-liability company

                                            FRESCA LLC


                                            By: /s/ Don Joshua
                                                --------------------------------
                                            Name:  Don Joshua
                                            Title: Executive V.P./G.M.