Exhibit
10.40


AMENDMENT
TO

PARK PLACE ENTERTAINMENT CORPORATION

1998 STOCK INCENTIVE PLAN, AS AMENDED MAY 11, 2001


THIS AMENDMENT TO PARK PLACE ENTERTAINMENT CORPORATION
1998 STOCK INCENTIVE PLAN, AS AMENDED MAY 11, 2001, dated as of June 13, 2005,
is made and adopted by Harrah’s Operating Company, Inc. (“Harrah’s Operating
Company”), a Delaware corporation and a wholly owned subsidiary of Harrah’s
Entertainment, Inc., a Delaware corporation. 
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to them in the Plan (as defined below).


WHEREAS, Harrah’s Operating Company previously entered
into that certain Agreement and Plan of Merger, dated as of July 14, 2004 (the “Agreement”),
pursuant to which Caesars Entertainment, Inc., a Delaware corporation (“Caesars”),
upon the terms and subject to the conditions set forth in the Agreement, merged
with and into Harrah’s Operating Company, with Harrah’s Operating Company as
the surviving entity (the “Merger”);


WHEREAS, Caesars maintains the Park Place
Entertainment Corporation 1998 Stock Incentive Plan, as amended May 11, 2001
(the “Plan”);


WHEREAS, pursuant to Section 8 of the Plan, the Board
of Directors of the Corporation may at any time amend the Plan;


WHEREAS, Harrah’s Operating Company, as successor to
Caesars, desires to amend the Plan as set forth herein; and


WHEREAS, this Amendment was adopted by the Special
Plan Amendment Committee of Harrah’s Operating Company on June 13, 2005.


NOW, THEREFORE, in consideration of the foregoing,
Harrah’s Operating Company hereby amends the Plan as follows, effective as of
immediately after the consummation of the Merger:


1.                                       Section
1(k) of the Plan is hereby amended to delete the amount “$.01” appearing
therein and to substitute the amount “$.10” therefor.


2.                                       Section
1(l) of the Plan is hereby amended and restated in its entirety as follows:


“(l)          ‘Corporation’
means Harrah’s Entertainment, Inc., a Delaware corporation.”



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3.                                       The
following new Section 1(cc) is hereby added to the Plan:


“(cc)       ‘Harrah’s Merger Agreement’
shall mean that certain Agreement and Plan of Merger, dated as of July 14,
2004, pursuant to which Caesars Entertainment, Inc., a Delaware corporation,
merged with and into Harrah’s Operating Company, Inc., a Delaware corporation
and a wholly owned subsidiary of the Corporation, with Harrah’s Operating
Company, Inc. as the surviving entity.”


4.                                       The
following new Section 1(dd) is hereby added to the Plan:


“(dd)       ‘Harrah’s Merger Effective
Time’ shall mean the effective time of the merger (the “Merger”) pursuant to the Harrah’s Merger Agreement.”


5.                                       The
first paragraph of Section 2 of the Plan is hereby amended and restated in its
entirety as follows:


“The
Plan shall be administered by the Human Resources Committee of the Board (the ‘Committee’);
provided, however that the Human
Resources Committee may delegate to a committee of one or more members of the
Board the authority to grant or amend Awards to participants other than (i)
senior executives of the Corporation who are subject to Section 16 of the
Exchange Act or (ii) any officer or other employee (as defined in accordance
with Section 3401(c) of the Code) of the Corporation or any subsidiary who is,
or could be, a “covered employee” within the meaning of Section 162(m) of the
Code.  The Committee shall consist of at
least two individuals, each of whom qualifies as (i) a member of the Board who
qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(3) of the
Exchange Act, or any successor definition adopted by the Board, and (ii) an “outside
director” pursuant to Code Section 162(m) and the regulations issued
thereunder.  Reference to the Committee
shall refer to the Board if the Human Resources Committee ceases to exist and
the Board does not appoint a successor Committee.”


6.                                       Section
3 of the Plan is hereby amended as follows:


a.                                       The
first sentence of Section 3 of the Plan is hereby amended to add the phrase “Prior
to the Harrah’s Merger Effective Time,” to the beginning of the sentence.


b.                                      The
following new paragraph is hereby added following the first paragraph of
Section 3 of the Plan:


“Immediately
after the Harrah’s Merger Effective Time, the number of shares of Common Stock
reserved and available for grant under the Plan, the maximum number of shares
of Common Stock covered by Awards granted to any participant in any calendar
year, the maximum



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number of shares of
Common Stock covered by Special Options granted to the CEO in the aggregate,
and the maximum number of shares of Common Stock covered by Special Options
granted to the Chairman in the aggregate shall be adjusted to reflect the
Merger.”


c.             The following new sentence is hereby added to the end of
the second paragraph of Section 3 of the Plan:


“Effective immediately
after the Harrah’s Merger Effective Time, the outstanding Awards under this
Plan shall be adjusted to reflect the Merger, as provided by the Harrah’s
Merger Agreement.”


7.                                       The
following new paragraph is hereby added to the end of Section 8 of the Plan:


“Effective
immediately after the Harrah’s Merger Effective Time, the Special Plan
Amendment Committee of Harrah’s Operating Company, Inc. shall have the power to
amend this Plan as the Special Plan Amendment Committee deems necessary or
desirable to facilitate the integration of Caesars Entertainment, Inc. with
Harrah’s Operating Company, Inc. pursuant to the Merger.”


8.                                       This
Amendment shall be and is hereby incorporated in and forms a part of the Plan.


9.                                       All
other terms and provisions of the Plan shall remain unchanged except as
specifically modified herein.


10.                                 The
Plan, as amended by this Amendment, is hereby ratified and confirmed.


[SIGNATURE PAGE FOLLOWS]



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I hereby certify that the foregoing Amendment was duly
adopted by the Special Plan Amendment Committee of Harrah’s Operating Company,
Inc. on June 13, 2005.


	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Stephen H. Brammell

  
	
  Title:

  	
  Senior Vice President, General Counsel and

  
	
   

  	
  Corporate Secretary