Document:

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                                                                    Exhibit 10.4

                      -----------------------------------

                              Dated: January 1, 2000

                      -----------------------------------

                             EMPLOYMENT AGREEMENT

                              - by and between -

                         HOLLYWOOD CASINO CORPORATION

                                   -  and -

                              EDWARD T. PRATT III

                      -----------------------------------
<PAGE>

                      -----------------------------------

                                TABLE OF CONTENTS

                      -----------------------------------

                                                                      Page
                                                                      ----

     RECITALS.......................................................... 1

     1.  DEFINITIONS................................................... 2

     2.  PRIOR EMPLOYMENT.............................................. 3

     3.  BASIC EMPLOYMENT AGREEMENT.................................... 4

     4.  DUTIES OF EMPLOYEE............................................ 4

     5.  ACCEPTANCE OF EMPLOYMENT...................................... 5

     6.  TERM.......................................................... 5

     7.  SPECIAL TERMINATION PROVISIONS................................ 5

     8.  COMPENSATION TO EMPLOYEE...................................... 6
         (a)     Base Salary........................................... 6
         (b)     Base Salary Adjustment................................ 7
         (c)     Incentive Bonus....................................... 7
         (d)     Employee Benefit Plans................................ 7
         (e)     Expense Reimbursement................................. 8
         (f)     Licensing Expenses.................................... 8
         (g)     Vacations and Holidays................................ 8

     9.  LICENSING REQUIREMENTS........................................ 8

     10. CONFIDENTIALITY...............................................10

     11. RESTRICTIVE COVENANT..........................................11

     11. BEST EVIDENCE.................................................11

     12. SUCCESSION....................................................11

     13. ASSIGNMENT....................................................12

                                       i
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     14. AMENDMENT OR MODIFICATION.....................................12

     15. GOVERNING LAW.................................................12

     16. NOTICES.......................................................12

     17. INTERPRETATION................................................13

     18. SEVERABILITY..................................................13

     19. DISPUTE RESOLUTION............................................13

     20. WAIVER........................................................13

     21. PAROL.........................................................14

     EXECUTION PAGE....................................................15

                                      ii
<PAGE>

                      -----------------------------------

                               EMPLOYMENT AGREEMENT

                      -----------------------------------

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of the 1st day of January, 2000, by and between HOLLYWOOD CASINO CORPORATION, a
Delaware corporation ("Employer"), and EDWARD T. PRATT III("Employee").

                                W I T N E S S E T H:
                                -------------------

         WHEREAS, Employer is a corporation, duly organized and existing under
the laws of the State of Delaware, which develops and/or operates riverboat and
dockside casinos and related support facilities in emerging and established
gaming jurisdictions and which has a need for qualified, experienced personnel;

         WHEREAS, Employee is an adult individual currently residing at 3307
Beverly Drive, Dallas, Texas 75205;

         WHEREAS, Employee has represented and warranted to Employer that
Employee possesses sufficient qualifications and expertise in order to fulfill
the terms of the employment stated in this Agreement; and

         WHEREAS, Employer is willing to employ Employee, and Employee is
desirous of accepting employment from Employer, under the terms and pursuant to
the conditions set forth herein.

                                       1
<PAGE>

         NOW, THEREFORE, for and in consideration of the foregoing recitals, and
in consideration of the mutual covenants, agreements, understandings,
undertakings, representations, warranties and promises hereinafter set forth,
and intending to be legally bound thereby, Employer and Employee do hereby
covenant and agree as follows:

         1. DEFINITIONS.  As used in this Agreement, the words and terms
            -----------
hereinafter defined have the respective meanings ascribed to them herein, unless
a different meaning clearly appears from the context:

           (a)  "Cause" - means
                 -----

           (i) the conviction of Employee of a felony by a court of competent
           jurisdiction; (ii) the indictment of Employee by a state or federal
           grand jury of competent jurisdiction for embezzlement or
           misappropriation of Employer's funds or for any act of dishonesty or
           lack of fidelity towards Employer; (iii) a decree of a court of
           competent jurisdiction that Employee is not mentally competent or is
           unable to handle his own affairs; (iv) the written confession by
           Employee of any act of dishonesty towards Employer or any
           embezzlement or misappropriation of Employer's funds; (v) the payment
           (or, by the operation solely of the effect of a deductible, the
           failure of payment) by a surety or insurer of a claim under a
           fidelity bond issued to the benefit of Employer reimbursing Employer
           for a loss due to the wrongful act or wrongful omission to act of
           Employee (the occurrence of which shall cause Employee to be indebted
           to Employer for the greater of either (A) the loss incurred by
           Employer or (B) the sums paid by Employer to Employee pursuant to
           this Agreement); (vi) Employee's breach of the restrictive covenant
           set forth in Paragraph 11 of this Agreement, or (vii) Employee's
           failure to maintain in force and in good standing any and all
           licenses, permits and/or approvals required of Employee by the
           relevant governmental authorities for the discharge of the
           obligations of Employee under this Agreement, provided that should
           Employee's required licenses, permits and/or approvals be suspended
           pending a final license, permit or approval revocation determination,
           this Agreement shall not terminate but any compensation which would
           otherwise be paid by Employer to Employee under Paragraph 8 of this
           Agreement shall be suspended and accrued pending the final resolution
           of such final license, permit and/or approval revocation
           determination, and, in the event such final resolution of such final
           license, permit and/or approval revocation determination does not
           revoke Employee's licenses, permits

                                       2
<PAGE>

           and/or approvals, any compensation which has been so suspended and
           accrued shall be paid by Employer to Employee, provided, however,
           that Employee's disability due to illness or accident or any other
           mental or physical incapacity shall not constitute "Cause" as defined
           herein.

          (b) "Complete Disability" - means the inability of Employee, due to
               -------------------
          illness or accident or other mental or physical incapacity, to perform
          his obligations under this Agreement for a period of three hundred
          sixty (360) calendar days in the aggregate over a period of five
          hundred (500) consecutive calendar days, such "Complete Disability" to
          become effective upon the expiration of such three hundred sixtieth
          (360th) day.

           (c) "Confidential Information" - means any information in any form,
                ------------------------
           regardless of the medium or media by which such information is
           recorded or communicated, that is in the possession of Employer being
           neither in the public domain nor routinely available to third
           parties, and if directly or indirectly disclosed to Employer's
           competitors (i) would assist such competitors in competing against
           Employer, (ii) would diminish or eliminate any competitive advantage
           now enjoyed by Employer,(iii) would cause financial injury or loss to
           Employer, or (iv) would reveal proprietary information or trade
           secrets of Employer.

            (d) "Effective Date" - means January 1, 2000.
                 --------------

            (e) "Employee" - means Edward T. Pratt III.
                 --------

            (f) "Employer" - means Hollywood Casino Corporation, a Delaware
                 --------
            corporation.

            (g) "Employer's Affiliates" - means any parent, subsidiary,
                 ---------------------
            affiliate or other legal entity of Employer.

            (h) "Prior Employment" - means any prior employment Employee has had
                 ----------------
            with either Employer or Employer's Affiliates.

         2. PRIOR EMPLOYMENT.  This Agreement supersedes and replaces any and
            ----------------
all prior employment agreements, whether written or oral, by and between
Employee, on the one side, and Employer or Employer's Affiliates, on the other
side, including, without limitation, that certain Employment Agreement dated as
of May 1, 1996, between Employer and Employee.  From and

                                       3
<PAGE>

after the Effective Date, Employee shall be the employee of Employer under the
terms and pursuant to the conditions set forth in this Agreement.

         3. BASIC EMPLOYMENT AGREEMENT.  Subject to the terms and pursuant to
            --------------------------
the conditions hereinafter set forth, Employer hereby employs Employee during
the Term hereinafter specified to serve in a managerial or executive capacity,
under a title and with such duties not inconsistent with those set forth in
Paragraph 4 of this Agreement, as the same may be modified and/or assigned to
Employee by Employer from time to time.  Notwithstanding the foregoing, Employer
and Employee hereby covenant and agree that, in the absence of mutual consent of
both Employer and Employee, Employee shall not be assigned duties by Employer
which would require that Employee maintain his principal place of residence or
primary place of employment outside of the greater metropolitan area of Dallas,
Texas.

         4. DUTIES OF EMPLOYEE.   Employee shall perform such duties assigned to
            ------------------
Employee by Employer as are generally associated with the duties of President
and Chief Operating Officer of Employer, or such similar duties as may be
assigned to Employee by the Chairman of the Board of Directors of Employer,
including but not limited to (i) the efficient and continuous operation of
Employer and Employer's Affiliates; (ii) the preparation of relevant budgets and
allocation of relevant funds; (iii) the selection and delegation of duties and
responsibilities of subordinates; (iv) the direction, review and oversight of
all operations and programs under Employee's supervision; and (v) such other and
further duties specifically related to such duties as assigned by Employer to
Employee.  In the performance of his duties hereunder, Employee shall report
directly to the Chairman of the Board/Chief Executive Officer and the Board of
Directors of Employer.  Notwithstanding the foregoing, Employee shall devote
such time
<PAGE>

to Employer's Affiliates as required by Employer, provided such duties are not
inconsistent with Employee's primary duties to Employer hereunder.

         5. ACCEPTANCE OF EMPLOYMENT.  Employee hereby unconditionally accepts
            ------------------------
the employment set forth hereunder, under the terms and pursuant to the
conditions set forth in this Agreement.  Employee hereby covenants and agrees
that, during the Term of this Agreement, Employee will devote the whole of his
normal and customary working time and best efforts solely to the performance of
Employee's duties under this Agreement.

         6. TERM.  The term of this Agreement shall commence on January 1, 2000
            ----
and expire on 12:00 p.m. on December 31, 2003 (the "Term"), unless sooner
terminated as provided herein.

         7. SPECIAL TERMINATION PROVISIONS.  Notwithstanding the provisions of
            ------------------------------
Paragraph 6 above, this Agreement and all parties' rights and obligations
hereunder shall terminate upon the occurrence of any of the following events:

          (a) the death of Employee; provided, however, that any and all
                                     --------  -------
          employee benefits due and owing to Employee shall be paid to the
          spouse of Employee in the event of such death;

          (b) the giving of written notice from Employer to Employee of the
          termination of this Agreement upon the Complete Disability of
          Employee; provided, however, that a termination pursuant to this
          Paragraph 7(b) shall not affect Employee's vesting or continued rights
          in any stock option plan set forth in Paragraph 8(c) of this
          Agreement;

          (c) the giving of written notice by Employer to Employee of the
          termination of this Agreement upon the discharge of Employee for
          Cause;

          (d) the giving of written notice by Employer to Employee of the
          termination of this Agreement without Cause; provided, however, that,
                                                       --------  -------
          if Employer gives Employee written notice of termination of this
          Agreement without Cause, such notice must be accompanied by Employer's
          written tender to Employee of Employer's commitment to

                                       5
<PAGE>

           continue to pay to Employee the compensation set forth in Paragraph
           8(a) of this Agreement; and/or

           (e)   a Change of Control (as defined in that certain Indenture dated
           as of May 19, 1999, among Employer, HWCC-Tunica, Inc., HWCC-
           Shreveport, Inc. and State Street Bank and Trust Company, as
           Trustee); provided, however, that, in the event of such Change of
                     --------  -------
           Control, Employer shall be obligated to pay to Employee an amount
           (the "Severance Amount") equal to the aggregate compensation which
           would have been paid by Employer to Employee under Paragraph 8(a) of
           this Agreement during the period (the "Severance Period") from the
           date of termination to the later to occur of the expiration date of
           this Agreement or thirty-six (36) months from the date of termination
           assuming that such termination had not occurred.  Employee shall have
           the right, exercisable by written notice to Employer, to elect to
           have the Severance Amount paid by Employer to Employee in (i) a lump
           sum payment not later than the date of occurrence of the Change of
           Control or (ii) equal monthly installments during the Severance
           Period.

        8. COMPENSATION TO EMPLOYEE.  For and in complete consideration for
           ------------------------
Employee's full and faithful performance of his duties under this Agreement,
Employer hereby covenants and agrees to pay to Employee, and Employee hereby
covenants and agrees to accept from Employer, the following items of
compensation:

          (a) Base Salary.  Employer hereby covenants and agrees to pay to
              -----------
Employee, and Employee hereby covenants and agrees to accept from Employer, an
annual base salary of Four Hundred Sixty-Eight Thousand and No/100 Dollars
($468,000.00), effective January 1, 2000, payable in such equal regular
installments as is Employer's custom and usage.  Such base salary shall be
exclusive of and in addition to any other benefits which Employer, in its sole
discretion, may make available to Employee, including, but not limited to, any
pension plans, bonus plans, retirement plans, company life insurance plan,
medical and/or hospitalization plans, or any and all

                                       6
<PAGE>

other benefit plans which may from time to time be in available to executive
officers of Employer generally during the Term of this Agreement.

          (b) Base Salary Adjustment.  The base salary prescribed in Paragraph
              ----------------------
8(a) above may be adjusted at such time and in such manner as the Compensation
Committee of the Board of Directors of Employer may determine in accordance with
the executive compensation policy of Employer then in effect; provided, however,
                                                              --------  -------
that such base salary shall never be less than $468,000 per annum.

          (c) Incentive Bonus.  Employee shall be eligible to receive one or
              ---------------
more incentive compensation bonuses based upon such performance and other
criteria as Employer shall determine in its sole discretion.  After the
Effective Date of this Agreement, Employer will implement an incentive bonus
program in which Employee will participate and which will be used to determine
Employee's incentive bonus.  The incentive bonus shall be payable by Employer to
Employee no later than the first day of March of the year following the calendar
year for which the incentive bonus is accrued (or in accordance with the terms
of any applicable incentive bonus program), and, where applicable, shall be
prorated based upon the number of days Employee was employed by Employer during
such calendar year.  Any incentive bonus shall be in addition to Employee's
participation in any and all profit sharing plans, bonus participation plans,
stock options or other incentive compensation to which Employee is entitled to
participate or receive.

          (d) Employee Benefit Plans.  Employer hereby covenants and agrees that
              ----------------------
it shall include Employee, if otherwise eligible, in any pension plans,
retirement plans, company life insurance plans, medical and/or hospitalization
plans, and/or any and all other benefit plans which may be placed in effect by
Employer during the Term of this Agreement.

                                       7
<PAGE>

         (e) Expense Reimbursement.  During the Term of this Agreement, Employer
             ---------------------
shall either pay directly or reimburse Employee for Employee's reasonable
expenses incurred for the benefit of Employer in accordance with Employer's
general policy regarding reimbursement, as the same may be amended, modified or
changed from time to time.  Such reimbursable expenses shall include, but are
not limited to, reasonable entertainment and promotional expenses, gift and
travel expenses, dues and expenses of membership in clubs, professional
societies and fraternal organizations, and the like.  Prior to reimbursement,
Employee shall provide Employer with sufficient detailed invoices of such
expenses in accordance with the then applicable guidelines of the Internal
Revenue Service so as to permit Employer to claim a deduction of such expenses.

          (f) Licensing Expenses.  Employer hereby covenants and agrees that
              ------------------
Employer shall pay all licensing fees and expenses incurred by Employee in
securing and maintaining such licenses and permits required of Employee in order
to perform his duties under this Agreement.

          (g) Vacations and Holidays.  Commencing as of the Effective Date of
              ----------------------
this Agreement, Employee shall be entitled to (i) annual paid vacation leave in
accordance with Employer's standard policy therefor, to be taken at such times
as selected by Employee and approved by Employer, and (ii) the following paid
holidays (or, at Employer's option, an equivalent number of paid days off):  New
Year's Day, Dr. Martin Luther King, Jr.'s Birthday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.

          9.  LICENSING REQUIREMENTS.  (a)  Employer and Employee hereby
              ----------------------
covenant and agree that this Agreement may be subject to the approval of (i) the
Illinois Gaming Board (the "IGB") pursuant to the provisions of the Illinois
Riverboat Gambling Act, as amended (the "Illinois Gaming Act"), and the
regulations promulgated thereunder, (ii) the Mississippi Gaming

                                       8
<PAGE>

Commission (the "MGC") pursuant to the provisions of the Mississippi Gaming
Control Act, as amended (the "Mississippi Gaming Act"), and the regulations
promulgated thereunder, (iii) the Louisiana Gaming Control Board (the "LGCB")
pursuant to the provisions of the Louisiana Riverboat Economic Development and
Gaming Control Act, as amended (the "Louisiana Gaming Act"), and the regulations
promulgated thereunder, and/or (iv) any and all other applicable gaming
authorities (the "Other Gaming Authorities") and any and all other applicable
gaming statutes (the "Other Gaming Acts") and the regulations promulgated
thereunder. If this Agreement is required by the Illinois Gaming Act, the
Mississippi Gaming Act, the Louisiana Gaming Act and/or the Other Gaming Acts
and the regulations promulgated thereunder to be approved by the IGB, the MGC,
the LGCB and/or the Other Gaming Authorities, as applicable, but is not so
approved by any such gaming regulatory authority, this Agreement shall
immediately terminate and shall be null and void and of no further force or
effect; provided, however, should this Agreement be required to be approved but
is not so approved by the IGB, the MGC, the LGCB and/or the Other Gaming
Authorities, Employer and Employee hereby covenant and agree that, with the
exception of the provisions of Paragraph 8 of this Agreement, this Agreement
shall be modified and amended so as to receive the appropriate approval from the
IGB, the MGC, the LGCB and/or the Other Gaming Authorities.

         (b) Employer and Employee hereby covenant and agree that, in order for
Employee to discharge the duties required under this Agreement, Employee shall
hold any necessary and appropriate casino key employee license (the "License")
in gaming jurisdictions in which Employer or Employer's Affiliates may now or
hereafter maintain casino operations.  In the event that any applicable gaming
regulatory authority (the "Authority") objects to the renewal of

                                       9
<PAGE>

Employee's License or refuses to renew Employee's License, Employer, at
Employer's sole cost and expense, shall promptly defend such action and shall
take such reasonable steps as may be required to either remove the Authority's
objections or secure the Authority's approval. Notwithstanding the foregoing, if
the source of the Authority's objections or the Authority's refusal to renew
Employee's License arise as a result of any of the events described in Paragraph
1(a) of this Agreement, Employer's obligations under this Paragraph 9 shall not
be operative and Employee shall promptly reimburse Employer upon demand for any
expenses incurred by Employer pursuant to this Paragraph 9.

         10.  CONFIDENTIALITY.  Employee hereby warrants, covenants and agrees
              ---------------
that, without the prior express written approval of Employer, Employee shall
hold in the strictest confidence and shall not disclose to any person, firm,
corporation or other entity, any and all of Employer's Confidential Information,
including, but not limited to, (i) information, letters, photographs, graphs,
samples, or computer software of a confidential nature; (ii) information or
other documents concerning Employer's business, customers or suppliers; (iii)
Employer's marketing methods, files and credit and collection techniques and
files; or (iv) Employer's trade secrets, technical information, design, process,
procedure, improvement and other "know-how" or information not of a public
nature, regardless of how such information came into the custody of Employee.
The warranty, covenant and agreement set forth in this Paragraph 10 shall not
expire, shall survive this Agreement and shall be binding upon Employee without
regard to the passage of time or other events.

                                      10
<PAGE>

         11.  RESTRICTIVE COVENANT.  Employee hereby covenants and agrees that,
              --------------------
during the Term of this Agreement or until December 31, 2004, if Employer
terminates Employee pursuant to Paragraph 7(d) above and is continuing to make
payments to Employee as provided therein, Employee shall not directly or
indirectly, either as a principal, agent, employee, employer, consultant,
partner, shareholder of a closely held corporation or shareholder in excess of
five percent (5%) of a publicly traded corporation, corporate officer or
director, or in any other individual or representative capacity, engage or
otherwise participate in any manner or fashion in any business that is in
competition in any manner whatsoever with the principal business activity of
Employer or Employer's Affiliates, in or about any state in which Employer or
Employer's Affiliates are licensed to conduct casino operations (the "Operating
States"), including without limitation any waterways which are wholly within the
Operating States, which are partly within the Operating States and partly
without the Operating States, or which form a boundary between the Operating
States and any other state or body public.  Employee hereby further acknowledges
and agrees that the restrictive covenant contained in this Paragraph 11 is
reasonable as to duration, terms and geographical area and that the same
protects the legitimate interests of Employer and Employer's Affiliates, imposes
no undue hardship on Employee and is not injurious to the public.
Notwithstanding anything express or implied herein to the contrary, the
restrictive covenant contained in this Paragraph 11 shall not apply in the event
of the termination of this Agreement due to a Change of Control.

         12.  BEST EVIDENCE.  This Agreement shall be executed in original and
              -------------
"Xerox" or photostatic copies and each copy bearing original signatures in ink
shall be deemed an original.

         13.  SUCCESSION.  This Agreement shall be binding upon and inure to the
              ----------
benefit of Employer and Employee and their respective successors and assigns.

                                      11
<PAGE>

         14.  ASSIGNMENT.  Employee shall not assign this Agreement or delegate
              ----------
his duties hereunder without the express written prior consent of Employer
thereto. Any purported assignment by Employee in violation of this Paragraph 14
shall be null and void and of no force or effect. Employer shall have the right
to assign this Agreement freely; provided, however, that in the event of such an
assignment by Employer and the assignee subsequently defaults under the terms of
this Agreement, Employer shall remain liable for compliance with the terms of
Paragraph 8 of this Agreement.

         15.  AMENDMENT OR MODIFICATION.  This Agreement may not be amended,
              -------------------------
modified, changed or altered except by a writing signed by both Employer and
Employee.
         16.  GOVERNING LAW.  This Agreement shall be governed by and construed
              -------------
in accordance with the laws of the State of Texas in effect on the Effective
Date of this Agreement.

         17.  NOTICES.  Any and all notices required under this Agreement shall
              -------
be in writing and shall either hand-delivered; mailed by certified mail, return
receipt requested; or sent via telecopier addressed to:

         TO EMPLOYER:             Chairman of the Board
         -----------              Hollywood Casino Corporation
                                  Two Galleria Tower, Suite 2200
                                  13455 Noel Road, LB 48
                                  Dallas, Texas 75240

         WITH COPY TO:            General Counsel
         ------------             Hollywood Casino Corporation
                                  Two Galleria Tower, Suite 2200
                                  13455 Noel Road, LB 48
                                  Dallas, Texas 75240

         TO EMPLOYEE:             Edward T. Pratt III
         -----------              3307 Beverly Drive
                                  Dallas, Texas 75205

                                      12
<PAGE>

     All notices hand-delivered shall be deemed delivered as of the date
actually delivered.  All notices mailed shall be deemed delivered as of three
(3) business days after the date postmarked. All notices sent via telecopier
shall be deemed delivered as of the next business day following the date of the
confirmation of delivery.  Any changes in any of the addresses listed herein
shall be made by notice as provided in this Paragraph 17.

         18.  INTERPRETATION.  The preamble recitals to this Agreement are
              --------------
incorporated into and made a part of this Agreement.  Titles of paragraphs are
for convenience only and are not to be considered a part of this Agreement.

         19.  SEVERABILITY.  In the event any one or more provisions of this
              ------------
Agreement is declared judicially void or otherwise unenforceable, the remainder
of this Agreement shall survive and such provision(s) shall be deemed modified
or amended so as to fulfill the intent of the parties hereto.

         20.  DISPUTE RESOLUTION.  Except for equitable actions seeking to
              ------------------
enforce the provisions of Paragraphs 10 and 11 of this Agreement, jurisdiction
and venue for which is hereby granted to Dallas County, Texas, any and all
claims, disputes or controversies arising between the parties hereto regarding
any of the terms of this Agreement or the breach thereof, on the written demand
of either of the parties hereto, shall be submitted to and be determined by
final and binding arbitration held in Dallas, Texas, in accordance with the
Employment Dispute Resolution Rules of the American Arbitration Association.
This Agreement to arbitrate shall be specifically enforceable in any court of
competent jurisdiction.

         21.  WAIVER.  None of the terms of this Agreement, including this
              ------
Paragraph 21, or any term, right or remedy hereunder shall be deemed waived
unless such waiver is in writing and

                                      13
<PAGE>

signed by the party to be charged therewith and in no event by reason of any
failure to assert or delay in asserting any such term, right or remedy or
similar term, right or remedy hereunder.

         22.  PAROL.  This Agreement constitutes the entire agreement between
              -----
Employer and Employee with respect to the subject matter hereto and this
Agreement supersedes any prior understandings, agreements or undertakings by and
between Employer and Employee with respect to the subject matter hereof.

                                      14
<PAGE>

       IN WITNESS WHERE AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties
hereto have executed and delivered this Agreement as of the year and date first
above written.
                              EMPLOYER:
                              --------

                              HOLLYWOOD CASINO CORPORATION, a
                              Delaware corporation

                              By: /s/ Jack E. Pratt
                                  --------------------------------------
                                  Name: Jack E. Pratt
                                  Title: Chairman of the Board
                                  & Chief Executive Officer

                              EMPLOYEE:
                              --------

                              /s/ Edward T. Pratt III
                              ------------------------------------------
                              EDWARD T. PRATT III

                                      15<PAGE>

                                                                   Exhibit 10.20

                      -----------------------------------

                              Dated: January 1, 2000

                      -----------------------------------

                               EMPLOYMENT AGREEMENT

                              -  by and between -

                           HOLLYWOOD CASINO CORPORATION

                                    - and -

                                  PAUL C. YATES

                      -----------------------------------
<PAGE>

                      -----------------------------------

                                TABLE OF CONTENTS

                      -----------------------------------

                                                                      Page
                                                                      ----

RECITALS............................................................... 1

        1.      DEFINITIONS............................................ 1

        2.      PRIOR EMPLOYMENT....................................... 3

        3.      BASIC EMPLOYMENT AGREEMENT............................. 3

        4.      DUTIES OF EMPLOYEE..................................... 3

        5.      ACCEPTANCE OF EMPLOYMENT............................... 3

        6.      TERM................................................... 4

        7.      SPECIAL TERMINATION PROVISIONS......................... 4

        8.      COMPENSATION TO EMPLOYEE............................... 4
                (n)     Base Salary.................................... 4
                (b)     Incentive Compensation Plan.................... 5
                (c)     Employee Benefit Plans......................... 5
                (d)     Expense Reimbursement.......................... 6
                (e)     Licensing Expenses............................. 6
                (f)     Vacations and Holidays......................... 6

        9.      LICENSING REQUIREMENTS................................. 7

        10.     TERMINATION BY EMPLOYEE................................ 8

        11.     CONFIDENTIALITY........................................ 9

        12.     RESTRICTIVE COVENANT................................... 9

        13.     BEST EVIDENCE..........................................10

        14.     SUCCESSION.............................................10

                                       i
<PAGE>

        15.     ASSIGNMENT.............................................11

        16.     AMENDMENT OR MODIFICATION..............................11

        17.     GOVERNING LAW..........................................11

        18.     NOTICES................................................11

        19.     INTERPRETATION.........................................12

        20.     SEVERABILITY...........................................12

        21.     DISPUTE RESOLUTION.....................................12

        22.     WAIVER.................................................12

        23.     PAROL..................................................13

        24.     EXECUTION PAGE.........................................14

                                      ii
<PAGE>

                  ____________________________________________

                               EMPLOYMENT AGREEMENT
                  ____________________________________________

          THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 1/st/ day of January, 2000, by and between HOLLYWOOD CASINO CORPORATION, a
Delaware corporation ("Employer"), and PAUL C. YATES ("Employee").

                             W I T N E S S E T E T H:

          WHEREAS, Employer is a corporation, duly organized and existing under
the laws of the State of Delaware, which owns and operates various casino
properties throughout the United States and which has a need for qualified,
experienced personnel; and

          WHEREAS, Employee is an adult individual currently residing at 6310
Lakehurst Avenue, Dallas, Texas 75230;

          NOW, THEREFORE, for and in consideration of the foregoing recitals,
and in consideration of the mutual covenants, agreements, understandings,
undertakings, representations, warranties and promises hereinafter set forth,
and intending to be legally bound thereby, Employer and Employee do hereby
covenant and agree as follows:

          1.    DEFINITIONS.  As used in this Agreement, the words and terms
                -----------
hereinafter defined have the respective meanings ascribed to them herein, unless
a different meaning clearly appears from the context:

                (a) "Just Cause" means any of the following: (i) the Employee's
                     ----------
                willful refusal to perform, or his substantial neglect of, the
                duties assigned to the Employee pursuant to Paragraph 4 hereof
                (for any reason other than as the result of a Complete
                Disability), and the failure by the Employee to promptly cure
                the breach or failure of performance upon written notice thereof
                from the Employer; (ii) Employee's willful engagement in any
                personal misconduct
<PAGE>

                involving dishonesty, illegality, or moral turpitude which is
                materially detrimental or materially injurious to the business
                interests, reputation or goodwill of Employer or Employer's
                Affiliates; (iii) Employee's willful engagement in any material
                act of dishonesty, disloyalty, or infidelity against Employer or
                Employer's Affiliates; (iv) the material breach by the Employee
                of his covenants under this Agreement, and the failure by the
                Employee to promptly cure the breach or failure of performance
                upon written notice thereof from the Employer; (v) Employee's
                willful violation of any material policy established by Employer
                with respect to the operation of Employer's business and
                affairs, or the conduct of Employer's employees; (vi) Employee's
                insubordination with respect to, or willful failure, in any
                material respect, to carry out all reasonable and lawful
                instructions issued by, the President or Chief Executive Officer
                of Employer and the failure by the Employee to promptly cure
                such failure to perform upon written notice thereof from the
                Employer; and (vii) Employee's failure to maintain in force and
                in good standing any and all licenses, permits and/or approvals
                required of Employee by the relevant governmental authorities
                for the discharge of the obligations of Employee under this
                Agreement and such failure is not the result of any negligence
                or omission by the Employer. All determinations of the existence
                of "Just Cause," including without limitation any determination
                with respect to performance, reasonableness, effectiveness,
                materiality and injury, shall be made in good faith by the
                Employer's Board of Directors and shall be conclusive as to all
                parties.

                (b) "Complete Disability" means the inability of Employee, due
                     -------------------
                to illness or accident or other mental or physical incapacity,
                to perform his obligations under this Agreement for a period of
                one hundred eighty (180) calendar days in the aggregate over a
                period of five hundred (500) consecutive calendar days, such
                "Complete Disability" to become effective upon the expiration of
                such one hundred eightieth (180th) day.

                (c) "Effective Date" means the date first above written.
                     --------------

                (d) "Employee" means Employee as earlier defined in this
                     --------
                Agreement.

                (e) "Employer" means Employer as earlier defined in this
                     --------
                Agreement.

                (f) "Employer's Affiliates" means any parent or subsidiary
                     ---------------------
                corporation or other legal entity of Employer.

                (g) "Prior Employment" means any prior employment Employee
                     ----------------
                has had with either Employer or Employer's Affiliates.

                                       2
<PAGE>

          2.  PRIOR EMPLOYMENT.  This Agreement supersedes and replaces any and
              ----------------
all prior employment agreements, whether written or oral, by and between
Employee, on the one side, and Employer or Employer's Affiliates, on the other
side, including, without limitation, that certain Employment Agreement dated as
of May 11, 1998, between Employer and Employee. From and after the Effective
Date, Employee shall be the employee of Employer under the terms and pursuant to
the conditions set forth in this Agreement.

          3.  BASIC EMPLOYMENT AGREEMENT.  Subject to the terms and pursuant to
              --------------------------
the conditions hereinafter set forth, Employer hereby employs Employee during
the Term hereinafter specified to serve in a managerial or executive capacity,
under a title and with such duties not inconsistent with those set forth in
Paragraph 4 of this Agreement, as the same may be modified and/or assigned to
Employee by Employer from time to time pursuant to the terms of this Agreement.

          4.  DUTIES OF EMPLOYEE. Employee shall perform such duties assigned
              ------------------
to Employee by Employer as are generally associated with the duties of Executive
Vice President and Chief Financial Officer, including but not limited to (i)
primary responsibility for all of the finance, accounting, tax, budgeting and
investor relations functions of the Employer and its Affiliates, (ii) the
management, selection and supervision of employees of Employer and its
Affiliates that perform any of the forgoing duties, and (iii) such other and
further duties specifically related to such duties as may be assigned by
Employer to Employee.

          5.  ACCEPTANCE OF EMPLOYMENT. Employee hereby unconditionally accepts
              ------------------------
the employment set forth hereunder, under the terms and pursuant to the
conditions set forth in this Agreement.  Employee hereby covenants and agrees
that, during the Term of this

                                       3
<PAGE>

Agreement, Employee will devote the whole of his normal and customary working
time and best efforts solely to the performance of Employee's duties under this
Agreement.

          6.  TERM. The term of this Agreement (the "Term") shall commence on
              ----
the Effective Date and, unless sooner terminated as provided herein, expire on
December 31, 2002.

          7.  TERMINATION BY THE EMPLOYER. Notwithstanding the provisions of
              ---------------------------
Paragraph 6 above, this Agreement and each party's rights and obligations
hereunder shall terminate upon the occurrence of any of the following events:

              (a) the death of Employee;

              (b) the giving of written notice from Employer to Employee of the
              termination of this Agreement upon the Complete Disability of
              Employee;

              (c) the giving of written notice by Employer to Employee of the
              termination of this Agreement upon the discharge of Employee for
              Just Cause; or

              (d) the giving of written notice by Employer to Employee of the
              termination of this Agreement without Just Cause; provided,
              however, that such notice must be accompanied by Employer's
              written tender to Employee of Employer's unconditional commitment
              to continue to pay to Employee the Base Salary and Minimum Bonus
              as set forth in Paragraphs 8(a) and 8(b) of this Agreement for the
              remainder of the Term of this Agreement.

          8.  COMPENSATION TO EMPLOYEE. For and in complete consideration of
              ------------------------
Employee's full and faithful performance of his duties under this Agreement,
Employer hereby covenants and agrees to pay to Employee, and Employee hereby
covenants and agrees to accept from Employer, the following items of
compensation:

          (a) Base Salary. Employer hereby covenants and agrees to pay to
              -----------
Employee, and Employee hereby covenants and agrees to accept from Employer, an
annual base salary (the "Base Salary") of (i) Two Hundred Seventy-Five Thousand
and No/100 Dollars ($275,000), effective on the Effective Date and continuing
through and including December 31, 2000 and (ii) Three

                                       4
<PAGE>

Hundred Thousand and No/100 Dollars ($300,000), effective as of January 1, 2001
and continuing throughout the remaining Term, payable in such equal regular
installments as is Employer's custom and usage. Such base salary shall be
exclusive of and in addition to any other benefits which Employer, in its sole
discretion, may make available to Employee, including, but not limited to, any
pension plans, bonus plans, retirement plans, company life insurance plan,
medical and/or hospitalization plans, or any and all other benefit plans which
may from time to time be in available to executive officers of Employer
generally during the Term of this Agreement.

          (b)     Incentive Compensation Plan.  In addition to receiving the
                  ---------------------------
Base Salary, Employee shall also be entitled to participate in the incentive
compensation plan of the Corporation as and when implemented.  Employee will
participate on the same terms as senior executive officers of Employer
generally.  The incentive compensation will be payable by Employer to Employee
in accordance with the terms of such incentive compensation plan, and, where
applicable, shall be prorated based upon the number of weeks Employee was
employed by Employer during such calendar year.  Any incentive compensation
shall be in addition to Employee's participation in any and all profit sharing
plans, bonus participation plans, stock option plans or other incentive
compensation and profit sharing plans which are from time to time made generally
available by Employer to Employer's Affiliates to senior executive officers.
Notwithstanding anything to the contrary set forth in this Agreement, Employee's
additional compensation under this Paragraph 8(b) will in no event be less than
$75,000 during any year of the Term (the "Minimum Bonus").

          (c)     Employee Benefit Plans. Employer hereby covenants and agrees
                  ----------------------
that it shall include Employee, if otherwise eligible, in any pension plans,
retirement plans, company life

                                       5
<PAGE>

insurance plans, medical and/or hospitalization plans, and/or any and all other
benefit plans which may be placed in effect by Employer during the Term of this
Agreement. In the event that the Employer terminates the Employee without Just
Cause pursuant to Paragraph 7(d) of this Agreement, the Employer shall continue
to include the Employee in the employee benefits plans described in this
Paragraph 8(c) for the remainder of the Term of this Agreement.

          (d)  Expense Reimbursement.  During the Term of this Agreement,
               ---------------------
Employer shall either pay directly or reimburse Employee for Employee's
reasonable expenses incurred for the benefit of Employer in accordance with
Employer's general policy regarding reimbursement, as the same may be amended,
modified or changed from time to time. Such reimbursable expenses shall include,
but are not limited to, reasonable entertainment and travel expenses, dues and
expenses of membership in professional societies and the like. Prior to
reimbursement, Employee shall provide Employer with sufficient detailed invoices
of such expenses in accordance with the then applicable guidelines of the
Internal Revenue Service so as to permit Employer to claim a deduction of such
expenses.
          (e)  Licensing Expenses.  Employer hereby covenants and agrees that
               ------------------
Employer shall pay all licensing fees and expenses incurred by Employee in
securing and maintaining such licenses and permits required of Employee in order
to perform his duties under this Agreement.

          (f)  Vacations and Holidays.  Commencing as of the Effective Date of
               ----------------------
this Agreement, Employee shall be entitled to (i) annual paid vacation leave in
accordance with Employer's standard policy therefor, to be taken at such times
as selected by Employee and approved by Employer, and (ii) the following paid
holidays (or, at Employer's option, an equivalent number of paid days off): New
Year's Day, Memorial Day, Independence Day, Labor

                                       6
<PAGE>

Day, Thanksgiving Day, Christmas Day and up to three (3) additional floating
holidays which vary from year to year.

          9.   LICENSING REQUIREMENTS.
               ----------------------

          (a)      Employer and Employee hereby covenant and agree that this
Agreement may be subject to the approval of the Illinois Gaming Board, the
Mississippi Gaming Commission, the Louisiana Gaming Control Board and any other
jurisdiction in which Employer or Employer's Affiliates conducts business
(collectively, the "Gaming Authorities") pursuant to the provisions of the
Illinois Riverboat Gambling Act, the Mississippi Gaming Control Act, the
Louisiana Riverboat Economic Development and Gaming Control Act and any other
applicable law and the regulations promulgated thereunder (collectively, the
"Gaming Acts").   In the event this Agreement is required to be approved by the
Gaming Authorities and is not so approved by the Gaming Authorities, then both
the Employer and the Employee covenant that they will attempt in good faith to
enter into a modified agreement that would be approved by the Gaming Authorities
provided, however, that, in no event will any modified agreement reduce the Base
Salary and Minimum Bonus provisions of Paragraphs 8(a) and 8(b) of this
Agreement.  In the event that the Employer and Employee cannot in good faith
enter into a modified agreement or if a modified agreement is not approved by
the Gaming Authorities, then this Agreement shall immediately terminate and
shall be null and void and of no further force or effect.

          (b)      Employer and Employee hereby covenant and agree that, in
order for Employee to discharge the duties required under this Agreement,
Employee may be required to continue to hold casino key employee licenses (the
"Licenses") as issued by one or more Gaming Authorities pursuant to the terms of
the Gaming Acts and as otherwise required by this Agreement.

                                       7
<PAGE>

In the event that any of the Gaming Authorities objects to the renewal of
Employee's License, or any of the Gaming Authorities refuses to renew Employee's
applicable License, Employer, at Employer's sole cost and expense, shall
promptly defend such action and shall take such reasonable steps as may be
required to attempt to secure such Gaming Authority's approval. The foregoing
notwithstanding, if such Gaming Authority's refusal to renew Employee's License
arises as a result of any of the events described in Paragraph 1(a) of this
Agreement, Employer's obligations under this Paragraph 9 shall not be operative
and Employee shall promptly reimburse Employer upon demand for any expenses
incurred by Employer pursuant to this Paragraph 9.

          10.     TERMINATION BY EMPLOYEE.     The Employee shall have the
                  -----------------------
option to terminate this Agreement, effective upon the effective date set forth
in written notice of such termination to the Employer, for "Good Reason".  For
purposes of this Agreement, Good Reason shall mean the occurrence of any one or
more of the following events: (i) any material breach of this Agreement by the
Employer that is not promptly remedied by the Employer after receipt of written
notice thereof from the Employee; and (ii) for any reason within one year
following the occurrence of a Change in Control (as defined in that certain
Indenture dated as of May 19, 1999, among Employer, HWCC-Tunica, Inc., HWCC-
Shreveport, Inc. and State Street Bank and Trust Company, as Trustee) (a "Change
in Control").  A termination of this Agreement by the Employee for Good Reason
shall be effectuated by giving Employer written notice of the termination,
setting forth in reasonable detail the specific conduct of the Employer that
constitutes Good Reason and the specific provision(s) of this Agreement on which
the Employee relies, and shall be given within sixty (60) days of the event
giving rise to the Good Reason.   Upon termination of this Agreement by the
Employee for Good Reason, the Employee shall be entitled to the unpaid

                                       8
<PAGE>

portion of the Base Salary and Minimum Bonus as set forth in Paragraphs 8(a) and
8(b) for the remainder of the Term of this Agreement.

          11.   CONFIDENTIALITY. Employee hereby warrants, covenants and
                ---------------
agrees that, without the prior express written approval of Employer, Employee
shall hold in the strictest confidence and shall not disclose to any person,
firm, corporation or other entity, any and all of Employer's confidential data,
including, but not limited to (i) information or other documents concerning
Employer's business, customers or suppliers; (ii) Employer's marketing methods,
files and credit and collection techniques and files; or (iii) Employer's trade
secrets and other "know-how" or information not of a public nature, regardless
of how such information came into the custody of Employee. The warranty,
covenant and agreement set forth in this Paragraph 11 shall not expire, shall
survive this Agreement and shall be binding upon Employee without regard to the
passage of time or other events.

          12.   RESTRICTIVE COVENANT.  Employee hereby covenants and agrees
                --------------------
that, during the Term of this Agreement, Employee shall not directly or
indirectly, either as a principal, agent, employee, employer, consultant,
partner, shareholder of a closely held corporation or shareholder in excess of
five percent (5%) of a publicly traded corporation, corporate officer or
director, or in any other individual or representative capacity, engage or
otherwise participate in any manner or fashion in any business that is in
competition in any manner whatsoever with the principal business activity of
Employer or Employer's Affiliates, in or about any state in which Employer or
Employer's Affiliates are licensed to conduct casino operations (the "Operating
States"), including any navigable waterways which are wholly within the
Operating States, which are partly within the Operating States and partly
without the Operating States, or which form a

                                       9
<PAGE>

boundary between the Operating States and any other state or body public.
Employee hereby further acknowledges and agrees that the restrictive covenant
contained in this Paragraph 12 is reasonable as to duration, terms and
geographical area and that the same protects the legitimate interests of
Employer and Employer's Affiliates, imposes no undue hardship on Employee and is
not injurious to the public.

          13.   BEST EVIDENCE. This Agreement shall be executed in original and
                -------------
"Xerox" or photostatic copies and each copy bearing original signatures in ink
shall be deemed an original.

          14.   SUCCESSION.
                ----------

          (a)   This Agreement shall be binding upon and inure to the benefit of
Employer and Employee and their respective successors and assigns; provided,
however, in the event of a Change of Control, Employer shall have the option, in
its sole discretion, to either (a) retain Employee for the services set forth in
Paragraph 4 and otherwise abide by the terms and conditions of this Agreement or
(b) terminate Employee's employment and pay to Employee an amount (the
"Severance Amount") equal to the aggregate Base Salary under Paragraph 8(a) and
the Minimum Bonus set forth under the last sentence of Paragraph 8(b) which
would have been paid by Employer to Employee during the period (the "Severance
Period") from the date of termination of the Agreement to the expiration of this
Agreement had it not been so terminated. Employer shall have the right,
exercisable by written notice to Employee, to elect to pay the Severance Amount
to Employee in (i) a lump sum payment not later than the date of occurrence of
the Change of Control or (ii) equal monthly installments during the Severance
Period.

          (b)   Except as otherwise set forth in the immediately preceding
sentence, the Employer will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Employer,

                                      10
<PAGE>

to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Employer would be required to perform it if no such
succession had taken place. Failure of the Employer to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Employee to compensation from the
Employer in the same amount and on the same terms as he would be entitled to
hereunder if he terminated this Agreement for Good Reason.

          15.   ASSIGNMENT. Employee shall not assign this Agreement or
                ----------
delegate his duties hereunder without the express written prior consent of
Employer thereto. Any purported assignment by Employee in violation of this
Paragraph 15 shall be null and void and of no force or effect.

          16.   AMENDMENT OR MODIFICATION. This Agreement may not be amended,
                -------------------------
modified, changed or altered except by a writing signed by both Employer and
Employee.
          17.   GOVERNING LAW. This Agreement shall be governed by and construed
                -------------
in accordance with the laws of the State of Texas in effect on the Effective
Date of this Agreement.

          18.   NOTICES. Any and all notices required under this Agreement shall
                -------
be in writing and shall be either hand-delivered; mailed by certified mail,
return receipt requested; or sent via telecopier addressed to:

            TO EMPLOYER:      Hollywood Casino Corporation
                              Two Galleria Tower, Suite 2200
                              13455 Noel Road, LB 48
                              Dallas, Texas 75240
                              Attention: General Counsel

            TO EMPLOYEE:      Paul C. Yates
                              6310 Lakehurst Avenue
                              Dallas, Texas 75230

                                      11
<PAGE>

          All notices hand-delivered shall be deemed delivered as of the date
actually delivered. All notices mailed shall be deemed delivered as of three (3)
business days after the date postmarked.  All notices sent via telecopier shall
be deemed delivered as of the next business day following the date of the
confirmation of delivery. Any changes in any of the addresses listed herein
shall be made by notice as provided in this Paragraph 18.

          19.   INTERPRETATION. The preamble recitals to this Agreement are
                --------------
incorporated into and made a part of this Agreement. Titles of paragraphs are
for convenience only and are not to be considered a part of this Agreement.

          20.   SEVERABILITY. In the event any one or more provisions of this
                ------------
Agreement is declared judicially void or otherwise unenforceable, the remainder
of this Agreement shall survive and such provisions shall be deemed modified or
amended so as to fulfill the intent of the parties hereto.

          21.   DISPUTE RESOLUTION. Except for equitable actions seeking to
                ------------------
enforce the provisions of Paragraphs 11 and 12 of this Agreement, jurisdiction
and venue for which is hereby granted to the District Court of Dallas County,
Texas, any and all claims, disputes or controversies arising between the parties
hereto regarding any of the terms of this Agreement or the breach thereof, on
the written demand of either of the parties hereto, shall be submitted to and be
determined by final and binding arbitration held in Dallas, Texas in accordance
with the Employment Dispute Resolution Rules of the American Arbitration
Association.   This Agreement to arbitrate shall be specifically enforceable in
any court of competent jurisdiction.

          22.   WAIVER. None of the terms of this Agreement, including this
                ------
Paragraph 22, or any term, right or remedy hereunder shall be deemed waived
unless such waiver is in writing

                                      12
<PAGE>

and signed by the party to be charged therewith and in no event by reason of any
failure to assert or delay in asserting any such term, right or remedy or
similar term, right or remedy hereunder.

          23.   PAROL. This Agreement constitutes the entire agreement between
                -----
Employer and Employee with respect to the subject matter hereto and this
Agreement supersedes any prior understandings, agreements or undertakings by and
between Employer and Employee with respect to the subject matter hereof.

                                      13
<PAGE>

          IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the
parties hereto have executed and delivered this Agreement as of the year and
date first above written.

                                  EMPLOYER:
                                  --------

                                  HOLLYWOOD CASINO CORPORATION

                                  By: /s/ Edward T. Pratt III
                                     ------------------------------------
                                     Name:  Edward T. Pratt III
                                     Title: President and Chief
                                             Operating Officer

                                  EMPLOYEE:
                                  --------

                                       /s/ Paul C. Yates
                                  --------------------------------------
                                  PAUL C. YATES

                                      14

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