EMPLOYMENT AGREEMENT


Exhibit 10.37

                              EMPLOYMENT AGREEMENT


                  Employment   Agreement,   dated  as  of  July  1,  1998  (this
"Agreement"),  by and between Riviera Holdings  Corporation and its wholly-owned
subsidiary Riviera Operating Corporation (collectively the "Company") and Jerome
Grippe ("Executive").

In  consideration  of the mutual  agreements  hereinafter set forth, the parties
hereto agree as follows:

1.  Employment.  During the "Term"  (hereinafter  defined) the Company agrees to
employ Executive as Vice President  Operations of the Company upon the terms and
conditions and for the compensation herein provided,  and Executive agrees to be
so employed and to render the services herein specified.

2. Term of  Employment.  The term of  employment  of  Executive  hereunder  (the
"Term") will be for the two year period commencing on July 1, 1998 and ending on
June 30, 2000, subject to earlier termination as provided in Section 10.

3. Duties. During the Term Executive agrees to (a) devote his full and exclusive
business time and attention to the business of the Company and its  subsidiaries
(vacation  and sick leave in accordance  with the Company's  policy and personal
time consistent with his position excluded);  and (b) perform such duties as the
Company's chief executive officer shall from time to time assign to Executive.

4. Salary.  During the Term  Executive  shall  receive a salary at the following
rates per annum, payable bi-weekly in arrears ("Base Salary"):

                           One Year Period
                           Commencing

                           7/1/98                             $150,000
                           7/1/99 and thereafter              $175,000

5. Stay Put Bonus.

a.  Executive  shall be entitled to a bonus  ("Stay Put Bonus") of $87,500 if he
remains an  employee  of the Company on each of January 1, 2001 and July 1, 2001
(or an  aggregate  of $175,000)  or if  Executive  has been  discharged  without
"Cause"  (hereinafter  defined)  prior to each such  date,  he will  immediately
receive any unpaid balance of the $175,000 Stay Put Bonus.





b. At the closing of a "Change of Control"  (hereinafter  defined)  the Stay Put
Bonus (i) shall be deposited in a Rabbi Trust with US Bank,  and one-half of the
amount of the Rabbi  Trust  established  for  Executive  will be paid on each of
January 1, 2001 and July 1, 2001 provided  Executive remains an employee on each
such date or has been discharged without Cause.

c. A "Change of Control"  shall mean (i) the sale of more than a majority of the
Company's common stock,  (ii) a merger in which the Company is not the surviving
company or a majority of the stock of the Company as the surviving company shall
be held by a party or related group of parties (excluding the present holders of
more than 10% of the Company's  common stock,  Morgens  Waterfall,  Sun Life and
Keyport Life) or (iii) sale of substantially all of the Company's assets.

6. Incentive Bonus.

Executive  may be eligible  for a bonus  ("Normal  Incentive  Bonus")  under the
Company's Senior Management  Compensation  Plan (the "Plan").  The Plan provides
for a target of $25 million of "EBITDA" for the Years 1999 and 2000 with amounts
being  credited  to the Plan pool up to a maximum of $1.2  million  ("Cap").  If
William  L.  Westerman  ceases  to be the  Company's  Chief  Executive  Officer,
Executive  shall be entitled to no less a Normal  Incentive Bonus (in terms of a
percentage of all bonuses) than in the prior fiscal year and at least 90% of the
bonus  pool  under  the  Plan  will be  distributed  to all  Plan  participants,
including Executive,  by March 15th of the following year. In calculating EBITDA
there shall be included any management fees earned by the Company from its Black
Hawk,  Colorado subsidiary ("Black Hawk"), but there shall be excluded any Black
Hawk EBITDA until at least a 20 return has been earned on capital invested (debt
and equity) in Black Hawk.  Also,  if the Company  becomes  involved in projects
other than Black Hawk which require that the Company invest its funds, a 20% per
annum return on such investment must be earned before any EBITDA  generated from
such project will be included in the EBITDA  calculation  under the Plan, unless
the Company pays more than five times trailing 12 months' EBITDA, in which case,
the ROI will be adjusted  accordingly.  Executive's  incentive bonus ("Incentive
Bonus"),  if any, shall be determined by the Company's chief  executive  officer
subject  to  approval  by the  Company's  Board  of  Directors  or  Compensation
Committee.

7. Death and Disability.

a.  Upon the death or  "Disability"  (hereinafter  defined)  of  Executive,  the
following   amounts  will  become   payable  to  (i)   Executive's   "Designated
Beneficiary" in the case of death or (ii) Executive in the case of Disability:





(i)  Base  Salary  shall  be paid to the end of the  month  in  which  death  or
Disability occurs.

(ii) Stay Put Bonus. A "Pro-Rata" (hereinafter defined) portion shall be paid as
soon as practicable after the date of death or Disability.

(iii) Incentive Bonus. Whether Executive shall be entitled to an Incentive Bonus
for the  year of his  death  or  Disability  shall  be  determined  and  paid in
accordance  with the Plan as promptly as practicable  after the end of such year
on a "Pro-Rata" basis.

b. The following terms shall have the following meanings:

(i) "Pro-Rata" - a fraction, the numerator of which is the number of days to the
date of death,  Disability  or discharge  without Cause and the  denominator  of
which is 365.

(ii) "Designated  Beneficiary"  shall be the person designated in writing by the
Executive prior to the Executive's death and if the Executive fails to designate
a beneficiary or if a designated beneficiary does not survive the Executive, all
amounts  payable   hereunder   shall  be  paid  to  the   Executive's   personal
representative  or pursuant to the terms of the Executive's  will or the laws of
descent and distribution.

(iii)  "Disability"  - the Company  shall find on the basis of medical  evidence
satisfactory to it that Executive is so totally mentally or physically  disabled
as to be unable  to  engage  in  further  employment  by  Company  and that such
disability  shall be determined to be such that it will cause,  or actually does
cause or has caused, Executive to be absent from work for a period, or aggregate
of periods, in excess of three months in any one twelve month period.

8.  Profit-Sharing  and 401(k) Plan.  In addition to the Base  Salary,  Stay Put
Bonus and Incentive Bonus,  Executive shall be eligible for participation in the
Defined Contribution Plan adopted by Company.

9. Additional  Benefits and  Compensation.  During the Term,  Executive shall be
entitled to:

a.  life  insurance,  group  health  insurance,   including  major  medical  and
hospitalization,  comparable to such benefits offered to other key executives of
the Company;





b. reimbursement for all reasonable expenses incurred by Executive in connection
with the performance of his duties and in accordance with any applicable  policy
of the Company (including 100% of reasonable travel and entertainment expenses),
subject to submission of appropriate documentation therefor; and

10. Termination By Company or By Executive.

a. If the Company shall discharge Executive for "Cause"  (hereinafter  defined),
Executive  shall not be entitled to receive any payment with respect to (i) Base
Salary  after  the date of  discharge,  (ii) the Stay Put  Bonus  and  (iii) the
Incentive Bonus.

b. If the Company shall  discharge  Executive  without  "Cause",  subject to his
obligation to "Mitigate"  (hereinafter defined),  Executive shall be entitled to
(i) Base  Salary to the end of the  Term,  (ii) his full Stay Put Bonus but with
payment  accelerated  to the date of  discharge  and  (iii) an  Incentive  Bonus
Pro-Rata to the date of discharge.

c. If Executive  shall resign prior to the  expiration of the Term, he shall not
be entitled to any  compensation  or benefits from the Company after the date of
his resignation.

d. The following terms shall have the following meanings:

(i) Cause - (A) a felony  conviction  of Executive,  (B) a final civil  judgment
shall be entered after all appeals shall have been exhausted in which a material
aspect  involved  Executive's  fraud or dishonesty  whether or not involving the
Company,  provided  that the  foregoing  shall not apply to the  action by Allen
Paulson and other  plaintiffs,  against the Company and other  defendants  which
involves  allegations of violation of Nevada law,  including RICO and "fraud" on
the part of the  Company  and which on the date hereof is pending in the Federal
District Court for the Central District of California;  (C) refusal by Executive
to perform  "Reasonable  Duties"  (hereinafter  defined)  assigned to him by the
Company's chief executive officer, provided, Executive shall fail to correct any
such failure  within 30 days after  written  notice  ("Cure  Period") or (D) the
Gaming  Authorities  of the  State of  Nevada  or any  other  state in which the
Company  shall conduct  gaming  operations  shall  determine  that  Executive is
unsuitable  to act as an executive of a gaming  company.  "Reasonable  Duties" -
Executive  shall not be required (x) on a permanent basis to spend more than 50%
of his business time outside of Las Vegas (or be




required  to  change  his  residence),  (y) to expose  himself  to a risk to his
physical  safety or  jeopardize  his ability to be licensed by any state  gaming
authority or (z) perform duties which are  inconsistent  with his role specified
in Section 1 hereof.

(ii)  Mitigate - Executive  shall be required to use his best  efforts to obtain
gainful  employment  as similar as  possible  to his  duties  with the  Company,
provided that (A) a finding by an arbitration tribunal that Executive has failed
to do so will result in the Company  being  relieved  of any  obligation  to pay
Executive and (B) any amount  received by Executive from such  employment  shall
reduce the amount payable by the Company under Section 10(b).

11. Confidential Information; Non-Competition.

a. During the Term and for a three year period  commencing on the termination of
the  Term of this  Agreement  for any  reason,  (i)  Executive  shall  hold in a
fiduciary  capacity  for the benefit of the  Company all secret or  confidential
information,  knowledge or data relating to the Company or its  affiliates,  and
their  respective  businesses  which shall not be public  knowledge  (other than
information  which  becomes  public  as a  result  of acts of  Executive  or his
representatives in violation of this Agreement),  including, without limitation,
customer/client  lists,  matters  subject  to  litigation,   and  technology  or
financial  information  of the Company or its  subsidiaries,  and (ii) Executive
shall not,  without the prior  written  consent of the Company,  communicate  or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it in writing.

b. During the Term, the Executive will not, directly or indirectly, own, manage,
operate,  control or participate in the ownership,  management or control of, or
be  connected as an officer,  employee,  partner,  director,  or  consultant  or
otherwise with, or have any financial  interest in any  hotel/casino  except for
(i) ownership of less than 5% of the  outstanding  equity interest in any entity
and (ii) management or consulting duties vis-a-vis another hotel/casino (such as
Four  Queens)  for which the  company is  performing  management  or  consulting
duties.





c. During the Term and for a one-year  period  commencing on  termination of the
Term for any reason,  Executive  will not solicit or contact any employee of the
Company or its affiliates  with a view to inducing or encouraging  such employee
to leave the employ of the  Company or its  affiliates  for the purpose of being
employed by Executive,  an employer affiliated with Executive, or any competitor
of the Company or any affiliate thereof.

d. Executive  acknowledges that the provisions of this Section 11 are reasonable
and  necessary  for the  protection  of  Company  and that the  Company  will be
irrevocably   damaged  if  such  provisions  are  not   specifically   enforced.
Accordingly, Executive agrees that, in addition to any other relief to which the
Company may be entitled in the form of actual or punitive  damages,  the Company
shall be entitled to seek and obtain injunctive relief from a court of competent
jurisdiction   (without  posting  of  a  bond  therefor)  for  the  purposes  of
restraining Executive from any actual or threatened breach of such provisions.

12. Miscellaneous

a. This  Agreement  shall be governed,  construed and  interpreted in accordance
with the internal laws of the State of Nevada applicable to agreements  executed
in that State.

b. This Agreement  supersedes all prior agreements and understandings  among the
parties,  and contains the full understanding of the parties hereto with respect
to the  subject  matter  hereof.  Any  change,  modification  or  waiver of this
Agreement must be in writing, signed by both parties hereto or, in the case of a
waiver, by the party waiving  compliance.  This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original. The captions of
each article and section are  intended  for  convenience  only.  All  references
herein to days,  weeks and months  shall mean by  calendar  unless  specifically
stated to the contrary.  All references herein to the singular shall include the
plural,  and all  references  to gender  shall,  as  appropriate,  include other
genders.  All  representations  and warranties  made hereunder shall survive the
execution and delivery and closing of this Agreement. At the termination of this
Agreement,  Executive  agrees  to  execute  in  recordable  form  an  instrument
sufficient to evidence said termination.

c. It is the intention of the parties hereto that this Agreement shall not inure
to the benefit of any third  parties not  parties to this  Agreement,  and it is
specifically intended that no third party beneficiary relationships, benefits or
obligations shall arise or be deemed to exist as a result of this Agreement.

d. This Agreement  shall inure to the benefit of and be binding upon each of the
parties  hereto,  their  heirs,  assigns,  successors,  executors  and  personal
representatives,  however,  as a  personal  service  contract,  it shall  not be
assignable by Executive.

e. The failure or delay by either party in any one or more  instances to enforce
one or more of the terms and  conditions  of this  Agreement  or to exercise any
right or privilege  under this Agreement  shall not thereafter be construed as a
waiver of any such  term,  condition,  right or  privilege  and the same and all
other  terms,  conditions,  rights or  privileges  under  this  Agreement  shall
continue  to remain in full force and effect as though no such  failure or delay
had occurred.

f. Any and all disputes between the parties hereto, however significant, arising
out of, relating in any way to or in connection  with this Agreement  (including
the validity,  scope, and  enforceability  of this  arbitration  clause) will be
solely settled by an arbitration  conducted in accordance  with the rules of the
American Arbitration Association or any similar successor body before a panel of
three arbitrators.  Each party shall appoint one arbitrator. If a party fails to
nominate an arbitrator within 10 days from the date when the claimant's  request
for  arbitration  has been  communicated  to the  other  party in  writing,  the
appointment  shall be made within 10 days  thereof by the  American  Arbitration
Association.  The two  arbitrators so appointed  shall attempt to agree upon the
third arbitrator to act as chairman. If the two arbitrators fail to nominate the
chairman  within 10 days  from the date of  appointment  of the later  appointed
arbitrator,  the  chairman  shall be  selected  within  10 days  thereof  by the
American Arbitration Association. The arbitration shall be conducted with a view
to  commencing  proceedings  within 30 days  from the date  when the  claimant's
request for  arbitration  was  communicated to the other party in writing and to
rendering  the award or other  judgment  not more than 15 days  thereafter.  The
award or other judgment of the arbitrators shall be final, and the parties agree
to waive their right to any form of appeal,  to the greatest  extent  allowed by
law,  and to share  equally the fees and expenses of the  arbitrators.  Judgment
upon  any  award  of  the  arbitrators  may  be  entered  in  any  court  having
jurisdiction  or  application  may be  made  to  such  court  for  the  judicial
acceptance of the award and for order of enforcement.  Such arbitration shall be
held only in Las Vegas, Nevada.  Pending resolution of the dispute,  there shall
be no  stoppage  by either  party under the terms  hereof;  rather,  the parties
hereto shall perform diligently under this Agreement pending ultimate resolution
of the dispute. By agreeing to arbitration,  neither party hereto is waiving any
benefit of any statute of limitations or other equitable defenses.





g. No  voluntary  or  involuntary  successor  in interest  of the Company  shall
acquire any rights or powers under this Agreement,  except as  specifically  set
forth  herein.  Otherwise,  the Company shall not assign all or any part of this
Agreement.

13. Notices. All notices, requests, demands, directions and other communications
provided for hereunder shall be in writing and delivered personally or mailed by
certified  or  registered  mail,  return  receipt  requested,  to the  following
addresses  for each party during the Term or until such time as written  notice,
as provided hereby, of a change of address to be used thereafter is given to the
other party, with copies to such legal counsel as each party, from time to time,
may designate:

Company                                                Executive

RIVIERA HOLDINGS CORPORATION                           Jerome P. Grippe
2901 Las Vegas Blvd. So.                               2072 Sutton Way
Las Vegas, Nevada  89109                               Henderson, NV  89014
Attn.:  William L. Westerman, Chief                    PERSONAL & CONFIDENTIAL
                  Executive Officer

Notices  delivered  personally shall be deemed to have been given upon delivery;
notices  delivered by certified or registered  mail shall be deemed to have been
given  seventy-two  (72) hours after the date  deposited in the mail,  except as
otherwise provided herein.

14.  Government  Approvals.  Notwithstanding  any other terms and provisions set
forth in this  Agreement,  it is  understood  and agreed that the  engagement of
Executive hereunder, the obligation of the parties hereto, and the effect of the
Agreement,  shall be  subject  to the  approval  of each  and all of the  terms,
covenants and provisions of this Agreement by the Nevada Gaming  Authorities and
other Governmental Authorities from whom approval, if any, is required under the
laws of the  State  of  Nevada,  the  County  of  Clark,  or any  and all  other
governmental agencies having jurisdiction thereover.  Each of the parties hereby
covenant  and agree to  exercise  their  best good  faith  efforts to proceed to
obtain any and all such necessary approvals.

IN WITNESS WHEREOF,  the parties herein have entered into this Agreement the day
and year first above mentioned.

COMPANY:                                                    EXECUTIVE:

RIVIERA HOLDINGS CORPORATION

By:  /s/                                                    /s/
       William L. Westerman                                 Jerome Grippe
Its:  Chief Executive Officer