Exhibit
10.42


AMENDMENT
TO

PARK PLACE ENTERTAINMENT CORPORATION

1998 INDEPENDENT DIRECTOR STOCK OPTION PLAN,

AS AMENDED MAY 12, 2000


THIS AMENDMENT TO PARK PLACE ENTERTAINMENT CORPORATION
1998 INDEPENDENT DIRECTOR STOCK OPTION PLAN, AS AMENDED MAY 12, 2000, 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 Independent Director Stock Option Plan, as amended May 12, 2000 (the “Plan”);


WHEREAS, pursuant to Section 6 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(g) of the Plan is hereby amended to delete the amount “$.01” appearing
therein and to substitute the amount “$.10” therefor.


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


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









 



 


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


“(x)          ‘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(y) is hereby added to the Plan:


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


5.                                       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 total number of shares of Common Stock reserved and available for grant
under the Plan shall be adjusted to reflect the Merger.”


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


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


6.                                       The
following new sentence is hereby added to the end of the second paragraph of
Section 6 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.”


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


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









 



 


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


 


 


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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