ENVIRONMENTAL INDEMNITY

ENVIRONMENTAL INDEMNITY

(Riviera Hotel & Casino in Las Vegas, Nevada)

This ENVIRONMENTAL INDEMNITY (as amended, modified or otherwise

supplemented from time to time, this "Indemnity") is made and entered into as of

June 8, 2007, by and among RIVIERA HOLDINGS CORPORATION, a Nevada corporation

("RHC"), as indemnitor ("Indemnitor"), and WACHOVIA BANK, NATIONAL ASSOCIATION,

as administrative agent (the "Agent") for the benefit of the Lenders referred to

below.

RECITALS

(A) RHC is the present owner of the real property located in Las

Vegas, Nevada included in the Collateral and more particularly described on

Exhibit A (the "Trust Property").

(B) RHC and the Agent are, contemporaneously with the execution and

delivery of this Indemnity, entering into that certain Credit Agreement, dated

as of substantially even date herewith (as amended, restated, supplemented, or

otherwise modified from time to time, the "Credit Agreement"), by and among RHC

(the "Borrower"), the subsidiaries of the Borrower from time to time party

thereto, the lenders from time to time party thereto (individually, a "Lender"

and collectively, the "Lenders"), and Wachovia Bank, National Association, as

administrative agent. As used herein and in the Credit Agreement, the term

"Lenders" means, individually and collectively, the Agent and the Lenders.

(C) The Credit Agreement and the Credit Party Obligations are secured,

in part, by RHC's interest in the Trust Property. The Trust Property is secured

by that certain Deed of Trust, Assignment of Leases and Rents, Security

Agreement and Fixture Filing, between RHC and the Agent (for the benefit of the

Lenders), dated as of the date hereof (as the same may be amended, restated,

supplemented, or otherwise modified from time to time, the "Deed of Trust").

(D) The Lenders have required, as a condition precedent to entering

into the Credit Agreement, that Indemnitor shall have executed and delivered

this Indemnity in favor of the Agent for the benefit of the Lenders.

NOW, THEREFORE, the parties hereto agree as follows:

1. Recitals. The Recitals are incorporated herein by this reference.

2. Definitions. Capitalized terms used herein but not otherwise defined

shall have the meanings assigned to such terms in the Credit Agreement. For

purposes of this Indemnity, the following terms have the meanings set forth

below.

"Adjacent Property" means any property so situated as to pose a risk

that a Hazardous Material could spread onto the Trust Property.

"Environmental Laws" collectively means and includes any and all

applicable present and, other than with respect to Section 3, future local,

state and federal law relating to the environment and environmental conditions,

including, without limitation: the Nevada Hazardous Materials Act (NRS Chapter

459); NRS Chapters 444, 445A, 445B and 445C; NRS Chapter 590; NRS ss. 477.045;

NRS ss. 618.750 to 618.850, inclusive; the Uniform Fire Code, as adopted by and

now or hereafter in effect in the State of Nevada; the Resource Conservation and

Recovery Act of 1976 ("RCRA"), 42 U.S.C. ss. 6901 et seq.; the Comprehensive

Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42

U.S.C. ss.ss. 9601-9657, as amended by the Superfund Amendments and

Reauthorization Act of 1986 ("SARA"), the Hazardous Materials Transportation

Act, 49 U.S.C. ss. 6901, et seq.; the Federal Water Pollution Control Act, 33

U.S.C. ss.ss. 1251 et seq.; the Clean Air Act, 42 U.S.C. ss.ss. 741 et seq.; the

Clean Water Act, 33 U.S.C. ss. 7401 et seq.; the Toxic Substances Control Act,

15 U.S.C. ss.ss. 2601-2629, the Safe Drinking Water Act, 42 U.S.C. ss.ss.

300f-300j, or any other similar federal, state or local law of similar effect,

each as amended, and any and all regulations, orders, and decrees now or

hereafter promulgated thereunder or any and all common law requirements, rules

and bases of liability regulating, relating to or imposing liability or

standards of conduct concerning pollution or protection of human health or the

environment, as now or may at any time hereafter be in effect.

"Hazardous Materials" means any substance, material or waste that is

or becomes designated or regulated as "toxic", "hazardous", "pollutant", or

"contaminant" or a similar designation or regulation under any Environmental Law

or other federal, state or local law (whether under common law, statute,

regulation or otherwise) or judicial or administrative interpretation of such,

including, without limitation, asbestos, petroleum products or by-products

(including, without limitation, crude oil or any fraction thereof), the group of

organic compounds known as polychlorinated biphenyls, radon gas, natural gas,

urea formaldehyde, radioactive materials, toxic, infectious, reactive,

corrosive, ignitable or flammable chemicals and chemicals known to cause cancer

or adverse health effects.

"Premises" means the Trust Property, and all improvements now or

hereafter located thereon, and all rights and interests of RHC therein.

"Remedial Work" means any investigation, site monitoring, containment,

cleanup, removal, restoration or other remedial work of any kind or nature

reasonably necessary under any applicable, local, state or federal law or

regulation, any judicial order, or by any governmental or nongovernmental entity

or person because of, or in connection with, the current or future presence,

suspected presence, release or suspected release of Hazardous Materials in or

into the air, soil, groundwater, surface water or soil vapor at, on, about,

under or within the Premises (or any portion thereof).

3. Representations and Warranties. Except as would not constitute a

Material Adverse Effect, the Indemnitor represents and warrants that: (1) no

Hazardous Material has been installed, used, generated, manufactured, treated,

handled, refined, produced, processed, stored or disposed of in, on or under the

Trust Property, including, without limitation, the surface and subsurface waters

of the Trust Property, except in compliance in all material respects with

Environmental Laws; (2) no activity has been undertaken on the Trust Property by

Indemnitor, its agents, employees, contractors, licensees, guests or tenants or

to its knowledge any other Person, which would cause, or has caused, (i) the

Trust Property to become a hazardous waste treatment, storage or disposal

facility, as such terms are defined and classified under any currently effective

Environmental Law, (ii) a release or threatened release of Hazardous Materials

on, under, about or from the Trust Property within the meaning of, or otherwise

violate, any currently effective Environmental Law (except as expressly

permitted in writing by a Governmental Authority), or (iii) the discharge or

emission of Hazardous Materials which would require a permit under any currently

effective Environmental Law that has not been obtained and is in full force and

effect; (3) no conditions caused by Indemnitor, its agents, employees,

contractors, licensees, guests or tenants or, to its knowledge, any other

Person, with respect to the Trust Property cause a violation or support a claim

under any currently effective Environmental Law; (4) to the best of Indemnitor's

knowledge after due inquiry, no underground storage tanks are located on the

Trust Property or have been located on the Trust Property and subsequently

removed or filled; (5) with respect to the Trust Property, Indemnitor has not

received any notice at any time that it (or any of its tenants or guests) is or

was claimed to be in violation of or in non-compliance with the conditions of

any currently effective Environmental Law; and (6) there is not now pending or

threatened any action, judgment, claim, consent decree, judicial or

administrative orders or agreements, or governmental liens with respect to

Indemnitor or the Trust Property relating to any currently effective

Environmental Law.

4. Covenants. Indemnitor covenants: (i) that no Hazardous Materials

shall be installed, used, generated, manufactured, treated, handled, refined,

produced, processed, stored or disposed of in, on or under the Trust Property,

except in all material respects in compliance with all applicable rules,

regulations and laws; (ii) that no activity shall be undertaken on the Trust

Property which would cause (A) the Trust Property to become a hazardous waste

treatment, storage or disposal facility, as such terms are defined and

classified under any Environmental Law, (B) a release or threatened release of

Hazardous Materials on, under, about or from the Trust Property within the

meaning of, or otherwise violate, any Environmental Law (except as expressly

permitted in writing by a governmental authority), or (C) the discharge or

emission of Hazardous Materials into any watercourse, body of surface or

subsurface water or wetland, or the discharge into the atmosphere of any

Hazardous Materials, that would require a permit under any Environmental Law and

for which no such permit has been issued; (iii) that no activity shall be

undertaken or permitted to be undertaken by Indemnitor on the Trust Property

which would reasonably be expected to result in a violation under any

Environmental Law; (iv) that soils excavated during construction and groundwater

generated during dewatering activities on the Trust Property shall be handled

and disposed of in compliance with Environmental Laws in all material respects;

(v) that if any Remedial Work is required under any applicable Environmental

Laws because of or in connection with current or future presence, suspected

presence, release or suspected release of a Hazardous Material into the air,

soil, ground water, surface water; or soil vapor on, under or about the Premises

or any portion thereof, Indemnitor shall promptly commence and diligently

prosecute to completion all such Remedial Work; provided that the Remedial Work

shall have been approved by any environmental regulatory agency having

jurisdiction over such work; (vi) all Remedial Work shall be performed by

contractors, and under the supervision of a consulting engineer, each approved

in advance by the Agent and any necessary environmental regulatory agencies and

all costs and expenses of such Remedial Work and Agent's or its agents' or

representatives' monitoring or review of such Remedial Work (including

reasonable attorneys' fees, charges and disbursements) shall be paid by

Indemnitor; (vii) if Indemnitor does not timely commence and diligently

prosecute to completion the Remedial Work, Agent and its agents and

representatives may (but shall not be obligated to) cause such Remedial Work to

be performed and Indemnitor agrees to bear and shall pay or reimburse Agent (for

the benefit of the Lenders) on demand for all expenses (including reasonable

attorneys' fees, charges and disbursements) relating to or incurred by Agent

(for the benefit of the Lenders) and its agents and representatives in

connection with monitoring, reviewing or performing any Remedial Work; (viii)

Indemnitor shall not commence any Remedial Work or enter into any settlement

agreement, consent decree or other compromise relating to any Hazardous

Materials or Environmental Laws which might impair the value of the Lenders'

security hereunder or under the other Credit Documents, unless such Remedial

Work is required to be performed by an environmental regulatory agency under

applicable law in which case Indemnitor shall use its best efforts not to impair

the value of the Lenders' security under the Credit Documents; and (ix) promptly

following completion of any remedial actions imposed upon Indemnitor under any

Environmental Law by a governmental agency in response to a violation of

Environmental Laws or any environmental permits, licenses, approvals or

authorizations or a release of Hazardous Materials at or from the Trust

Property, Indemnitor shall obtain and deliver to the Agent (for the benefit of

the Lenders), either (x) an environmental report in form and substance

reasonably acceptable to the Agent from an environmental consultant reasonably

acceptable to the Agent, stating that all required action has been taken, and

that upon completion of such action, the Trust Property is, to the knowledge of

such professional, then in compliance with applicable Environmental Laws, or (y)

a statement from the governmental agency that required such action to the effect

that all required action has been taken to its satisfaction.

5. Indemnities. Indemnitor hereby agrees to unconditionally indemnify,

defend, and hold Lenders harmless against: (1) any loss, fines, penalties,

actions, suits, proceedings, liability, damage, expense or claim incurred in

connection with, arising out of, resulting from or incident to the application

of any Environmental Law with respect to the Trust Property; (2) any breach of

any representation or warranty or the inaccuracy of any representation made by

Indemnitor in or pursuant to this Indemnity; (3) any breach of any covenant or

agreement made by Indemnitor in or pursuant to this Indemnity, (4) any liability

or obligation arising out of CERCLA, any equivalent state statute or any other

Environmental Law which may be incurred or asserted against the Lenders,

directly or indirectly, under Environmental Laws, with respect to the Trust

Property; and (5) any other loss, liability, damage, expense or claim which may

be incurred by or asserted against the Lenders, directly or indirectly,

resulting from the presence of Hazardous Material on the Trust Property,

including (A) all foreseeable and unforeseeable consequential damages, (B) the

costs of any required or necessary investigation, repair, cleanup, remediation

or detoxification and (C) the costs of the preparation and implementation of any

closure, remedial or other remedial plans. Notwithstanding anything herein to

the contrary, this Indemnity shall not be construed to impose liability on

Indemnitor for Hazardous Materials placed, released or disposed of on the Trust

Property or any obligation or liability under Environmental Law (except to the

extent caused by the acts or omissions of Indemnitor or its agents, employees,

contractors, licensees, guests and tenants) (i) after the date of foreclosure,

assignment (other than an assignment by the Agent to a successor "Agent" under

the Credit Agreement) or sale, (ii) after the acceptance by the Agent (for the

benefit of the Lenders) of a deed in lieu of foreclosure, (iii) during any

period during which a receiver appointed upon the request or petition of the

Agent (for the benefit of the Lenders) is in possession of the Trust Property or

the Agent (for the benefit of the Lenders) operates the Trust Property as a

mortgagee in possession, or (iv) to the extent such liability arises from the

gross negligence or willful misconduct of the Agent (for the benefit of the

Lenders) or any indemnitee hereunder.

6. Duration of Indemnity. The duration of Indemnitor's obligations

hereunder shall cease upon (i) payment in full in cash of all Credit Party

Obligations and the irrevocable termination of all commitments of the Lenders to

extend credit under the Credit Agreement and/or (ii) the release of the Deed of

Trust; provided, however that Indemnitor's obligations with respect to Sections

5 and 9 shall not cease until the expiration of the statute of limitations

period applicable to the subject matter of the underlying claim.

7. Notices from Indemnitor. Indemnitor shall, promptly after obtaining

knowledge thereof, advise the Agent (for the benefit of the Lenders) in writing

of: (i) any governmental or regulatory actions instituted or threatened in

writing under any Environmental Law affecting the Trust Property or this

Indemnity or any requirement by a government or regulatory agency to take

material response action with respect to the presence of Hazardous Materials on

the Trust Property, including, without limitation, any notice of inspection

(other than routine inspections), abatement or noncompliance; (ii) all claims

made or threatened in writing by any third party against Indemnitor or the Trust

Property relating to any Hazardous Material or a violation of an Environmental

Law with respect to the Trust Property; (iii) Indemnitor's discovery of any

occurrence or condition on the Trust Property or any Adjacent Property that

would reasonably be expected to subject Indemnitor or the Trust Property to (A)

a material claim under any Environmental Law or (B) any restriction on

ownership, occupancy, transferability or material change in use of the Trust

Property under any Environmental Law; and (iv) the commencement of any Remedial

Work. Indemnitor shall deliver to the Agent (for the benefit of the Lenders)

such documentation or records as the Agent may reasonably request and that are

susceptible of being obtained by Indemnitor relating to the Trust Property in

relation to any Environmental Law without undue cost or expense and without the

necessity for initiating legal proceedings to obtain the same. Agent, for the

benefit of the Lenders, may join and participate in, as a party if it so

determines, any legal or administrative proceeding or action concerning the

Premises under any Environmental Law. Indemnitor agrees to bear and shall pay or

reimburse Agent (for the benefit of the Lenders) on demand for all reasonable

expenses (including reasonable attorneys' fees, charges and disbursements)

relating to or incurred by Agent (for the benefit of the Lenders) in connection

with any such action or proceeding.

8. Notice of Claims Against Indemnitees. The Agent (for the benefit of

the Lenders) agrees that it shall provide Indemnitor with written notice of any

claim or demand that the Agent (for the benefit of the Lenders) has determined

could give rise to a right of indemnification under this Indemnity; provided

that the failure to give any such notice shall not limit Indemnitor's

obligations hereunder. Such notice shall be given a reasonable time after the

Agent (for the benefit of the Lenders) becomes aware of the relevant facts and

shall specify, to the best of the Agent's knowledge, the facts giving rise to

the alleged claim, and the amount, to the extent determinable, of liability for

which indemnity is asserted. Indemnitor agrees that in any action, suit or

proceeding brought against the Lenders, the Lenders may be represented by

counsel chosen by the Lenders, without affecting or otherwise impairi